KERALA HOTELS PVT. LTD. Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) THE petitioner is a Private Limited Company engaged in the hotel business. They have two hotels one at Thiruvananthapuram and the other at Kuttalam. Under the Central Government Foreign Trade Policy, the Government decided to facilitate technological and infrastructural upgradation for the purpose of attaining internationally accepted standards of productivity. With the said object in view the Government decided to grant licences for the import of capital goods for use in manufacturing items for export and also to service sectors to develop infrastructure and quality of service with the object of earning more foreign exchange. To achieve the above objective it has been proposed to promote concessional rate of customs duty against bank guarantee or bond for import of certain articles. Under the scheme, the second respondent is the highest authority to issue licences and to regulate and control the import of capital goods in actual user condition. The petitioner being engaged in the hotel industry had sought permission for import of two cars. Permission was granted to the petitioner and the petitioner accordingly imported two cars manufactured by Mercedez Benz of Germany. The first car was imported on 17 -2 -2003 and the other on 19 -6 -2004. The applications submitted by the petitioner are Exts. P1 and P1(a) respectively. The motor cars were imported for providing service to hotel industry and earning foreign exchange. The licences issued to the petitioner are Exts. P2 and P2(a). It is the case of the petitioner that, as per the terms of the import the petitioner was to earn foreign exchange worth US $ 4,84,570 which is five times the value of the capital goods on FOB basis imported as per Ext. P2. The foreign exchange was to be earned within a period of eight years. Under Ext. P2(a), the required foreign currency expected is fixed at US $ 3,74,653. The petitioner executed a bank guarantee to the extent of 95% of the normal customs duty that was expected to be earned. The copies of the bank guarantee are Exts. P3 and P3(a) in WPC 29077/2006. Accordingly the cars were imported and were being used by the petitioner pursuant to installation certificates Exts. P4 and P4(a). While so, by Ext. P5 notification dated 14 -6 -2006 the Government of India notified that the vehicle so imported would have to be registered as a tourist vehicle. Thereupon, the second respondent required the petitioner to submit his Export Promotion Capital Goods (EPCG) licence for making necessary endorsements regarding the registration of the car as a tourist car. The petitioner objected to the same explaining that the notification had no retrospective effect and that for the said reason it was not necessary for the petitioner's vehicles to be registered as tourist vehicles. Under protest, the petitioner produced his licence and an endorsement was made thereon to register the vehicle as a tourist taxi. In the meantime, the petitioner was served with a detention order Ext. P7 in respect of his vehicle and a restraint order Ext. P8. Since the said orders prevented the petitioner from using the vehicle for the purposes for which they were imported the petitioner approached this Court by filing WPC 29077/2006. The writ petition was admitted and an interim order of stay was granted on 7 -11 -2006. The said order continues to be in force till date.

(2.) WPC 14472/2007 has been filed by the petitioner challenging Ext. P12 show cause notice which according to him, is not warranted, in the face of the interim order passed by this Court in the earlier writ petition. As per Ext. P12, it has been alleged that the petitioner was guilty of violations of the conditions subject to which the vehicles were imported and therefore, he has been directed to show cause why the imported cars should not be confiscated, why the bank guarantees should not be enforced, why interest should not be recovered under Section 28 of the Customs Act, 1962, why penalty should not be imposed under Section 112 of the Customs Act, 1962, why penalty should not be imposed on the petitioner in his personal capacity under Section 114A/112 of the Customs Act, 1962 and failing which, action was proposed to be pursued as notified. The petitioner has sought for the issue of appropriate directions, quashing Ext. P12. The said writ petition was admitted on 24 -5 -2007 and an order of interim stay granted in the case continues to be in force.

(3.) IN all the three writ petitions separate counter affidavits have been filed. I have heard Adv. D.S. Sreekumaran who appears for the petitioner in all the writ petitions as well as Adv. Thomas Mathew Nellimoottil who appears for the respondents and Adv. Pauly Mathew Muricken who appears for the fifth respondent Bank in WPC 7065/2011.