Case: Laxmi Organic Industries Limited Vs. Union of India & Others

P.C. :1. Rule. Respondents waive service. By consent of the parties, Rule is made returnable forthwith.2. By this Writ Petition under Article 226 of the Constitution of India, the petitioners are praying for issuance of a writ of mandamus or any other writ, order or direction declaring a circular dated 4th March, 2013 as ultra vires to Articles 14 & 19(1)(g) of the Constitution of India and/or Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 ( for short, Foreign Trade Act).3. The challenge is raised in the following factual background.4. The petitioners are a Company incorporated under the Indian Companies Act, 1956 and inter alia engaged in the business of manufacture and export of Acetyls. The petitioners submit that one of the major raw materials for manufacture and export of Acetyls is Acetic Acid.5. We are concerned in this case with the import of Acetic Acid. The petitioners point out that they are leading exporters of Acetyls from India. In para-5 of the Writ Petition they have given the figures of total exports in last three years. The petitioners then contend that they import Acetic Acid which is a common input for production of the final products, namely, Ethyl Acetic and Dikelene Derivatives. They have set out details of the total imports of Acetic Acid in last three years. They also acquire this Acetic Acid from domestic manufacturers. The details thereof are set out as well. The petitioners concede that out of a total quantity of imported Acetic Acid and that acquired in domestic market, some portion is sold on as is where is basis in the local market.6. In this Writ Petition, the petitioners are relying upon the import of Acetic Acid under an Advance License. In that regard they rely upon the Foreign Trade Policy for 200409 (para 2.27.1 and corresponding paragraph 6.12 of the Foreign Trade Policy for the period 2009-14). They contend that the exporter having turnover of at least Rs.5 Crores in the current or preceding financial year and having a good track record of three years is exempt from furnishing of bank guarantee in relation to imports under Advance Licenses. The petitioners submit that the Central Board of Excise and Customs, New Delhi have issued a circular bearing No.58/2004-Cus. dated 21st October, 2004. The impugned circular dated 4th March, 2013 amends para 3.2(Clause c) of the 2004 Circular.7. The petitioners reproduce the relevant paragraphs of the Foreign Trade Policy and to which we will advert 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 Rs.81,14,361/- and imposed penalty of an equivalent amount. The petitioners claimed that they have deposited a sum of Rs.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 to the extent of Rs.1,44,28,722/- has been recovered from them by an order dated 19th December, 2013 by the Deputy Commissioner of Central Excise, Mahad Division.11. We are not concerned with this controversy as it is stated to be the subject matter of a distinct Writ Petition. 12. The petitioners rely upon the fact that they avail of the facilities under the Advance License. The imports of Acetic Acid were duty free. However, some consignments of Acetic Acid arrived in November and December, 2014 but in clearance of the same, the second respondent to the Writ Petition, insisted on the petitioners furnishing a bank guarantee equal to 25% of the duty amount. This was for clearance under Advance Licenses. The petitioners made enquiries and it was revealed that the bank guarantee has been demanded on account of the circular dated 4th March, 2013. Para-4 of this circular amends para 3.2(c) of the earlier circular dated 21st October, 2004. That is how the petitioners approached the authorities but they were informed that the condition of furnishing of this bank guarantee cannot be waived. It is that communication which is also impugned in this Writ Petition.13. The petitioners did furnish the bank guarantees but are aggrieved by the fact that denial by the second respondent of the facilities and the privileges under the Foreign Trade Policy is totally discriminatory and arbitrary. 14. Mr. Shroff, learned Senior Counsel appearing on behalf of the petitioners submitted that the impugned circular violates the constitutional mandate enshrined in Articles 14 and 19(1)(g) of the Constitution of India. He submits that the same imposes an unreasonable fetter and restriction on the petitioners fundamental rights to carry on trade, business and commerce guaranteed vide Article 19(1) (g) of the Constitution of India. The impugned circular also confers arbitrary powers to pick and choose. Inasmuch as there cannot be a category of Advance License holders who can be subjected to a treatment different than what is envisaged and contemplated in terms of the privileges guaranteed by Foreign Trade Policy.15. The essential argument of Mr. Shroff is that the Foreign Trade Policy and the stipulations therein are purported to be amended by this act of the authorities in amending the circular. They are not empowered to make any changes or even amendments in the 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 issue the requisite circulars and notification. A notification once issued by them can also be amended by