1989 (3) TMI 138 - HC - Customs

Import - Advance licence issued under Duty Exemption Scheme - Estoppel - Duty Exemption Scheme

Issues Involved:
1. Validity of the orders or directions passed by the respondents.
2. Compliance with the Duty Exemption Scheme.
3. Amendment of the DEEC Book and Advance Licence.
4. Calculation and payment of Customs Duty and interest.
5. Surrender of valid Replenishment Licences.
6. Application of the 1983-84 Import Policy versus the 1985-88 Import Policy.
7. Alleged arbitrariness and illegality of the respondents' demands.
8. Reimbursement of excess interest paid by the petitioner.

Issue-wise Detailed Analysis:

1. Validity of the orders or directions passed by the respondents:
The petitioner challenged the orders dated 17th December 1987 and 10th February 1988, contending that they were arbitrary, illegal, and without jurisdiction. The court concluded that these orders were erroneous and illegal, and thus, must be set aside and quashed.

2. Compliance with the Duty Exemption Scheme:
The petitioner was a manufacturer-exporter under the Duty Exemption Scheme, which allowed duty-free import of raw materials for manufacturing export products. The petitioner fulfilled approximately 95% of the export obligations and complied with the scheme's requirements by paying Customs Duty and interest on the unaccounted materials.

3. Amendment of the DEEC Book and Advance Licence:
The petitioner faced issues with the amendment of the DEEC Book and the Advance Licence, which were necessary to compute the correct Customs Duty and the value of Replenishment Licences. Despite multiple requests, the second respondent failed to make the necessary corrections, causing delays and additional interest payments by the petitioner.

4. Calculation and payment of Customs Duty and interest:
According to para 20 of the 1983-84 Import Policy, the petitioner was required to pay Customs Duty on the proportionate quantity of exempt materials corresponding to the products not exported, along with 18% interest. The petitioner complied with this requirement and paid the necessary duties and interest.

5. Surrender of valid Replenishment Licences:
The third respondent demanded the surrender of valid Replenishment Licences to cover unfulfilled portions of export obligations. The petitioner complied by surrendering licences worth Rs. 21,805/-. However, the respondents later demanded additional licences worth Rs. 2,42,402/-, which the court found to be arbitrary and excessive.

6. Application of the 1983-84 Import Policy versus the 1985-88 Import Policy:
The court determined that the 1983-84 Import Policy governed the petitioner's case, as the Import Licence was issued during that period. The provisions of the 1985-88 Import Policy or any amendments made after 30th August 1986 could not be applied retrospectively to the petitioner's case.

7. Alleged arbitrariness and illegality of the respondents' demands:
The court found the respondents' demands to be arbitrary and illegal. The respondents' requirement for the petitioner to surrender additional Replenishment Licences worth Rs. 2,42,402/- for non-fulfilling 5% of the export obligation was deemed incredible and unreasonable.

8. Reimbursement of excess interest paid by the petitioner:
Due to the respondents' delays in amending the DEEC Book and the Advance Licence, the petitioner paid excess interest to the Customs Authorities. The court held that the respondents were responsible for reimbursing the petitioner Rs. 12,673/- for the excess interest paid.

Conclusion:
The court ruled in favor of the petitioner, setting aside and quashing the impugned orders. The petitioner complied with the Duty Exemption Scheme and the 1983-84 Import Policy requirements. The respondents' demands were found to be arbitrary and illegal, and the petitioner was entitled to reimbursement for the excess interest paid.

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