2009 (3) TMI 343 - HC - Customs

Validity of Circular No. 21 of 2007, dated 8-5-2007 issued by the Ministry of Finance, Department of Revenue, Government of India is challenged in this Petition. The petitioner has also challenged the action of the customs authorities in withholding clearance of the edible oil imported by the petitioner as per the licence granted by the DGFT under the Target Plus Scheme contained in the Foreign Trade Policy. - we are prima facie of the opinion that where the licence specifically permits importation of a particular item, it will not be open to the customs authorities to contend that the petitioner is not entitled to import that item under the Import Policy. - As regards the interim relief is concerned, the licences as amended on 10-2-2009 specifically permit the petitioner to import all edible oils classified under chapter 15. As per the policy circular No. 10 dated 5-6-2008 job worker named on the said licences is entitled to process the imported goods and sell the resultant product in the open market. In the present case, it is not in dispute that the edible oil imported by the petitioner is covered under Chapter 15. Hence, prima facie the benefit of Exemption Notification No. 32 of 2005 dated 8-4-2005 applicable to the imports under the Target Plus Scheme cannot be denied to the petitioner. - In this view of the matter, pending the hearing and final disposal of the petition, the respondents are directed to clear the edible oil imported by the petitioner on the petitioner furnishing bond and undertaking to pay the amount if ultimately found payable.

Summary

Issues:
1. Validity of Circular No. 21 of 2007 issued by Ministry of Finance challenged.
2. Customs authorities withholding clearance of edible oil imported under Target Plus Scheme.
3. Interpretation of licensing authority's endorsement permitting importation.
4. Denial of benefit under Exemption Notification No. 32/2005.
5. Nexus requirement under Foreign Trade Policy for duty credit usage.
6. Permissibility of importing edible oil based on Circular No. 21/2007.

Analysis:
1. The petitioner challenged Circular No. 21 of 2007 and customs authorities' actions withholding clearance of imported edible oil under the Target Plus Scheme. The petitioner argued that once the licensing authority endorses a license for importing a specific item, customs cannot oppose it under the Foreign Trade Policy. Legal precedents were cited to support this argument.

2. Customs authorities issued a show cause notice based on Circular No. 21/2007, questioning the import of edible oil and the entitlement to Exemption Notification No. 32/2005. The respondent contended that duty credit usage must align with the exported product and claimed the Circular justified denying benefits to the petitioner.

3. The court acknowledged the licensing authority's endorsement allowing the import of all edible oils classified under Chapter 15. It was observed that the petitioner's license specifically permitted importing edible oil, rejecting the revenue's reliance on a past case where the item imported was not permitted by the license.

4. Considering the amendments to the Handbook of Procedures and policy circulars, the court assessed whether the customs authorities could reject the import of edible oil based on Circular No. 21/2007. The court found that the petitioner was entitled to import edible oil under the Target Plus Scheme and directed the authorities to clear the goods pending final disposal of the petition.

5. The court emphasized that the petitioner's license explicitly allowed importing edible oils under Chapter 15, making them eligible for the benefits of Exemption Notification No. 32/2005. The court directed the authorities to clear the imported edible oil upon the petitioner furnishing a bond and undertaking to pay any amount found payable.

6. The court clarified that the pending writ petition did not prevent the authorities from adjudicating the show cause notice issued earlier. The judgment highlighted the importance of honoring specific endorsements on licenses and ensuring customs authorities do not contradict licensing permissions.