2006 (8) TMI 54 - SC - Central Excise

EXIM-Export obligation not fulfilled which is imposed under Notification 204/92-Cus.-Transfer of imported material to another transferable licence holder High Court take action regarding regularization of non-fulfilment of export obligation

Issues:
1. Allegation of arbitrary and illegal actions by appellants against respondents.
2. Dispute over surrender of imported raw material and export obligations.
3. Interpretation of export and import policy provisions.
4. Allegations of fraudulent evasion of duty under the Customs Act.
5. High Court directions for regularization of export obligation default.
6. Non-compliance with High Court directions by Union of India.
7. Court's directive for decision on respondents' representation and stay on coercive actions.

Analysis:
1. The respondents filed writ petitions alleging arbitrary and illegal actions by the appellants, seeking relief under various constitutional and fundamental rights provisions. The dispute arose when coercive steps were initiated against the respondents for alleged violations under the Customs Act and Foreign Trade Act. The respondents claimed they were detained, while the appellants argued it was for interrogation purposes.

2. The case involved a dispute regarding the surrender of imported raw material and meeting export obligations. The respondents imported Polyester Filament Yarn (PFY)/Partial Oriented Yarn (POY) under an advance license scheme but faced challenges in exporting the goods due to market conditions. They sought permission to sell or surrender the raw material, which was contested by the authorities citing restrictions under the export and import policy.

3. The interpretation of provisions in the export and import policy was crucial in this case. The authorities asserted that the duty-free raw material imported must be used for manufacturing goods for export and could not be disposed of without fulfilling export obligations. The respondents' actions were deemed to contravene these policy provisions, leading to allegations of fraudulent evasion of duty.

4. Allegations of fraudulent evasion of duty under the Customs Act were made against the respondents for diverting imported material to the domestic market without paying customs duty. A case was registered for the same, highlighting the seriousness of the alleged violations.

5. The High Court provided directions for regularization of the default in export obligations, emphasizing the possibility of seeking relief under para 128 of the scheme. The Court directed the authorities to issue demand notices for duty recovery and instructed the respondents to file representations for regularization within a specified timeframe.

6. The Union of India failed to comply with the High Court directions regarding issuing demand notices for duty recovery. The respondents claimed to have filed representations as per the Court's directive, but the authorities contested receiving them, leading to a lack of progress in resolving the dispute.

7. The Court directed the department to decide on the respondents' representation within three months and stay coercive actions until a decision was made. Clarifications were provided regarding the interim order's implications, emphasizing the need for compliance with the Court's directives while allowing investigations to proceed.

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