MAHENDRA PETROCHEMICALS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) Rule. Mr DN Patel, learned Senior Standing Counsel for the Union of India waives service of Rule for the respondents.

(2.) In this petition under Article 226 of the Constitution, the petitioners have challenged the orders dated 14.5.2003/14.6.2003 passed by the Settlement Commission rejecting the four applications filed by the petitioners under Section 127-B of the Customs Act, 1962 (hereinafter referred to as "the Customs Act").

(3.) The petitioner-Company is a Public Limited Company engaged in the business of manufacture of polyester yarns. The petitioner-Company was also exporting the goods manufactured by it and against the exports, the petitioners were availing the benefit of the Advance Licence Scheme as contained under the Exim Policy of the Government of India. The petitioners obtained Advance Licence dated 15.9.1998 from the Office of the Joint Director General of Foreign Trade, Ahmedabad entitling the petitioners to import 2,62,500 Kgs. of chips and other inputs. The export obligation of the petitioners against the above import was prescribed under the said licence at 2,50,000 Kgs. of yarn valuing US$ 3,12,500. The petitioners thereafter imported the chips under the above licence and filed Bill of Entry dated 14/15.9.1998 for clearance of the imported goods for home consumption. The petitioners showed additional customs duty (CVD) as payable whereas the basic customs duty and special additional duty (SAD) were shown as Nil in the Bill of Entry for the goods imported and cleared for home consumption. It is case of the petitioners that after the above import took place in the year 1998 and immediately after the inputs were removed for home consumption, international prices of yarns became very volatile. As a result of various developments that took place in various countries, mainly South East Asian countries and also countries like China and Taiwan, imported polyester yarn became very cheap to such an extent that the yarns sold by the manufacturers located in countries like China and Taiwan became cheaper than even the price at which the petitioners had imported the chips. The petitioners, therefore, were not in a position to export yarns manufactured by it out of the above referred inputs namely chips. The petitioners, therefore, disposed of the materials in the domestic market and did not export any yarn against the obligations flowing from the above referred advance licence. The petitioners had executed bond and bank guarantees as prescribed under the Exim Policy for the above imports. As the petitioners could not export the goods after importing the above referred materials, by letters dated 14.2.2001, the Deputy Commissioner of Customs, Mumbai invoking the bank guarantees for non-discharge of export obligation. Those letters are produced at Annexure "B" colly. to the petition. The Customs department accordingly encashed the bank guarantees against the petitioners' liabilities for customs duty. The Office of the Director General of Foreign Trade, Ahmedabad issued demand notices dated 12.10.2001 advising the petitioners to pay the Customs Department customs duty on the unutilized imported materials alongwith interest at 24% p.a. thereon and called upon the petitioners to explain why the bank guarantees should (sic - not) be enforced also declaring the petitioners as defaulter thereby disentitling the petitioners to secure any licence/release order in terms of para 71 of the Import Policy 92-97 and in accordance with the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as "the Foreign Trade Act") and the Rules and orders issued thereunder. After calling upon the petitioners to remain present for personal hearing before the Deputy Director General of Foreign Trade on 30.10.2001 at 3.00 PM, the notices concluded with the following paragraph :-