Licensing authorities have the power to amend the licence with retrospective effect- Bombay HC

By TG Team DGFT Judiciary March 21, 2011

TaxGuru Citation: 2011 taxguru.in 275
Case Name: M/s. Bhilwara Spinners Ltd. V/s. Union of India, Customs and Anr. (Bombay High Court)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Courts: All High Courts, Bombay High Court

The Bombay HC last week quashed the decision of the Customs, Excise, Service Tax Appellate Tribunal which held the Director General of Foreign Trade (DGFT), the licensing authority under the Foreign Trade (Development & Regulation) Act, did not have the powers to amend licences with retrospective effect. The CESTAT ruling was challenged by Bhilwara Spinners Ltd, manufacturers of yarn, which were granted ‘export promotion capital goods’ licence to import capital goods. The terms had to be changed due to market circumstances.

Bombay High Court

Writ Petition No. 9259 OF 2010

M/s. Bhilwara Spinners Ltd. V/s. Union of India, Customs and Anr.

Judgment Reserved On: 9th March, 2011

Judgment Pronounced On: 16th March, 2011

JUDGMENT

(PER J.P. DEVEDHAR, J.)

1) Rule, returnable forthwith.By consent, petition is taken up for final hearing.

2) The petitioner is aggrieved by the decision of the CESTAT dated 11/5/2010 as also the larger Bench decision of the CESTAT dated 18/1/2008, wherein it is held that the licensing authorities do not have the power to amend the license with retrospective effect.

3) The petitioner is engaged in the business of manufacture and sale of yarn. The petitioner had applied for and obtained Export Promotion Capital Goods license (‘EPCG licence’ for short) dated 14/1/1998, with obligation to export goods 6 times the CIF value of the capital goods imported. At the relevant time, there were two types of EPCG licenses namely 10% basic duty EPCG license (10% Basic duty + Nil CVD) and zero duty EPCG license (‘Nil’ Basic dty + 10% CVD). The petitioner opted for zero duty EPCG license. Para 6.3 of the Foreign Trade Policy as well as condition No.5 of Notification No. 29/97 governing zero duty EPCG license provided that the minimum CIF value of capital goods to be imported under zero duty EPCG license should be Rs.20 crores and if the same is not complied, the importer shall be liable to pay full duty with interest.