2023 (12) TMI 493 - HC - Customs

Recovery of customs duty forgone proportionately with respect to the utilization of the licence - non-fulfilment of export obligation - appellant had engaged third party exports - HELD THAT - The Circular No.7/2002 dated 11.7.2002 was issued by the Ministry of Commerce and Industry, Directorate General of Foreign Trade, New Delhi, on the basis of the representations given from various exporters for condonation of procedural lapse of not mentioning the EPCG licence number and the date on the shipping bills relating to the exports for fulfillment of EO under EPCG scheme. A decision was taken under para 2.5 of the EXIM policy that such procedural lapse may be condoned in relaxation of the existing policy provisions subject to submission/verification of the documents as enumerated therein. In the present case, the contention of the respondents nned not be considered that the appellant had not fulfilled the export obligation within the stipulated period. The same was not the ground in denying the benefit to the appellant. It is worth noting that the appellant even failed to place on record the shipping bills. Moreover, the appellant admitted that it did not mention the names of third parties and the licence holder on the shipping bills. It would be difficult for the respondents to verify the genuineness of the claim in the absence of the names of third parties on the shipping bills so also the names of the licence holder. Paragraph 5.7.1 of the Hand Book of Procedures prescribes that EPCG licence number and date shall be endorsed on the shipping bills which are proposed to be presented towards discharge of export obligation. The appellant did not comply with the same. Moreover, the shipping bills were not placed before the respondents so as to enable the respondents to verify the same. There are no error in the order passed by the respondents negativing the claim of the appellant - the writ appeal stands dismissed.

Summary

Issues involved:
The judgment involves a challenge to an order rejecting a request to relax conditions on shipping bills for EPCG license utilization and the subsequent initiation of recovery action under the Foreign Trade (Development and Regulation) Act, 1992.

Details of the judgment:

Challenge to Order and Export Obligation:
The appellant filed a writ petition challenging the rejection of their request to relax conditions on shipping bills related to EPCG license utilization. The appellant had an EPCG license for importing machinery and capital goods for its export unit. Despite seeking extensions for fulfilling the export obligation, a policy Circular No.7/2002 was issued, leading to a demand notice for non-fulfillment of export obligation.

Contentions of the Appellant:
The appellant argued that they complied with all conditions in Circular No.7/2002, except for a procedural condition regarding the names on shipping bills. They contended that this procedural condition could be relaxed, as they had submitted all necessary documents, including no objection certificates and declarations from third parties.

Legal Argument and Precedent:
The appellant relied on a Supreme Court judgment to support their case, emphasizing that non-compliance with a procedural condition should not be fatal. They argued that the documents submitted should suffice to fulfill the procedural requirement, even if the shipping bills did not contain all necessary names.

Respondent's Position and Court's Analysis:
The Central Government Standing Counsel for the respondents highlighted that the appellant failed to provide the required shipping bills with the necessary details. The court noted that the absence of names on the shipping bills made it challenging for the authorities to verify the claims. The court upheld the decision to deny the appellant's claim, citing the importance of complying with the specified conditions, including endorsing the EPCG license number and date on shipping bills.

Judgment and Dismissal:
In light of the arguments presented and the failure to meet the procedural requirements, the court dismissed the writ appeal, finding no error in the decision to reject the appellant's request. The judgment did not award any costs to either party.