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2018 (9) TMI 332 - HC - CustomsJurisdiction of DGFT - Power to recover customs duty - Whether the order passed by the DGFT as confirmed by the Appellate authority is legal and valid? - Held that:- The Customs authorities had not initiated any action for recovery of unpaid duty. Instead, it is the authority under the DGFT which issued show-cause notice and ultimately passed the impugned order. These steps were initiated after discharge of the LUT and bank guarantees. The show-cause notice dated 25.01.2005 which was pursued and which culminated into the final order, referred to and proposed action under section 11(2) of the Act of 1992. Section 11 of the Act of 1992 pertains to contravention of provision of the said Act, rules, orders and foreign trade policy. Subsection (2) of section 11 thus is a penal provision and has certainly not a provision for recovery of unpaid duty. It is hugely doubtful whether the said provision could have been invoked after the entire procedure of granting of license, import of goods under such license and export of finishing product as promised for obtaining the license, was over and culminated into discharge of LUT and bank guarantees given by the petitioner. However, in the present proceedings, we are not inclined to give any final expression or opinion on this aspect. In the present case, having initiated penalty proceedings the said authority asked the petitioner to pay up the customs duty with interest. He referred to section 13 of the Act of 1992 which specifies the Adjudicating Authority for imposing penalty or for confiscation. Thus, with the aid of section 13, he exercised powers for imposing penalty under section 11(2) of the Act. In the process, he ordered recovery of the customs duty of the specified amount with interest. Interestingly, he also provided in the operative portion of the order that immediately upon recovery or payment of the amount, as indicated in the preceding paragraphs, “present show-cause notice will be treated as withdrawn and case will stand as closed/discharged/realized?”. In clear terms therefore, he imposed customs duty with interest asked, the petitioner to pay the sum upon which, the penalty would be spared. Certainly, the said authority did not have power to act as Customs officer recovering the unpaid customs duty failing which, he would exercise power to impose penalty under section 11(2) of the Act. If the said authority was of the opinion that the petitioner exposed itself to any penalty, he ought to have recorded reasons and imposed the penalty. He certainly could not have, in the guise of penal powers, sought recovery of customs duty which power, in any case, he did not enjoy. Petition allowed - decided in favor of petitioner.
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