them. In the instant case a notification has been issued by the Central Board of Excise & Customs, New Delhi. The power of this Board to promulgate a circular or a notification and later on amend it, has not been questioned at all.17. Relying upon the affidavit-in-reply, Mr. Jetly would submit that the Foreign Trade Policy does not rule out exercise of power by this Board to prescribe norms for execution of the letter of undertaking and bank guarantee. In other words, the privileges attached to the advance license holders complying with the export obligation envisage exemption from furnishing of a bank guarantee or letter of undertaking. The bank guarantee and letter of undertaking is a requirement or a mode prescribed by Customs Authorities in terms of the Customs Act, 1962 so as to deal with the case of import and export of goods. That is the exclusive power conferred in them under the Customs Act, 1962. That is to facilitate levy, assessment and collection of the customs duty in terms of the Act and Rules framed thereunder. Therefore, the Foreign Trade Policy which grants certain privileges to Advance License holders and in cases of import of raw materials which go into the manufacture of export products equally empowers the Customs Authority to prescribe such norms. If the norms already prescribed have to undergo a change the Board is fully empowered to make such changes as well. Therefore, neither Foreign Trade Policy is amended or overridden nor the Customs Authorities in issuing the circular or amending it have carried any such exercise. They have acted within the ambit and scope of their power and under the Customs Act, 1962. Further the Customs Act, 1962, the powers conferred thereunder are fully recognized even by the Foreign Trade Policy and, therefore, none of the paragraphs of the Foreign Trade Policy are affected by the modification made in the circular. In any event the Foreign Trade Policy itself clarifies that the privileges and the concessions are admissible in the event no violation or breach of the statutory enactments including the Customs Act, 1962 is committed. In the face of admitted violation by the petitioners and the order confirming the demand and the subsequent conduct of the petitioners would denote that they are fully aware 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 measures by the Director General of Foreign Trade pursuant to a Status Category envisage that the status holder has to achieve certain export performance. That is to be counted and in terms of para-3.10.2. The Star Export House has to have export performance worth Rs.100 Crores. The petitioners are fulfilling this criteria. Para 3.10.4 of the Export and Trading house status holders outlines the privileges and one of the privileges is exemption from furnishing of bank guarantees in schemes under the Foreign Trade Policy.21. The incentive schemes that are envisaged in terms of this Policy are exports and imports are free unless regulated. The petitioners rely upon paragraph 2.2 to 7.1 and which gives exemption from bank guarantee. All the exporters who have export turn over of at least Rs.5 crores in the current or preceding license year and have a good track record of three years export will be exempted from furnishing a bank guarantee for any of the schemes under this Policy and may furnish a letter of undertaking in lieu of a bank guarantee. The petitioners rely upon the Foreign Trade Policy and the Handbook of Procedures provide that such a policy and whereunder execution of a bank guarantee / letter of undertaking is envisaged, then, wherever a duty free import is allowed or otherwise specifically stated, importer shall execute the prescribed letter of undertaking / bank guarantee / bond with the Customs Authorities before clearance of goods. The procedures further provide in Chapter6 that there are entitlements if an Export Oriented Unit has a turnover of Rs.5 Crores or above, is in existence for at least three years and it will not be required to furnish bank guarantee at the time of import or going for job work in a DTA provided it has achieved positive export obligation and has not been issued a show cause notice or confirmed demand during the preceding three years on grounds other than procedural violations under the penal provisions of the Customs Act, Central Excise Act and Foreign Trade Act etc...22. The petitioners are relying upon certain other stipulations in the Handbook of Procedures but what emerges from the factual position narrated by them is that they are a Advance License holder. They rely upon the Foreign Trade Policy stipulations and the privileges and benefits thereunder but at the same time do not dispute that in relation 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 Rs.