2022 (12) TMI 455 - HC - Customs

Invocation of bank guarantee - non-redemption of Export Promotion Capital Goods (EPCG) authorisations which was availed of earlier - HELD THAT - The Petitioner had originally obtained 58 EPCG Authorisations out of which 33 were redeemed by it. The Petitioner had further surrendered 3 authorisations. At the time when the said writ was considered, 22 authorisations were remaining. The Court after considering the fact that foreign tourism was almost at a nil position during the pandemic had directed the Petitioner to approach the Director General of Foreign Trade (DGFT) by way of a representation. The invocation of the bank guarantee for non-redemption of the EPCG was also stayed by this Court - The representation filed by the Petitioner is still pending and has not been decided. Mr. Rao, ld. Sr. Counsel for the Petitioner submits that thereafter, five more EPCG have been redeemed and there are only 17 which are remaining. In the present writ petition, it is the grievance of the Petitioner that recently, letters have been issued by the Department of Revenue, Office of the Commissioner of Customs- Import, in violation of this Court s orders, invoking the bank guarantee submitted by the Petitioner without considering the Petitioner s representation. Further, it is the case of the petitioner that two weeks advance notice, in terms of the order extracted above, has not been given to invoke the bank guarantee - the enforcement of the invocation has been kept in abeyance by the Customs Authority. Mr. Vineet Malhotra, ld. Counsel appearing for DGFT submits that the representation is still pending and if a time bound schedule is fixed by this Court, the representation would be decided within the said period. The writ petition is disposed off.

Summary

Issues:
1. Invocation of bank guarantee due to non-redemption of Export Promotion Capital Goods (EPCG) authorizations.
2. Compliance with court orders regarding bank guarantee invocation.
3. Pending representation with the Director General of Foreign Trade (DGFT) for extension of EPCG authorizations.

Issue 1: Invocation of bank guarantee due to non-redemption of EPCG authorizations:
The petitioner, a hospitality company operating a hotel, approached the court due to the invocation of a bank guarantee by the Department Commissioner of Customs for non-redemption of EPCG authorizations. The court had previously directed the petitioner to approach the DGFT for a representation regarding the impact of the COVID-19 pandemic on fulfilling export obligations. The court stayed the bank guarantee invocation pending a decision by the DGFT. The petitioner later redeemed additional EPCGs, reducing the remaining authorizations to 17. The petitioner's grievance in the current writ petition was that the bank guarantee was invoked without considering their representation and without the required two weeks' notice as per the court's order.

Issue 2: Compliance with court orders regarding bank guarantee invocation:
The court clarified that the Customs Authorities had kept the enforcement of the bank guarantee invocation in abeyance upon being notified of the court's orders. The court directed that the pending representation, along with the previous writ petition, be considered as one by the DGFT, and a decision should be made by January 31, 2023. The court further directed that the bank guarantee should not be invoked without two weeks' advance notice to the petitioner. If the petitioner redeems further EPCGs during this period, it should be brought to the notice of the DGFT. In case the representation is rejected, the petitioner would have four weeks to avail of remedies, during which the bank guarantees should not be invoked.

Issue 3: Pending representation with the DGFT for extension of EPCG authorizations:
The court consolidated the pending representation with the DGFT and directed a decision by January 31, 2023. The court emphasized that the bank guarantees should not be invoked without prior notice to the petitioner. If the petitioner redeems additional EPCGs during this period, it must inform the DGFT. In case the representation is rejected, the petitioner would have four weeks to pursue legal remedies without the bank guarantees being invoked.

In conclusion, the court addressed the issues of bank guarantee invocation, compliance with court orders, and the pending representation with the DGFT, providing detailed directions to safeguard the petitioner's interests and ensure a fair decision-making process.