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TMI Blog2011 (3) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the licence holder - The larger Bench decision of the CESTAT dated 18/1/2008 and the Division Bench decision of the CESTAT dated 11/5/2010 to the extent they hold that the licensing authorities do not have the power to amend the licence with retrospective effect from the date of granting the licence, set aside - The decision of the customs authorities seeking to recover duty with interest and penalty on the footing that the petitioner has violated condition No.5 of Notification No.29/97 is quashed and set aside. - 9259 OF 2010 - - - Dated:- 16-3-2011 - J.P. DEVADHAR, MRS. R.S, DALVI, JJ. Mr. V.Shridharan with Mr. Prakash Shah, Advocates i/b. PDS Legal for the petitioner. Mr.A.J.Rana, Senior Advocate with Mr. A.S.Rao, Mr. Pradeep Jetly, Advocate JUDGMENT (PER J.P. DEVEDHAR, J.) 1) Rule, returnable forthwith. By consent, petition is taken up for final hearing. 2) The petitioner is aggrieved by the decision of the CESTAT dated 11/5/2010 as also the larger Bench decision of the CESTAT dated 18/1/2008, wherein it is held that the licensing authorities do not have the power to amend the licence with retrospective effect. 3) The petitioner is engaged i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the capital goods imported and that they can approach the customs authorities for release of BG/LUT executed by the petitioner. 7) In the meantime, by an order in original ('OIO') dated 27/2/2001, one of the show cause notice was adjudicated and it was held that the failure to import capital goods worth Rs.20 crores under zero duty EPCG licence was in violation of condition No.5 in Notification No.29/97 and, therefore, the petitioner was liable to duty, interest and penalty. 8) The petitioner challenged the OIO dated 27/2/2001 by filing an appeal before the CESTAT. During the pendency of appeal, since the zero duty EPCG licence was converted into 10% duty EPCG licence by order dated 8/9/2003, the question arose as to whether the conversion of licence would apply retrospectively. The Division Bench of CESTAT referred the matter to the larger bench for decision on the following issues:- "(i) Whether DGFT has powers to amend the licences includingthe re-validation (obviously referring of a situation wherevalidity is expired) and whether amendment will beretrospective in nature ? (ii) Whether as to the amendment carried out by the DGFT,whether right or wrong can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and imposed penalty. The object of making an application for conversion of the licence after the expiry of the licence period was obviously with a view to overcome the difficulty in complying with condition No.5 in Notification No.29/97. 16) The fact that the licensing authorities as also the EPCG Committee which consists of both the licensing authorities as well as the customs authorities have permitted conversion of licence even after the licence had expired long back, clearly shows that the said conversion was allowed obviously with a view to enable the petitioner to overcome the condition No.5 of Notification No.29/97. Although the petitioner had obtained zero duty EPCG licence with a view to import capital goods worth Rs.20 crores, in view of the changed market conditions, the petitioner could not import capital goods exceeding Rs.12.5 crores. Condition No.5 in Exemption Notification No.29/97 provides that where the zero duty EPCG licence holder does not import capital goods worth Rs.20 crores then the entire duty with interest would be recoverable on the quantity of imports made under the said licence. Accordingly, the customs authorities had demanded duty with interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities cannot challenge the powers of licensing authorities to amend the licence and on the other hand holds at the instance of the customs authorities that the licensing authorities do not have the power to amend the licence retrospectively. Such an order of the CESTAT which is mutually contradictory cannot be sustained in so far as it holds that the licensing authorities do not have the power to amend the licence retrospectively. 21) Strong reliance was placed by Mr. Jetly on the decision of the Punjab Haryana High Court in the case of Vikrant Overseas V/s. Union of India reported in 2000 (123) ELT 486 (P H). In that case, the licence was amended by the licensing authority to the prejudice of the licence holder. In that context, it was held that the licence cannot be amended retrospectively so as to make the imports already made pursuant to the licence illegal. In the present case, the licence is converted at the instance of the licence holder that too much after the expiry of the licence period and much after the customs authorities initiated action for not complying with the condition No.5 in the Notification No.29/97. Therefore, it is clear that the conversion of li ..... X X X X Extracts X X X X X X X X Extracts X X X X
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