2012 (9) TMI 82 - HC - Customs

Disentitlment to the benefit of the DEPB credit - the shipment could not be completed by a cut-off date for the Let Export Order mentioned by the circular dated 22-9-2011, i.e 30th September, 2011 - Held that - The petitioner is disentitled to the benefit of the DEPB scheme by virtue of a restriction imposed on 22-9-2011, made effective nine days later. To inflict such an arbitrary condition, which is declared to be legally unsustainable, and yet insist that during the interregnum a fresh condition operates to deny the citizen the relief he is justly entitled to, is unfair and unreasonable. Furthermore the respondents are also wrong in contending that the issuance of the Tribunal s order on 8-12-2001 does not constitute a valid reason in terms of the circular dated 22-9-2001 warranting manual endorsement on the LEO after 30-9-2011. In this case, the goods were neither detained, nor were subject to proceedings which culminated in any assessment order, in these circumstances, the insistence that the petitioner continue to maintain a bank guarantee for Rs. 2 crore is unwarranted. The customs authorities did not show how this condition, in addition to the bond insisted in the case of the shipment, was essential as the samples necessary for the investigation and issuance of show cause notice, if any, had been drawn. The goods were exported and the consideration was received in respect of the earlier shipments covered by the three bills bank realization certificate towards export proceeds in respect of the said shipping bills were received on 06.07.2011. In the circumstances, it would be unreasonable and unfair for the respondents, to continue to insist that the Bank guarantee for the amount of Rs. 2 crores should be maintained - the respondents are directed to treat the export in respect of the shipping bill dated 15-6-2011 as eligible to benefit of the DEPB scheme, and having been exported under it, on LEO basis - in favour of assessee.

Summary

Issues Involved:
1. Provisional release and export of goods.
2. Requirement and waiver of bank guarantee.
3. Compliance with DEPB Scheme deadlines.
4. Legality of Customs Authority's actions and conditions.

Issue-wise Detailed Analysis:

1. Provisional Release and Export of Goods:
The petitioner, an export house, sought directions against the Customs Authority for the provisional release and export of its goods pursuant to the CESTAT order dated 08.12.2011. The petitioner had filed multiple shipping bills for the export of fabrics valued at approximately Rs. 9.25 crores. Initially, the goods were detained for investigation. However, the Customs Authority allowed the export of these consignments on the execution of a bond with a bank guarantee of Rs. 2 crores. Further, another shipping bill filed on 15.06.2011 was also detained but later released provisionally on similar conditions.

2. Requirement and Waiver of Bank Guarantee:
The petitioner requested the waiver of the bank guarantee condition, citing a letter from the Deputy Commissioner Export (SIIB), ICD-Tuglakabad, which stated that goods not seized or confiscated should be provisionally cleared. Despite the petitioner's representation, the Customs Authority did not release the goods, leading to a writ petition. The Commissioner rejected the waiver request and maintained the requirement for a bank guarantee. The petitioner appealed to the CESTAT, which found the requirement of furnishing a bank guarantee to the extent of 25% of the bond amount unjustified. The CESTAT held that the earlier bank guarantee of Rs. 2 crores should suffice for the present consignment as well.

3. Compliance with DEPB Scheme Deadlines:
Despite the CESTAT's order, the Customs Authority refused to permit the export under the DEPB Scheme, citing a circular dated 22.09.2011, which stated that exports under the DEPB Scheme were only valid if the Let Export Order (LEO) was issued by 30.09.2011. The petitioner argued that the condition imposed by the Customs Authority prevented the timely issuance of the LEO, and thus, the circular should not apply retroactively to their case.

4. Legality of Customs Authority's Actions and Conditions:
The court found that the Customs Authority's actions undermined the permission granted earlier for export. The imposition of the bank guarantee condition, later deemed unjustified by the CESTAT, prevented the petitioner from meeting the DEPB Scheme deadline. The court deemed the Customs Authority's insistence on the bank guarantee and subsequent denial of DEPB benefits as arbitrary and unreasonable. It was highlighted that the circular dated 04.01.2011 emphasized the prompt handling of detained goods and the avoidance of unnecessary delays.

Conclusion:
The court directed the Customs Authority to treat the export under the shipping bill dated 15.06.2011 as eligible for DEPB Scheme benefits and to release the bank guarantee of Rs. 2 crores for the earlier shipment. The writ petition was allowed, with the court finding the Customs Authority's conditions and actions unjustified and arbitrary.