TMI Blog2018 (9) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... 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or payment of the amount, as indicated in the preceding paragraphs, “present show-cause notice will be treated as withdrawn and case will stand as closed/discharged/realized?”.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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50 AND 69 OF P.B. 92.97 AS AMENDED AND CONDITION NO. 04 AND 15 OF GENERAL NOTES FOR TEXTILE PRODUCTS IN THE H.B. 92.97 (VOL.1) It is not disputed that the condition No. 15 of the general notice for textile product in the HB 92.97 volume (1) contained a condition that the dyes to be imported under such licenses the value thereof could not exceed 14% of FOB value of the exports. 2. The case of the petitioner-company is that such condition contained in the fine print was lost sight of not only by the petitioner but also by the Customs department as well as the authorities under the Director General of Foreign Trade ['DGFT' for short]. Be that as it may, the petitioner-company made duty free imports under the said two licenses, carried out its manufacturing activities and undisputedly, made exports to fulfill their export obligation undertaken. 3. The import-export policy, at the relevant time, envisaged the importer of duty free goods under such advance licenses to provide the bank guarantee or letter of undertaking [LUT] of specified amounts to the DGFT which could be utilized for ensuring compliance with the terms of the import licenses. Upon completion of the import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Restriction of 14% FOB value for Chemicals Dyes as per Condition (4) of General Notes for Textiles = S$277339.86 Actual value utilized = US$319685.96 Excess Utilized = US42346.10 8. Whereas as per para 129 of the Hand Book of Procedures 1992-97 the payment of amount of duty, interest and any dues or surrender of Special Import License for regularization shall, however, be without prejudice to any other action that may be taken by the Customs authorities at any stage under the Customs Act, 1962. On the basis of same analogy you are duty bound to pay the customs duty with 24% interest for excess of this notice and submit documentary evidence thereof. 9. Whereas the above action of the noticee firm contravenes section 11 of the Foreign Trade (Development and Regulation ) Act, 1992. 10. Now, therefore, in exercise of powers vested in me under section 13 of the Foreign Trade (Development Regulation) Act, 1992, I call upon the noticee firm and its Directors to show cause within period of 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.2 To Recover/payment of interest with effect from 04/07/1997 till the date of payment at the rate of 15% (interest as on date comes to amount of ₹ 1120749/- (Rupees eleven lakh twenty thousand seven hundred forty nine only only). 11.3 Immediately after recovery/payment of the amount as indicated in paras 11.1 and 10.2 above present show cause notice will be treated as withdrawn and case will stand as closed/discharged/regularized. 12. This order is issued without prejudice to any other action that may be taken under any other Act, Rule or Regulation in force. 8. The petitioner unsuccessfully challenged the order-in-original before the appellate authority upon which the present petitions came to be filed. Learned counsel Mr. Parikh for the petitioners submitted that the authority has committed a serious error in raising demand of customs duty in the guise of exercising powers under the Act of 1992, if at all it was within the jurisdiction of the Customs authorities to question the petitioners about unpaid duty. He further submitted that once the LUT and bank guarantee were discharged, the jurisdiction of the DGFT authorities, come to an end. No further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d other raw materials would come-up for consideration. However, we face a situation where 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. Sub-section (1) of section 11 provides that no export or import shall be made by any person except in accordance with the provisions of the said Act, rules and orders made thereunder and the foreign trade policy for the time being in force. Sub-section (2) of section 11 provides that where any person makes or abates or attempts to make any export or import in contravention of any provision of the Act or the rules or the orders or the foreign trade policy, he would be liable to pay a penalty which would be not less than ten thousand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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