Air Travel Bureau Ltd & Another vs Union Of India
2011 Latest Caselaw 16 Del

*           IN THE HIGH COURT OF DELHI AT NEW DELHI


+            WRIT PETITION (CIVIL) NO. 3739 OF 2010


AIR TRAVEL BUREAU LTD & ANOTHER ....Petitioners.
                      Through Mr. Sushil Kumar, advocate.

                             VERSUS

UNION OF INDIA                             .....Respondent.
                          Through Mr. Mukesh Anand, advocate.



CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE SANJIV KHANNA


                             ORDER

% 04.01.2011

The petitioner no.1-Air Travel Bureau Ltd. avers that it is a

travel agency and for the purpose of its business activities had

imported five cars subject matter of the present petition, under the

Export Promotion Capital Goods Scheme (hereinafter referred to

as EPCG, for short) under the Foreign Trade Police 2002-07. The

four licenses, for import of the said cars were issued by the

Director General of Foreign Trade (hereinafter referred to as

DGFT, for short). As under the EPCG Scheme the cars had been

imported by the petitioner no.1 at concessional/reduced rate of

W.P.(C) NO.3739/2010 Page 1 customs duty being a service provider, and subject to the condition

that the service provider shall generate export obligation equal

to/worth five or eight times, depending upon the Circulars issued

from time to time, the CIF value of the capital goods on FOB basis

within a period of eight years from issue of the licences.

2. The petitioner no.1 had at the time of customs clearance on

reduced/concessional rate of duty had given bonds and bank

guarantees of total value of Rs. 1.73 crores, as per the following

details:-

License No. Date of Bank Guarantee Date of issuance Amount of Bond amount obtaining/no. of Bank Bank applying Guarantee Guarantee 0530133531 20.11.2002 200311 16.06.2003 Rs. 42,85,000 Rs. 43,80,000 IBGF0144 0530133993 25.03.2003 1113/2003 18.06.2003 Rs. 39,35,000 Rs. 44,40,000 0530133994 26.03.2003 1130/2003 1.10.2003 Rs. 35,36,000 Rs. 63,00,000 0530134159 12.05.2003 1131/2003 1.10.2003 Rs. 35,10,000 Rs. 35,36,000

3. By way of the present petition, the petitioner no.1 has

challenged and made prayers for quashing the two show cause

notices both dated 3rd May, 2010 issued by the Commissioner of

Customs, ICD Tughlakabad, under Section 124 of the Customs

Act, 1962 (hereinafter referred to as the Act, for short) and for

quashing the proceedings arising therefrom. The petitioner no.1

has also prayed for return of the four bank guarantees and

W.P.(C) NO.3739/2010 Page 2 cancellation of the bonds given by the petitioner nos.1 and 2 to the

Customs Department at the time of release of the cars.

4. In the show cause notices, allegations have been made that

the petitioner no.1 was required to install or use the capital goods,

i.e. the cars for specific purpose, which it appears was not

complied with and the petitioner no.1 had not fulfilled the export

obligation imposed on them. It is alleged that the imported cars

were not exclusively earning the requisite foreign exchange. It is

also alleged that the Export Obligation Discharge Certificate

(hereinafter referred to as EODC, for short) issued by DGFT is not

acceptable to the Customs Department.

5. The petitioner no.1 has challenged the said show cause

notices on the ground that DGFT had issued Circular no.7 dated

7th May, 2008 wherein it was postulated that the cars/vehicles

imported under EPCG Scheme by the service provider should be

registered as tourist vehicles if EODC has not been obtained by

30th June, 2008. But by further clarification dated 26th September,

2008, DGFT has specified that this condition was not applicable to

those who have applied for EODC by 30th June, 2008 and they are

therefore protected. It is further alleged that in 2004, the petitioner

had faced enquiry conducted by Director of Revenue Intelligence

W.P.(C) NO.3739/2010 Page 3 (hereinafter referred to as DRI, for short) but no show cause notice

was issued to the petitioner no.1 in respect of the five cars, subject

matter of import licence mentioned above. Lastly, reliance is

placed upon the decision of this Court dated 3rd August, 2010 in

Customs Appeal Case No. 5 and 6 of 2009 dismissing the appeal

filed by the Commissioner of Customs assailing Order dated 16th

December, 2008 passed by Customs, Excise and Service Tax

Appellate Tribunal, New Delhi in respect of the two cars which

were imported under licence dated 17th September, 2002.

