Kitex Garments Ltd. vs Cus. and C. Ex. Settlement Commission, Chennai

Manjula Chellur, C.J.—The appellant is before us aggrieved by the judgment of the learned Single Judge giving the benefit of making a representation with regard to waiver of interest alone and not the other relief sought in the writ petition. It is not in dispute that as per Ext. P19 the Settlement Commission passed final order pertaining to four advance licences of Export and Import. With reference to two licence Nos. 2042504, dated 8-5-1996 and 10000906, dated 23-6-1997, there were controversy. So far as licence ending with No. 504, according to the appellant, when the actual foreign exchange that could have been realised from the export of goods was realised, there was no justification on the Settlement Commission to find fault with the appellant exporter so far as non-supply of the quantity of goods as indicated in the licence as one of the obligation. When we look at the Scheme, it is a Quantity/Value Based Duty Exemption Entitlement Certificate and not with reference to quantum of foreign exchange earned. Therefore, so far as this concession, irrespective of earning foreign exchange, shortage of supply of goods would come in the way of appellant and the claim in question cannot be accepted, having regard to the terms and conditions (obligations mentioned in the advance licences).

Then coming to the other licence ending with No. 906, when once the exporter acquires the benefit on account of importing certain goods and giving exemption of payment of duty, he is not expected to turn round and say irrespective of this benefit earned in the import, if the buyer who did not pay the money for supply of goods and thus did not comply with his obligation then such inadequacy or deficit should be passed on to the Department. Once he gets the benefit on the import of goods, having earned the benefit, it is not open to say that there is violation of obligation under the licence. Therefore, the Settlement Commission was justified in rejecting both claims.

So far as waiver of interest as contemplated u/s 127(h), either wholly or in part, a benefit can be extended to the licensee in respect of penalty, fine and interest prior to the amendment in accordance with the procedure applicable at the relevant point of time and not in accordance with the existing Section 127(h). So far as payment of 50% of the impugned demand as indicated in the judgment of the learned Single Judge, we extend the time up to 28-2-2013. The Writ Appeal is disposed of as above.