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2012 (10) TMI 236 - HC - CustomsScope of Deemed Exports - whether it includes sale to foreign tourists - whether it is restricted to REP Licenses only or include advance licence - petitioner obtained an advance license for 212.8 Metric Tons against which the petitioner had actually imported only 180 Metric Tons of the stainless steel - thereafter, on account of conflict between the President and the Managing Director of the Foreign importer, which couldn't be resolved in the near future, the export order on the basis of which the advance license was obtained had been terminated - petitioners were stuck with a huge consignment of steel utensils made to the unique specifications demanded by the Foreign Company, for which reason the petitioners found no other buyers in the Foreign Market - petitioners fulfilled export obligation by selling the said utensils to foreign tourists within the country Held that:- "Deemed exports” cannot and should not be restricted to REP Licenses only if the prime objective is to earn foreign exchange which is also the objective under the Advance Licenses as well. Since the main objective of both the licenses is to earn foreign exchange, which is achieved even when sales are made to foreign tourists, the plea of the respondents that deemed exports can be done only in case of REP license cannot be accepted. In the facts and circumstances it is clear that the respondents have turned a blind eye to the genuine problem faced by the petitioners, the real cause for the termination of the export order, and the subsequent foreign exchange earned by the petitioner, beyond the export obligations attached to the advance license has not been denied. Thus solely on the technical ground that the petitioners had not sought the permission of the competent authority before affecting the deemed exports, and that the DEEC Books were not maintained, such strict mechanical application of the provisions of Import and Export Policy in the facts and circumstances cannot be accepted, when the substantive intent behind the issuance of the advance license has been achieved by the petitioners. In these circumstances imposition of any penalty on the petitioners will be iniquitous and not justifiable considering the objective of the policy. Thus, for the forgoing reasons the impugned order dated 14th May, 1986 is set aside and the writ petition is allowed. The petitioners shall also be entitled for release of their bank guarantee in the facts and circumstances - Decided in favor of assessee
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