ESSAR STEEL LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) By this petition under Art. 226 of the Constitution of India, the petitioner seeks the following substantive relief :

(2.) The facts stated briefly are that the petitioner is a Public Limited Company incorporated under the Companies Act, 1956 and is inter alia, engaged in the business of manufacturing steels, including hot rolled coils,sheets and plates. The petitioner entered into agreements for sale of 10,867.359 M.Ts. of different grades of steel products, including galvanized coils and hot rolled plates (the subject goods) with Liberty Commodities Ltd. (the foreign buyer) on various dates. The export sale value was about Rs. 48.54 crore. Under the contract, the seller was to communicate cargo readiness to the buyer who was to nominate a vessel within the time stipulated for the purpose and in the event the buyer did not place the vessel within 15 days of cargo readiness, the seller would be entitled to claim the proceeds under the letter of credit; and that on full payment being realised as per the invoice the title of the goods would stand transferred to the buyer. The petitioner cleared about 10,867 M.Ts. of G. P. Sheets/coils of varying thickness from its manufacturing facility at Hajira for exports without payment of duty. The clearances were made under 267 ARE-l's during the months of June and July, 2008, without payment of duty against bond/letter of undertaking, and the cleared goods were stored at Pre-Shipment Storage facility of Mumbai Port Trust. It is averred in the petition that the goods were delivered to the shipping agent of the buyer at Mumbai Port and on fulfilment of the cargo readiness, the consideration for sale was recovered under the letter of credit in respect of the commercial invoices raised by the petitioner on the buyer. In terms of the contract between the petitioner and the foreign buyer, the buyer was to pay value before actual exports and nominate vessel for lifting the goods as the said contract was F.O.B. However, the buyer did not thereafter physically export the subject goods from the port. The steep fall in prices due to global financial crisis resulted in the cancellation of the re-sale orders of the buyer which led to the goods not being exported and as a consequence thereof, the petitioner could not produce proof of export as contemplated under Notification No. 42 of 2001. Moreover, on account of delay in nomination of the vessel detention and demurrage charges were levied by Mumbai Port on the buyer.

(3.) Since, the petitioner could not produce proof of export as contemplated under Notification No. 42 of 2001, as amended from tinte to time, within a period of six months prescribed therein, the petitioner addressed a letter dated 22nd January, 2009 to the respondent No. 2 seeking extension of time for submission of proof of export. However, the said respondent vide letter dated 20-3-2009 rejected the request for extension and raised duty demand of Rs. 6,99,99,589/- along with interest from the date of removal of goods for export from the petitioner on the ground that proof of export had not been submitted by it. The petitioner reiterated the request for extension vide letter dated 27-3-2009, whereupon the respondent No. 2 granted one-time extension of six months for submitting proof of export vide letter dated 16-4-2009. It appears that in the meanwhile, representations were made by the buyer to the Mumbai Port for remission/waiver of the demurrage and detention charges mainly on the ground that the accrued liability was more than the value of goods itself. Since, the goods were not yet exported, the petitioner made another application vide letter dated 8-6-2009 for further extension of time for furnishing proof of export, which came to be refused vide letter dated 10-6-2009. Vide letter dated 3-7-2009, the petitioner was directed to pay central excise duty of Rs. 5,82,87,812/- along with interest, being the duty payable on dutiable sheets (G. P. Sheets) cleared for export without payment of duty under bond/L.U.T. in respect of which, proof of export had not been produced.