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TMI Blog2013 (9) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... xport obligation. Admittedly, the petitioner had failed to fulfil the export obligation, though, he had imported goods by using the licence. It is also admitted that he paid less duty in terms of the licence by making use of the Scheme. When it is not in controversy that the petitioner had failed to fulfil the export obligation, then, the second respondent is entitled to enforce the terms of the bond. Interest payable as per the terms of the Customs Act is different from the interest payable under the bond executed in terms of the Foreign Trade (Development and Regulation) Act, 1992. If any interest is to be levied under the terms of the Customs Act, undoubtedly, the procedure contemplated under the Customs Act is to be followed by the customs authority to demand customs duty together with interest. But, under the Foreign Trade (Development and Regulation) Act, 1992, though, there is no specific provision for demanding interest in case of violation of terms and conditions of the licence issued under the Act, in terms of the bond such interest could be demanded - Decided against assessee. - W.P. No. 44020 of 2002 - - - Dated:- 21-8-2013 - S. Nagamuthu,JJ. For the Petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied in column (2) of the notification have not been complied with. 6. As per the above said notification, an importer has to fulfil his export obligation within the time prescribed in the licence. The petitioner is a Company, by name, "M/s. FAL Industries Limited", who was manufacturing various products, including Typewriters and Air Purifiers. The petitioner Company was also involved in export of the above products. The petitioner Company obtained licence from the first respondent/Directorate General of Foreign Trade, bearing No.P/CG/2100700, dated 27.08.1992, under the Scheme, known as, "Export Promotion Capital Goods Scheme" (hereinafter referred to as, "The Scheme"). As per the terms of the licence, the petitioner Company could import goods worth CIF value of Rs.64,27,044/-. As per the terms of the licence, the machinery to be imported would be eligible for concessional rate of interest at 15%, in terms of the Customs Notification No. 160/92, dated 20.04.1992. 7. In terms of the above licence, admittedly, the petitioner Company imported materials under Bill of Entry No.44076, dated 22.12.1992, for a CIF value of Rs.59,59,050/- and paid concessional customs duty of Rs.8,68, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel further relies on an unreported judgment of a learned Single Judge of this Court in M/s.Gayathri Stickers vs. The Director General of Foreign Trade (W.P.No. 21948 of 2002), dated 30.10.2012. The learned counsel also relies on two other judgments of the Hon'ble Supreme Court in V.V.S.Sugars vs. Government of Andhra Pradesh and Others, reported in 1999 INDLAW SC 374 and India Carbon Limited and others vs. State of Assam, reported in 1997 INDLAW SC 2083. I will make discussion about these judgments at the appropriate stages of this order. 12. But, the learned Additional Central Government Standing Counsel appearing for the respondents 1 to 3 would vehemently oppose this Writ Petition. According to him, the interest demanded by means of the impugned order is not within the purview of the Customs Act. It is his contention that if any interest is to be demanded as per the provisions of the Customs Act, then, it is for the authority under the Customs Act, to make a demand by following the procedure established in the Customs Act itself. He would tacitly admit that the interest demanded in the impugned order is not in terms of the Customs Act. But, he would submit that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... At the outset, I have to state that there need not be any confusion between the powers of the authorities under the Customs Act and the powers of the authorities under the Foreign Trade (Development and Regulation) Act, 1992. Under the Customs Act, the demand for interest can be made under Section 28-AA of the Act, for the failure to pay the determined customs duty within a period of three months from the date of such determination. Such demand for payment of interest can be made by following the procedure contemplated in the Foreign Trade (Development and Regulation) Act, 1992 and the Foreign Trade (Regulation) Rules, 1993, by the customs authorities. 16. Here in the instant case, the interest has not been demanded by the authorities under the Customs Act, in terms of any of the provisions of the Customs Act. On the contrary, interest has been demanded by the second respondent viz., Deputy Director General of Foreign Trade. There is no controversy before this Court that under the Foreign Trade (Development and Regulation) Act, 1992 and the Foreign Trade (Regulation) Rules, 1993, there is no specific provision empowering the second respondent to demand interest for the failure o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment of the Hon'ble Supreme Court in Rexnord Electronics and Controls Limited vs. Union of India and others, reported in (2008) 12 Supreme Court Cases 156, the case referred to above. That was also a case, where a bond executed in terms of the Customs Notification No. 160/92, dated 20.04.1992 (the notification, which is the subject matter in the present Writ Petition) was considered. In that case, the exporter had executed a bond, thereby, agreeing to pay interest in the event of his failure to fulfil the export obligation. But, he did not pay interest. In the meanwhile, he approached the Settlement Commission under Section 127-H of the Customs Act, for immunity from prosecution and for waiver of imposition of penalty, fine and interest under the Customs Act. The Settlement Commission accepted the said request of the exporter and granted waiver of payment of penalty, fine as well as interest. Aggrieved over the same, the matter was taken up to the Supreme Court. Before the Supreme Court, it was contended that the Settlement Commission, had not authority to waive the interest, which is leviable under the bond executed in terms of the Scheme. It was further contended that as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said amount which is otherwise payable. In any event the appellant is not prejudiced thereby as irrespective of such direction, the appellant was bound to pay the interest payable under the bond." 21. In Rexnord Electronics and Controls Limited case (cited supra), the Hon'ble Supreme Court has referred to a Division Bench judgment of a Bombay High Court in Tanu Healthcare Limited vs. Union of India, reported in (2007) 207 ELT 641 (Bombay), wherein, the Bombay high Court has held that "6....payment of interest under the bond is a contractual obligation and the Settlement Commission has no power to grant immunity to interest covered by such bonds." 22. Thus, from the above judgment, it is crystal clear that the interest payable as per the terms of the Customs Act is different from the interest payable under the bond executed in terms of the Foreign Trade (Development and Regulation) Act, 1992. If any interest is to be levied under the terms of the Customs Act, undoubtedly, the procedure contemplated under the Customs Act is to be followed by the customs authority to demand customs duty together with interest. But, under the Foreign Trade (Development and Regulation) Act, 1992, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lure to fulfil export obligation, the customs authority has got no power to demand interest. Regarding that proposition, as I have already pointed out, there can be no second opinion. That was not a case where payment of interest was made by an authority under the Foreign Trade (Development and Regulation) Act, 1992, in terms of the bond. Therefore, the judgment of the said Division Bench has got no application to the facts of the present case at all. 25. The learned counsel for the petitioner would rely on yet another unreported judgment of a learned Single Judge of this Court in M/s.Gayathri Stickers vs. The Director General of Foreign Trade (W.P.No. 21948 of 2002) (referred to above), dated 30.10.2012. In that case, of course, the learned Single Judge in paragraph No.16 has held as follows:- "16. In the light of the above said order, it is clear that interest cannot be levied on duty amount by the respondents. When the above said order of this Court has not been challenged in appeal, I do not find any merit in the arguments advanced by the learned counsel for the respondents 1 to 3 as well as the impugned order passed by the third respondent. Therefore, as already held by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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