2000 (5) TMI 41 - HC - Customs

Summary

Issues:
Renewal of private bonded warehouse license, duty imposition on certain items, requirement of export for manufacturing under Customs Act.

Renewal of Private Bonded Warehouse License:
The petitioner held a private bonded warehouse license issued by the 2nd respondent, allowing manufacturing of boats and launches under customs supervision using imported parts. The license was periodically renewed, with the last renewal on 28-7-1998. The petitioner applied for renewal before the expiry on 24-7-1999. However, the 2nd respondent directed the petitioner to export boats/launches containing 50% of the imported materials for renewal consideration. The petitioner challenged this direction as illegal, arbitrary, and contrary to the Customs Act, stating that specific exemption under Section 25 cannot be curtailed by executive instructions. The court noted that renewal under Section 58 is distinct from export requirements under Section 65, and upheld the authorities' right to ask for an export undertaking before renewal consideration.

Duty Imposition on Certain Items:
The 2nd respondent imposed a duty of Rs. 28,79,682 on items used in manufacturing launches, alleging they were not eligible for exemption under Notification 23/98. The petitioner contended that the duty imposition was unjustified as they had been availing exemption under notifications. The court held that since the petitioner failed to comply with the export requirement of at least 50% of raw materials, they cannot claim the benefit of exemption. The court emphasized that Sections 58, 65, and 66 of the Customs Act must be read together, and the authorities were justified in asking for an export undertaking before renewal consideration.

Requirement of Export for Manufacturing under Customs Act:
The court referred to Section 65 of the Customs Act, which allows manufacturing in a warehouse subject to conditions. The petitioner's license for in-bond manufacturing required compliance with conditions, including export of at least 50% of raw materials. The court noted that the petitioner failed to export as mandated, rendering them ineligible for exemption benefits. The court emphasized that compliance with export conditions is essential for availing exemptions under the Customs Act. Consequently, the court dismissed the writ petition, stating that the petitioner must comply with conditions for renewal and cannot enrich themselves unjustly by disregarding export obligations.