TMI Blog2015 (1) TMI 934X X X X Extracts X X X X X X X X Extracts X X X X ..... e holder shall execute a legal undertaking / bank guarantee with the Customs Authority in the manner as may be prescribed by them. In the light of the policy provisions (FTP) the issue regarding execution of bonds / bank guarantee under the aforementioned schemes was reviewed by the Board and in supersession of the earlier circular, the circular dated 21st October, 2004 was issued. Revised norms could have been prescribed by the Board, namely, Central Board of Excise and Customs for the purpose of furnishing bond and bank guarantee under the schemes. Para 3.1 of this circular refers to the Star Export House. The bank guarantee exemption in para 3.1 is admissible subject to the conditions stipulated in this circular and para 3.2(c) further stipulates that the license holder should not have been penalized under the provisions of the Customs Act, 1962 and the Central Excise Act, 1944. Further, every misuse of Advance License scheme dis-entitles the holder of the license from availing of the benefits and privileges. Thus, consistent with the stipulations and the conditions in the Foreign Trade Policy the norms have been prescribed and revised and which always stipulated that the ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h December, 2014, cannot be faulted. We do not think and as a result of the discussion that the Foreign Trade Policy has been amended or overridden by any stipulations in the Customs Department circular or the communication impugned in the present Writ Petition. Far from taking such a stand or step the Customs authorities have acted consistent with both the Foreign Trade Policy and the Foreign Trade Act, 1992. The mandate of both Acts, namely, Foreign Trade Act and the Customs Act, 1962 do not favour grant of any exemptions or special privileges to those who have been penalized or proceeded against or booked for cases which are referred to in para-4 of the circular / notification dated 4th March, 2013. - Decided against petitioners. - Writ Petition [Lodging] No. 3288 of 2014 - - - Dated:- 14-1-2015 - S. C. Dharmadhikari And S. P. Deshmukh,JJ. For the Petitioner : Mr. Darius Shroff, Senior Counsel a/w. Mr. Vikram Nankani, Senior Counsel and Mr. Aqeel Sheerazi Mr. Sushanth Murthy For the Respondent : Mr. Pradeep S. Jetly ORDER P. C. 1. Rule. Respondents waive service. By consent of the parties, Rule is made returnable forthwith. 2. By this Writ P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... little later. 8. The petitioners do not dispute that a show cause notice was issued on 1st October, 2010 alleging that they were not eligible for availing Cenvat Credit in respect of the storage and warehousing charges of the Acetic Acid on the ground that part of Acetic Acid was also traded by the petitioners, and trading being an exempt service, the Cenvat Credit was not eligible. There was an allegation of suppression and, therefore, a larger period was invoked. The show cause notice is issued under Section 11A of the Central Excise Act, 1944 read with Rule 14 of the Cenvat Credit Rules, 2004. The case was adjudicated by the Commissioner of Central Excise, Raigad. He passed an order on 31st January, 2012. He confirmed the demand of ₹ 81,14,361/- and imposed penalty of an equivalent amount. The petitioners claimed that they have deposited a sum of ₹ 20 lacs pending adjudication. 9. In Appeal against the order dated 31st January, 2012, the Customs, Excise and Service Tax Appellate Tribunal granted stay of recovery of the balance amount on 8th August,2012. 10. The petitioners then rely upon the fact that despite this stay granted and its extension, an amount t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he paragraphs of the Foreign Trade Policy. Under the garb of making an amendment to a circular issued by them, the Customs authorities cannot purport to impose an additional restriction on the Advance License holders in terms of the Foreign Trade Policy or change or alter the privileges and benefits thereunder. Relying upon Section 5 of the Foreign Trade Act, Mr. Shroff submitted that a Foreign Trade Policy can be amended only by the Central Government by a notification in the Official Gazette. He submits that the power to make and frame a policy includes a power to amend or modify it. However, that is a power conferred exclusively in the Central Government by virtue of the Foreign Trade Act. For all these reasons, he submits that the Writ Petition be allowed and the reliefs prayed be granted. 16. On the other hand Mr. Jetly, appearing on behalf of the respondents would submit that there is no merit in the challenge raised. He submits that the authorities exercising powers under the Customs Act, 1962 have not by any stretch of imagination amended the Foreign Trade Policy as is falsely urged. The authorities exercising powers under the Customs Act, 1962 are further empowered to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are that the privileges are conditional. They cannot be availed of in the event of any order or demand based on violation or breach of the Customs Act and Central Excise Act. In such circumstances, there is no merit in the Writ Petition and it deserves to be dismissed. 18. With the assistance of Mr. Shroff and Mr. Jetly we have perused the entire Writ Petition and all the annexures thereto. We have also perused a judgment relied upon by Mr. Jetly in the case of Shah Pulp Paper Mills Ltd. Vs. Union of India reported in 2012 (276) E.L.T. 289. 19. The petitioners have handed in a compilation. The Government of India, Ministry of Commerce and Industry, particularly the office of the Joint Director of Foreign Trade have certified the petitioners as a Star Export House . The petitioners rely upon the Foreign Trade Policy 2009-14. In para 9.59 the term Status Holder is defined to mean an exporter who is recognized as Export House/ Trading House / Star Trading House / Premier Trading House by the Director General of Foreign Trade / Development Commissioner. That is how the petitioners claim the benefits and privileges under the Foreign Trade Policy. 