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 21-Oct-2004Bond and Bank guarantee under Advance License and EPCG Schemes Norms revised Circular No.58/2004-Cus., dated 21-10-2004 F.NO.605/ 40/2004-DBKGovernment of IndiaMinistry of Finance (Department of Revenue)Central Board of Excise & Customs, New DelhiSubject : Revised Norms for Execution of Bond and Bank Guarantee under Advance License and EPCG Schemes RegardingThe Foreign Trade Policy for the period 2004-09 has come into force w.e.f. 1.9.2004. It has been provided in paragraph 2.27.1. of the said Policy that all exporters having an export turnover of at least Rs. 5 crores in the current or preceding financial year and having a good track record of three years of exports will be exempted from furnishing a Bank Guarantee (BG) for any of the Schemes under the Policy and may furnish a LUT in lieu of BG. Further, paragraph 2.20 of the Hand Book of Procedures (Vol. I) prescribes that in cases of direct import, before clearance of goods through Customs, the licence holder shall execute a legal undertaking (LUT)/Bank Guarantee (BG) with the Customs authorities in the manner as may be prescribed by them.2. In the light of these Policy provisions, the issue regarding execution of Bond/BG under DEEC and EPCG Schemes has been reviewed by the Board and in supersession of earlier DOR Circular Nos. 45/96-Cus., dated 28-8-96, [1996 (86) E.L.T. T70], 71/98-Cus., dated 15-9-98 [1998 (103) E.L.T. T19], 48/2003-Cus., dated 6-6-2003 [2003 (154) E.L.T. T57], 74/2003-Cus., dated 21-8-2003 [2003 (156) E.L.T. T68] and 79/2003-Cus., dated 4-9-2003 [2003 (156) E.L.T. T94], the following revised norms are prescribed for the purpose of furnishing Bond and BG under the said Schemes.3. The bond under Advance License and EPCG Schemes shall be furnished in the format annexed to this Circular. The bond shall cover the duty ordinarily leviable on the goods but for the exemption. The bond shall be backed by a Bank Guarantee or cash security as per the norms prescribed in the following paragraph. Guarantee from a financial institution like IDBI, ICICI, UTI etc. may also be accepted in lieu of Bank Guarantee.3.1 The Bank Guarantee/cash security shall be taken as per the following norms for the purpose of permitting clearance of imported goods under Advance License/EPCG Schemes.Category of ImporterQuantum of Bank Guarantee/cash security(a) All exporters who have an export turnover (physical exports) of Rs 5 crores in current or preceding financial year and having a good track record of three years of exportsNil(b) Public Sector UndertakingNil(c) Star Export HouseNil(d) Manufacturer exporters registered with Central Excise, who have been exporting during the previous two financial years and have minimum export of Rs. 1 crore or more during the preceding financial year.Nil(e) Manufacturer exporters registered with Central Excise, who have paid central excise duty of Rs.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) Others100% 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 across default in export obligation against any Advance License/EPCG License issued.(b) For the purpose of availing BG exemption in terms of Para 3.1 above, the exporter shall submit the proof of export performance or payment of duty, as the case may be, duly certified by the jurisdictional Superintendent of Central Excise in case he is registered with the Central Excise. In cases where the exporter is not registered with the Central Excise, but he is a registered member of an Export Promotion Council, he shall produce a certificate from the concerned Export Promotion Council. In other cases the exporter shall produce a certificate duly authenticated by a practicing Chartered Accountant, who is registered with the Central Excise Department for payment of service tax, along with evidences of export to the satisfaction of the Assistant Commissioner or Deputy Commissioner. The Chartered Account issuing the certificate will mention his STC code and other registration details in the certificate.(c) The License holder should not have been penalized under the provisions of the Customs Act, 1962, the Central Excise Act, 1944, the Foreign Exchange Management Act (FEMA), 1999 or the Foreign Trade (Development and Regulation) Act, 1992 during the previous three financial years.4. The facility of filing Corporate Guarantee as provided in DOR Circular No. 38/97Cus dated 19-9-97 [1997 (95) E.L.T. T44] shall also continue to be available subject to fulfillment of conditions specified in the said Circular.5. In individual cases where the jurisdictional Commissioner of Customs/ DGFT authority /EPCG Committee/ALC/ is satisfied that a higher quantum of Bank Guarantee is justified on account of risk to revenue, 100% BG may be taken by the Customs after recording the reasons therefor in file.6. Where an importer so requests, a BG may be taken consignment-wise subject to the condition that such consignment-wise BG shall only be acceptable by the Customs at the port of registration of the license.7. The Bond/BG shall be filed for a minimum period of 3 years with an undertaking to keep the BG alive for the entire period of export obligation viz. 8+2 = 10 years or 12+2 = 14 years etc. under EPCG Scheme as the case may be.8. The Custom House shall properly maintain Bond/BG registers and ensure that wherever the bank guarantees are not renewed in time, recovery 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 to fulfil the export obligation and defaults on payment of customs duty and interest, the parent company shall make good the Government revenue and the interest. In other words, the parent company will be severally and jointly liable for the action in terms of the Bond/BG jointly executed by them.