In a recent case, the Kerala High Court dismissed the writ petition challenging the bank guarantee given against the demand due to customs duty in the absence of fraud or irretrievable injury to the person who furnished the guarantee. The bank guarantee was furnished against demand for customs duty as the asseseee imported goods in violation of the Export Promotion of Capital Goods Scheme(EPCG) Scheme.
M/S Itma Hotels India Private Limited, the petitioner filed a writ petition impugning the notice issued by the Customs Department to the Manager, State Bank of India, M.G Road, Ernakulam, for invoking the bank guarantee furnished by the petitioner under EPCG Scheme for importing of capital goods for the hotels. According to the Department, the petitioner did not fulfil the conditions of the Government and they had imported the capital goods in violation of the said scheme. In view thereof, the petitioner was liable to pay a due demand of Rs.4,14,72,500/- by way of a Demand Draft drawn in favour of the Commissioner of Customs, Cochin for which the petitioner had furnished bank guarantee.
The court can interfere against the invocation of a bank guarantee only on two grounds i.e., fraud or irretrievable injury or loss to the person who has furnished a bank guarantee. The court observed that none of the grounds are available in the writ petition against the notice invoking the bank guarantee furnished by the petitioner under the EPCG Scheme.
A single bench of Justice Dinesh Kumar Singh held that the writ petition was not maintainable and dismissed the same. Further held that the 1st respondent should proceed with adjudication of show cause notices by law, expeditiously.
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