2007 (12) TMI 159 - HC - Customs

DEEC imports - Under Value Based Advance Licence Scheme, any inputs specified in licence could be imported duty free for the CIF value stated in licence - licensee is obliged to export the manufactured drugs to the value & quantity mentioned in the licence since licence doesn t mention CIF value of each input, discharge of bond can t be denied on ground that individual input under separate licences ought to have been imported discharge of bond is allowed as export obligation is fulfilled

Summary

Issues Involved:
1. Compliance with conditions of the export obligation under the Value Based Advance Licence Scheme.
2. Requirement of individual licences for each input.
3. The validity of the compendious licence issued by the licensing authority.
4. Entitlement to discharge the legal undertaking executed for the export obligation.

Detailed Analysis:

1. Compliance with Conditions of the Export Obligation:
The primary issue was whether the respondent complied with the conditions incorporated in the Value Based Advance Licence Scheme and was entitled to get the letter of undertaking discharged. The respondent had imported inputs and exported resultant products within the prescribed period and values as per the licence. The Court found that the respondent had fulfilled the export obligations both value and quantity-wise, and thus complied with the conditions attached to the licence.

2. Requirement of Individual Licences for Each Input:
The appellant contended that the respondent should have applied for separate advance licences for each input and exported the resultant products as per the individual licences. However, the Court observed that neither the licence conditions nor the Duty Exemption Entitlement Certificate required individual licences for each input. The Court noted that the respondent had imported and exported as per the terms of the compendious licence, which did not specify the need for individual licences.

3. Validity of the Compendious Licence Issued by the Licensing Authority:
The appellant argued that the licensing authority should have issued separate licences for each input with specified CIF values. The Court found that the licensing authority, being aware of the exemption scheme, had issued a compendious licence without specifying CIF values for each input. The Court held that it was not open to the appellant to impose new conditions not present in the licence or notification after the issuance of the licence. The Court emphasized that the licensing authority did not take any remedial measures to cancel or modify the licence, which indicated the validity of the compendious licence.

4. Entitlement to Discharge the Legal Undertaking:
The Court concluded that the respondent had complied with all the conditions of the licence and the notification, including the import and export obligations. Therefore, the respondent was entitled to get the legal undertaking discharged. The Court dismissed the appeals, upholding the order of the learned single Judge, which directed the appellants to complete the discharge of the bonds executed by the respondent.

Conclusion:
The High Court of Madras held that the respondent had complied with the conditions of the Value Based Advance Licence Scheme and was entitled to the discharge of the legal undertaking. The Court dismissed the appellant's contention regarding the need for individual licences for each input, emphasizing the validity of the compendious licence issued by the licensing authority. The appeals were dismissed, and the order of the learned single Judge was upheld.