Availability of benefit under DGFT Provisions in absence of Customs Notification

PJ/Case Laws/2011-12/1364

Case: M FAR HOTELS LIMITED v/s UNION OF INDIA

Citation: 2011 (270) E.L.T. 158 (Ker.)

Issue:- Whether benefit of credit of Customs duty under DGFT Notification can be availed in absence of Notification issued by the Customs Department?

Brief Facts:- Petitioner-company established a Hotel, which is approved by the Director of Tourism, Government of India. Goods were imported by the petitioner under Exts. P9 to P14 bills of entries and Ext. P15 invoice. Credit was denied to the petitioner in respect of goods thus imported. The petitioner got the goods released on furnishing bank guarantee.

Petitioner filed writ petition before the High Court.

Respondent’s Contention:- Department had objected that in the absence of a Notification issued by the customs as a consequence of Exts. P17 and P18, the benefit cannot be claimed at this stage.

Reasoning of Judgment:- The High Court noted that during the pendency of the writ petition, the Director General of Foreign Trade has issued Exts. P17and P18 clarifying the position, as a result of which, the petitioner is entitled to get duty credit in respect of the goods imported under Exts. P9 to P15. In view of this clarification the petitioner is also entitled to avail of the benefit of the duty credit certified under Exts. P5 to P5(d) and P6 licence as well.

High Court held that the petitioner will be entitled to duty credit for the goods imported under Exts. P9 to P15 and the bank guarantees furnished by the petitioner will be returned. It was also declared that the petitioner will be entitled to the benefit of the balance amount of duty credit certified under Exts. P5 to P5 (d) and Ext. P6 licence as well. Further, having regard to the fact that the Government of India have issued Exts. P17 and P18, they held that it will not be reasonable to require the petitioner to wait until any notification is issued by the Customs Department to get the benefit. Therefore there is no substance in the objection of the department.

Decision:- Appeal disposed off.

Comment:- In this landmark decision, the DGFT, the prime authority has said that the credit will be admissible then the same cannot be denied on the ground that the custom notification has no clause for the same. There is always a conflict between DGFT and custom and Central Excise department. Although the DGFT is prime authority for import and export but the custom department does not issue the proper notification implementing the Foreign Trade policy. Thereafter, the implementing custom department allows the provisions as per Custom department only. Hence, the poor exporter or importer has to suffer on lack of co-ordination between the two ministries.

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PJ/Case Laws/2011-12/1364

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