20. The promotional measur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation to availment of Cenvat Credit they were proceeded against by the Department of Central Excise and a show cause notice was issued under Section 11A of the Central Excise Act, 1944 read with Rule 14 of the Cenvat Credit Rules,2004 which is dated 1st October, 2010. The case was adjudicated by the Commissioner of Central Excise and the order in Original dated 31st January, 2012 confirms the demand of ₹ 81,14,361/- and imposes penalty of equivalent amount on them. That order may have been challenged and is a subject matter of an Appeal but what emerges from the record is that the imports of the consignments of raw materials namely Acetic Acid in November / December, 2014 resulted in the demand of furnishing bank guarantee to the extent of 25% of the duty amount for clearance under the Advance Licences issued in favour of the petitioners. That has been based on firstly a circular and which is holding the field. That circular has been issued on 21st October, 2004 (annexure D ). That circular reads as under : Circular No.58/2004 Cus. dated 21Oct2004 Bond and Bank guarantee under Advance License and EPCG Schemes - Norms revised Circular No.58/2004Cus., dated 21102004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceding financial year and having a good track record of three years of exports Nil (b) Public Sector Undertaking Nil (c) Star Export House Nil (d) Manufacturer exporters registered with Central Excise, who have been exporting during the previous two financial years and have minimum export of ₹ 1 crore or more during the preceding financial year. Nil (e) Manufacturer exporters registered with Central Excise, who have paid central excise duty of ₹ 1 crore or more during the preceding financial year. Nil (f) Manufacturer exporters who are not covered under (a), (b),(c),(d) (e) above. 25% (g) Others 100% 3.2. BG exemption as specified in Para 3.1 above shall be admissible subject to the following conditions: (a) The license holder has not defaulted on the export obligation in respect of any Advance License/EPCG Licence issued to him in the past. The BG exemption shall stand withdrawn if DGFT or Customs comes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action is initiated by enforcement of the Bank Guarantee within time. The Customs shall also ensure that, wherever required, Bank Guarantees are renewed well in time. This aspect needs to be monitored closely by the Commissioners. 9. In the case of subsidiary company of a parent company of a recognized status, the facility of filing joint bond (both by the parent company as well as the subsidiary company holding the license) along with BG/cash security/ any other guarantee from financial institutions like IDBI, ICICI, UTI etc., shall also be available. The facility, however, shall be subject to the following conditions: (i) the parent company shall necessarily have more than 50% share holding in the subsidiary company. (ii) the bond shall be jointly signed by the parent company as well as the subsidiary company and shall be executed along with BG/cash security/ or guarantee from financial institutions like IDBI, ICICI, UTI etc. wherever applicable in terms of criterion laid down. The guarantee shall be in relation to terms and conditions of the Joint Bond. (iii) the parent company shall stand surety for the subsidiary company that in the event subsidiary company fails ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould reveal that it prescribed revised norms for execution of bond and bank guarantee under Advance License and EPCG Schemes. It expressly refers to the Foreign Trade Policy and the exemptions thereunder in favour of such exporters who have export turn over of at least ₹ 5 Crores. The hand book of procedures has been referred to and in cases of direct import, before clearance of goods through customs, licence holder shall execute a legal undertaking / bank guarantee with the Customs Authority in the manner as may be prescribed by them. In the light of the policy provisions (FTP) the issue regarding execution of bonds / bank guarantee under the aforementioned schemes was reviewed by the Board and in supersession of the earlier circular, the circular dated 21st October, 2004 was issued. We are in agreement with Mr.Jetly that the revised norms could have been prescribed by the Board, namely, Central Board of Excise and Customs for the purpose of furnishing bond and bank guarantee under the schemes. Para 3.1 of this circular refers to the Star Export House. The bank guarantee exemption in para 3.1 is admissible subject to the conditions stipulated in this circular and para 3.2(c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rters, trade associations and the field formations that with this amendment the benefit of availing of exemption from bank guarantee will be denied even before the show cause notice proposing imposition of penalty has been adjudicated. 4. The Board has reviewed the matter and considers that the position of not having been penalized should be restored. Accordingly, the para 3.2(c) of Circular 58/2004Cus shall be read as follows: (c) The License holder should not have been penalized during the previous three financial years in cases booked against him related to Customs, Central Excise or Service Tax under the provisions of the Customs Act, 1962, the Central Excise Act, 1944, the Finance Act, 1994 (for Service Tax), as detailed below: (a) Cases of duty evasion involving misdeclaration / misstatement/ collusion / willful suppression / fraudulent intent whether or not extended period for issue of show cause notice has been invoked. (b) Cases of misdeclaration and/or clandestine/unauthorized removal of excisable / import / export goods warranting confiscation of said goods. (c) Cases of misdeclaration /misstatement / collusion / willful suppression / fraudulent intent ai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the fact that by these amendments the benefit of availing of bank guarantee will be denied even before the show cause notice imposing penalty has been adjudicated. That is how the Board reviewed the matter and it restored the position prior to issuance of the circular No.6/2011 dated 18th January, 2011. However while restoring it the Board amended para 3.2(c) of earlier circular of 2004 and in para-4 brought in cases of Mis-declaration / mis-statement / collusion / willful suppression / fraudulent intent aimed at availing Cenvat Credit, rebate, refund, drawback, benefits under export promotion/ reward schemes. Thus, the cases of the nature for which the petitioners have been proceeded against are expressly brought in. The petitioners may eventually succeed and / or the order in Original may be set aside but today the position factually is that such an order passed against them in the year 2012 is in force and it is passed and communicated within the period specified in the circulars and the Foreign Trade Policy. It is within the preceding three years. In such circumstances, when larger public interest is sought to be sub-served by denying exemption to such Advance License holder ..... X X X X Extracts X X X X X X X X Extracts X X X X
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