(iv) this facility shall be extended only to those companies which have proven track record and reputation.10. BG exemption specified in para 3.1 above shall also be available in respect of past licenses where license holder had earlier filed BG but as on date he is entitled for BG exemption.11. It shall be the responsibility of the jurisdictional Superintendent of Central Excise or other agencies that while issuing the Certificate about export performance or about the fact of payment of central excise duty for the purpose of Para 3.1, he satisfies himself about the genuineness of the declaration given by the license holder.12. In order to thwart attempts to misuse Advance License Scheme, the DGFT authorities shall endorse a copy of the Advance License to the concerned Central Excise authorities by fax or e-mail with request to intimate the concerned DGFT authority in case the party appears to be bogus/ non-existent. Immediately on receipt of copy of the Advance License by Central Excise, the Superintendent of Central Excise having jurisdiction over the manufacturing premises of the license holder shall undertake physical verification within one month of the receipt of copy of Advance License from the relevant DGFT authority to ascertain that the party to whom Advance License has been issued is not bogus/nonexistent. In all cases where on physical verification by Central Excise, the party is found to be bogus/non-existent, the jurisdictional Commissioner of Central Excise shall immediately inform the concerned Licensing Authority (who had issued the Advance License) so as to enable the DGFT authorities to suspend the Advance License and intimate the concerned Customs authorities about it where the Advance License is registered.13. A suitable Trade Notice and Standing Order may be issued for the guidance of the trade and staff. Difficulties faced, if any, in implementation of the Circular may be brought to the notice of the Board at an early date.14. Receipt of the Circular may kindly be acknowledged.23. A bare perusal of the said circular would 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 Rs.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) 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 benefits or bank guarantee exemption is admissible subject to the license holder not being proceeded or penalized under the Central Excise Act, 1944.24. In the present case, the petitioners are only impugning the circular dated 4th March, 2013. That circular, copy of which is at Annexure E page 48, reads as under :Bank guarantee under Advance Authorization (AA)/Duty Free Import Authorization (DFIA)/Export Promotion Capital Goods (EPCG) Scheme Norms revised.Circular No. 8/2013-Cus., dated 4-3-2013F.No.609/134/2012-DBKGovernment of IndiaMinistry of Finance (Department of Revenue)Central Board of Excise & Customs, New Delhi,Subject : Norms for Execution of Bank Guarantee in respect of Advance Authorization (AA) / Duty Free Import Authorization (DFIA) / Export Promotion Capital Goods (EPCG) Regarding.The undersigned is directed to invite reference to Circular No. 58/2004-Cus., dated 21-10-2004 [2004(173) E.L.T. (T4)] on the above subject. This was amended by Cir. Nos.17/2009-Cus [2009 (238) E.L.T. (T6)] and 32/2009-Cus. [2009 (244) E.L.T. (T4)]. Circular No.58/2004 was further amended by Circular No.6/2011-Cus., dated 18-1-2011. By this amendment, para 3.2 (c) was amended and the conditions for availing of exemption from bank guarantee were modified.2. Prior to amendment by Cir 6/2011-Cus, one of the explicit criteria for denying benefit was that the license holder should have been penalized. However, the issue of penalty imposed for technical offences had arisen. The Circular 6/2011-Cus asked for taking an affidavit from the license holder stating whether any case(s) for certain offences, regarded as other than technical offences, had been booked during the previous three financial years and it was prescribed that, in case such violation(s) were revealed, the benefit of exemption from bank guarantee should not be extended.3. It has been brought to the notice of the Board by exporters, 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 58/2004-Cus 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 aimed at availing CENVAT credit, rebate, refund, drawback, benefits under export promotion/reward schemes.(d) Cases wherein Customs/Excise duties and Service Tax has been collected but not deposited with the exchequer.(e) Cases of non-registration with the Department with intent to evade payment of duty / tax. or in cases booked against him under the Foreign Exchange Management Act (FEMA), 1999 or the Foreign Trade (Development and Regulation) Act, 1992. In order to ascertain/verify whether the License/Authorization holder meets this criterion he may be asked to furnish an affidavit. The Commissioners shall ensure that some of the affidavits furnished are cross checked randomly with the field formations for their veracity..5. It may be noted that the other conditions in Para 3.2 of the Circular No.58/2004-Cus dated 21-10-2004 remain unchanged. These instructions may be brought to the notice of the trade/exporters by issuing trade/Public Notices. Standing orders/instructions may be issued for guidance of the assessing officers. Difficulties faced, if any, in implementation of the Circular may please be brought to the notice of the Board at an early date.Receipt of this circular may kindly be acknowledged.25. That circular further revised the norms and which have been prescribed by the earlier circular dated 21st October, 2004 which itself came to be amended by circular No.17/2009 and 32/2009. It was further amended by circular No.6/2009 dated 18th January, 2011. The last amendment and which has been put in issue before us contained in para 3.2(c) is now notified by the Central Board of Excise and Customs vide this circular of 4th March, 2013. It has been stated that prior to the issuance of the amended circular of 2011 one of the explicit criteria for denying benefit to the license order is that license holder should not have been penalized. However, the issue of penalty imposed for technical offences had arisen. Therefore an affidavit was insisted from the license holder with regard to the offences recorded as other than technical offences and for which the said license holder had been booked during the three previous financial years. If that was revealed then in cases of such violations benefit of exemption from bank guarantee should not be extended. Attention of the Board was invited by Exporters Trade Associations and Field Forming 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 holders from the condition of furnishing of bank guarantee that we are of the opinion that the mandate enshrined in Articles 14 & 19(1)(g) of the Constitution of India has not been violated. The benefits are under the export promotions / reward schemes and which finds recognition in the Foreign Trade Policy as well. When the Foreign Trade Policy and consistent therewith the Board circulars aim at not giving any privileges, special status and exemptions to the category of persons who are proceeded against for violations or breaches of the aforementioned enactments then the insistence by the Commissioner on the petitioners furnishing a Bank guarantee of 25% vide communication dated 9th December, 2014, cannot be faulted.26. We do not think and as a result of the above 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. In such circumstances, we do not find any merit in the contentions of Mr. Shroff.

Decision reasoning: 0[ds]Further the Customs Act, 1962, the powers conferred thereunder are fully recognized even by the Foreign Trade Policy and, therefore, none of the paragraphs of the Foreign Trade Policy are affected by the modification made in the circular. In any event the Foreign Trade Policy itself clarifies that the privileges and the concessions are admissible in the event no violation or breach of the statutory enactments including the Customs Act, 1962 is committed. In the face of admitted violation by the petitioners and the order confirming the demand and the subsequent conduct of the petitioners would denote that they are fully aware 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.That circular further revised the norms and which have been prescribed by the earlier circular dated 21st October, 2004 which itself came to be amended by circular No.17/2009 and 32/2009. It was further amended by circular No.6/2009 dated 18th January, 2011. The last amendment and which has been put in issue before us contained in para 3.2(c) is now notified by the Central Board of Excise and Customs vide this circular of 4th March, 2013. It has been stated that prior to the issuance of the amended circular of 2011 one of the explicit criteria for denying benefit to the license order is that license holder should not have been penalized. However, the issue of penalty imposed for technical offences had arisen. Therefore an affidavit was insisted from the license holder with regard to the offences recorded as other than technical offences and for which the said license holder had been booked during the three previous financial years. If that was revealed then in cases of such violations benefit of exemption from bank guarantee should not be extended. Attention of the Board was invited by Exporters Trade Associations and Field Forming 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 inbrought in cases ofnt / 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 beby denying exemption to such Advance License holders from the condition of furnishing of bank guarantee that we are of the opinion that the mandate enshrined in Articles 1419(1)(g) of the Constitution of India has not been violated. The benefits are under the export promotions / reward schemes and which finds recognition in the Foreign Trade Policy as well. When the Foreign Trade Policy and consistent therewith the Board circulars aim at not giving any privileges, special status and exemptions to the category of persons who are proceeded against for violations or breaches of the aforementioned enactments then the insistence by the Commissioner on the petitioners furnishing a Bank guarantee of 25% vide communication dated 9th December, 2014, cannot be faulted.26. We do not think and as a result of the above 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 inof the circular / notification dated 4th March, 2013. In such circumstances, we do not find any merit in the contentions of Mr. Shroff.