2025 (2) TMI 386 - HC - Customs

Issuance of SCN issued by the Director General of Foreign Trade (DGFT) u/s 14 of the Foreign Trade (Development and Regulation) Act 1992 (FTDR Act) and subordinate law thereunder - Essar availed of the benefits under the Foreign Trade Policy 2004-2009 (FTP) by furnishing information making declarations and relying on certificates that were allegedly wrong - HELD THAT - A careful scrutiny of the Impugned SCN shows that it does not allege any mis-statement other than the assertion by Essar that the SFIS File was in conformity with the SFIS. Such an approach in the Impugned SCN is directly in the teeth of the DB Judgement and is completely untenable. There are no hesitation in holding that the Impugned SCN is covered by res judicata and is unreasonable and arbitrarily attempts to re-open an issue already closed. The Recovery Notices having been quashed the Impugned SCN is a circumvention of the effect of such quashing. Petition disposed off.

Summary

The Bombay High Court rendered a judgment in a Writ Petition challenging a show cause notice issued by the Director General of Foreign Trade (DGFT) to Essar Shipping Ltd. The notice alleged that Essar availed benefits under the Foreign Trade Policy 2004-2009 by providing misleading information. The court analyzed the case in detail as follows:**Issues Presented and Considered:**1. Whether the show cause notice issued by the DGFT to Essar Shipping Ltd. should be quashed.2. Whether the Policy Circular issued by the DGFT regarding the qualifications for duty credit scrips under the Served from India Scheme (SFIS) was correctly applied.3. Whether the Recovery Notices seeking recovery of Customs Duty benefits from Essar were valid.**Issue-Wise Detailed Analysis:**- The court examined the relevant legal framework, including the Foreign Trade (Development and Regulation) Act, 1992 and the SFIS under the Foreign Trade Policy.- The court interpreted the Impugned SCN as being based on a misreading of a previous judgment by a Division Bench of the court.- Key evidence included the SFIS File submitted by Essar and the Policy Circular issued by the DGFT.- The court applied the law to the facts by analyzing the implications of the Policy Circular on Essar's eligibility for duty credit scrips.- Competing arguments centered around the interpretation of the Policy Circular and its retrospective application.- The court concluded that the Impugned SCN was untenable and deserved to be quashed due to the misinterpretation of the previous judgment and the lack of new evidence justifying its issuance.**Significant Holdings:**- The court held that the Impugned SCN was covered by res judicata and attempted to re-open a closed issue unreasonably.- The court found that the Recovery Notices had been quashed, rendering the Impugned SCN a circumvention of the previous ruling.- The court emphasized that the Policy Circular was intended to be prospective and did not allow for the re-opening of settled claims.- The court quashed the Impugned SCN and ruled in favor of Essar Shipping Ltd.The judgment established the principle that settled and closed claims cannot be re-opened based on subsequent policy changes. It clarified the application of the Policy Circular and upheld the finality of the previous judgment in determining Essar's eligibility for duty credit scrips. The court's decision to quash the Impugned SCN was based on the lack of new evidence and the attempt to re-litigate a previously settled matter.