ELECON ENGINEERING CO. LTD. Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioner, a Limited Company, has filed this petition under Article 226 of the Constitution of India seeking a writ of mandamus or any other direction or order directing the respondents to refund a sum of Rs. 3,85,60,727/ - recovered from the petitioner -company by way of encashing the Bank Guarantee issued by the State Bank of India, Anand Branch.

(2.) IT appears that the petitioner entered into a contract with the Maharashtra State Electricity Board (hereinafter referred to as the 'Board') to execute a project at Chandrapur for Coal Handling Plant on turn -key basis. For the purpose of executing the said project, the petitioner -company was required to import certain materials from abroad and accordingly the petitioner -company applied for import licence on 1 -1 -1998. The said licence was issued by the Company Authority on 5 -3 -1998. On the basis of the said li -cence, the petitioner -company imported the necessary material which were utilized for putting up the plant for the Board, It is an undisputed fact that the said import was permitted to be carried out by virtue of Notification No. 36/97 -Cus. dated 11 -4 -1997 as amended by Notification No. 67/97 -Cus., dated 8 -9 -1997 and Notification No. 57/98 -Cus., dated 13 -7 -1998, which was issued under the provisions of Sub -section (1) of Section 25 of the Customs Act, 1962. By virtue of the said notification, the petitioner was exempted from paying custom duty which was otherwise leviable on import of goods. As per one of the conditions for importing the goods, the petitioner was required to execute a Bank Guarantee and furnish the same to the respondent -Department so as to ensure that in the eventuality of the petitioner -company becoming liable to pay the customs duty under the provisions of the Act, the interest of the Department would be protected.

(3.) MR . J.G. Shah appearing on behalf of the petitioner -company assailed this action of the Department on two fold grounds, firstly that the Department had failed to follow the statutory procedure and adjudicate the liability which can be fastened on the petitioner -company before encashing the Bank Guarantee and secondly that the project for the Board had already been completed and in light of the same, as the goods have been used for the project which had originally been funded by a multilateral foreign agency, the petitioner was entitled to the exemption which it had availed of under the aforesaid notification.