6. Department of Customs has contested the present petition

and has filed a counter affidavit pointing out that the role of DGFT

and Department of Customs is distinct and governed by different

provisions of law. The licences were issued by DGFT but

operationalised by Customs for which separate notification is

issued under the law. As per Clause (ii) of para 4 of the

Explanation given to Notification no.44/2002-cus. it is submitted,

that the Customs Department has full right and authority to

examine whether or not the petitioner no.1 has fulfilled the export

obligation in compliance with the terms of the import or has

violated the conditions of Notification no.44/2002-cus.

W.P.(C) NO.3739/2010 Page 4

7. Reliance is also placed by the Customs Department on

Sheshank Sea Foods Pvt. Ltd. versus Union of India (1996) 11

SCC 755. Referring to this judgment in Customs Appeal Case No.

5 and 6 of 2009, the Division Bench of this Court in the judgment

dated 3rd August, 2010 has observed :

"6. Once we apply this yardstick to the facts of the present case, the conclusion would be that the respondents have been able to fulfil the obligation under EPCG license as pointed above, which was the very condition imposed in the said license by the DGFT. DGFT has redeemed the license and has taken the view that the respondents have fulfilled their export obligation. No doubt, the opinion of the DGFT would not be conclusive and any such certificate cannot press the power of the authority to reopen even a concluded matter it if is shown that the such conclusion was vitiated by fraud concealment of facts or misrepresentation or misdeclaration as held by the Apex Court in „Sheshank Sea Foods Pvt. Ltd. v. Union of India & Ors. (1996) 11 SCC 755‟. However, in the present case, the appellants have not been shown that there is any fraud, concealment of facts or misrepresentation or misdeclaration on the part of the respondents."

8. In the present case, the matter is pending at the show cause

stage. Customs Department has made certain allegations and the

petitioner no.1 has refuted and denied the said allegations. Facts

and factual matrix of the case have to be gone into, examined and

W.P.(C) NO.3739/2010 Page 5 verified. Each import under the EPCG licence is a separate and a

distinct import. Each case has to be examined on its own facts.

Service provider may have fulfilled the obligations imposed in

respect of one EPCG licence but may not have fulfilled the

obligations in respect of another licence. This will depend upon the

factual matrix of each case. Moreover, the judgment dated 3rd

August, 2010 was on an appeal filed by the Customs Department

on a question of law. Of course, the petitioner no.1 is entitled to

rely upon the legal ratio in the case of Interglobe Enterprises Ltd

versus Union of India and others 126 (2006) DLT 589 referred

to in the judgment of the Division Bench dated 3rd August, 2010. It

will be premature and will not be appropriate to interfere with the

show cause notices dated 3rd May, 2010 at this stage and prevent

any verification or scrutiny.

9. Learned counsel for the petitioners has submitted that the

matter has been prolonged and delayed and the petitioners had

earlier filed Writ Petition (Civil) No. 9396/2009 for release of the

bank guarantees which was dismissed as withdrawn on 4th May,

2010 as the respondent-Department of Customs had issued show

cause notices dated 3rd May, 2010. It is submitted that the

petitioner has been forced to repeatedly renew the bank

W.P.(C) NO.3739/2010 Page 6 guarantees worth Rs.1.73 crores and accordingly is suffering and

is being harassed. Learned counsel for the Department of

Customs has disputed and denied the said contentions and during

the course of hearing has stated that the show cause notices

would be adjudicated and decided within six weeks from the date

on which copy of this Order is received by them. The statement

made by the learned counsel for the Department of Customs is

taken on record and it is directed that the two show cause notices

dated 3rd May, 2010 should be adjudicated and decided within six

weeks from the date copy of this Order is received by the

Department of Customs. In case, the proceedings are dropped, the

bank guarantees and the bonds given by the petitioner no.1

company or on their behalf, shall be released. In case the stand of

the petitioner no.1 is not accepted, the bank guarantees and the

bond shall not be invoked and enforced for a period of four weeks

from the date of service of the adjudication order to enable the

petitioners to file appeal or take steps to challenge the said order

in accordance with law. The adjudication order as required, should

be a speaking order dealing with the contentions and the pleas

raised by the petitioners. Petitioners are also given liberty to file

additional or further response along with documents within two

W.P.(C) NO.3739/2010 Page 7 weeks from the date copy of this order is received. Hearing will be

also given to the petitioner no.1.

Writ Petition is accordingly disposed of.

SANJIV KHANNA, J.

CHIEF JUSTICE

JANUARY 04, 2011.

P




W.P.(C) NO.3739/2010                                           Page 8