In a major relief to Essar Group, the Bombay High Court quashes Rs. 27.4 Crore Demand Notice as Customs Duty Circular Not Applicable To ‘Finalised’ Benefits Under SFI Scheme.
By instituting this writ petition, the petitioner seeks to challenge Policy Circular No.25 of 2007 dated 1st January, 2008issued by the Director-General of Foreign Trade (DGFT), the respondent. According to the petitioner, in the garb of purported clarification, the DGFT has curtailed benefits available to service providers, such as the petitioner, under the Served from India Scheme (SFI Scheme).
Consequent upon the said Circular, the Joint Director General of Foreign Trade, Bengaluru, the third respondent, vide demand notice dated 28th January, 2010 (demand notice) and reminder, post-facto and retrospectively, directed the petitioner to pay customs duty and interest on the basis of the benefits already availed and utilised by the petitioner on account of its entitlement under the SFI Scheme.
The essence of the petitioner’s challenge is that the DGFT cannot take away the benefits conferred by the FTP 2004-09 by way of a circular, which is only administrative and/or executive in nature. It is also claimed that the third respondent does not have the power to deny the benefits conferred under the FTP 2004-09 long after the utilisation thereof by the petitioner, when there is no provision whatsoever either under the FTDR Act or the FTP 2004-09 authorising the third respondent to recall the benefits granted to the petitioner under the FTP 2004-09 for the past period, such benefits having accrued and granted to the petitioner in accordance with the law.
The division bench headed by Justice Dipankar Dutta and Justice Karnik has ruled that the petitioner is discharged from the undertaking given by it at the time of admission of the writ petition on 14th September 2010. 56. However, since it appears to be the case of the respondents that the petitioner was disqualified, even on the basis of the contents of the Application and/or Declaration/Undertaking given by it while obtaining benefits under the SFI Scheme, the respondents may proceed against the petitioner to take away such benefits only if such an action is permissible in law.
“The demand notice dated 28th January 2010 and the reminder dated 31st May 2010, for the reasons as aforesaid, are set aside,” the court added.
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