GAYATHRI STICKERS Vs. DIRECTOR GENERAL OF FOREIGN TRADE

JUDGEMENT

(1.) THE present writ petition has been directed against the impugned order passed by the third respondent, Foreign Trade Development Officer, Ministry of Commerce in File No. 20/1180/54/EPCG -III/1474, dated April 22, 2002 to quash the same since the third respondent called upon the petitioner to pay interest within 30 days from the date of the receipt of the same indicating further therein on failure to comply with the above requirement, penal action will be initiated under section 11(2) of the Foreign Trade (Development and Regulation) Act. The case of the petitioner is that the petitioner obtained a licence bearing No. 2133619, dated November 28, 1994 under a scheme called "Export Promotion Capital Goods Scheme" from the first respondent for importing various machinery to manufacture greeting cards and paper stickers. The said licence was issued for CIF value of US Dollars 1,97,537 for a period of 24 months to import the above said machines. The condition imposed in the licence is that the petitioner shall export greeting cards, and paper stickers for a value of US Dollars 7,90,148, i.e., fours times the CIF value of the goods permitted to be imported in terms of the above licence within a period of five years.

(2.) IT was further submitted that the goods covered by the above licence are eligible to be imported at concessional rate of customs duty in terms of Customs Notification No. , dated April 20, 1992. As per the said notification, the duty leviable is only 15 percent subject to the condition that the petitioner -firm exports the goods as stipulated in the licence issued to them. The petitioner has to execute a bank guarantee with the first respondent for availing of concessional duty. Accordingly, the petitioner through Karur Vysya Bank Ltd., Tirupur executed a bank guarantee in favour of the first respondent. In terms of the bank guarantee executed by the petitioner -firm in favour of the first respondent, the petitioner -firm undertook to pay duty, which is leviable on the goods imported, in case, the petitioner -firm fails to meet the export obligation as stipulated in the licence and customs notification referred to above.

(3.) HOWEVER , due to unforeseen circumstances and for reasons beyond its control, the petitioner -firm could not export greeting cards and paper stickers as per the conditions mentioned in the above -said licence. Therefore, the bank guarantee executed by the petitioner -firm was enforced and a sum of Rs. 18 lakhs towards duty liability was realised by the fifth respondent. Subsequently, the petitioner issued a show -cause notice, vide File No. S45/51/1995, dated nil calling upon the petitioner -firm to show cause as to why a duty amount of Rs. 41,54,913 should not be confirmed as payable by the petitioner -firm for non -compliance of the export obligation. It is further stated in the said notice that interest at 24 percent is also levied on the duty amount payable by the petitioner till December 31, 1999 indicating that the total amount is Rs. 90,53,112 and after deducting the amount of Rs. 18,00,000, which was realised by enforcing the bank guarantee, a balance amount of Rs. 72,53,112 is proposed to be recovered from the petitioner -firm. On receipt of the said show -cause notice, the petitioner -firm submitted its reply stating that only because of the failure to export the goods as per the condition mentioned in the licence, the duty was levied by the fifth respondent. It is further stated in the reply that in terms of Customs Notification No. 61/1994, dated March 1, 1994, the firm is eligible for payment of customs duty at 25 percent, on various machinery imported by them and accordingly the duty payable is only Rs. 27,19,637. The duty already paid at the time of clearance was Rs. 9,37,198 and therefore, the balance duty payable is Rs. 17,82,439. Since the bank guarantee has been enforced and an amount of Rs. 18,00,000 was realised by the fifth respondent and the petitioner -firm has already paid the duty amount, the fifth respondent has to refund a sum of Rs. 17,561 to the petitioner. The calculation of duty payable by the petitioner -firm is as follows: