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

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 (1 = appeal accepted, 0 = rejected): 0

Explanation:
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.