Case Law Details
Itma Hotels India Private Limited. Vs Additional Commissioner Of Customs (Kerala High Court)
Introduction: The Kerala High Court recently adjudicated a writ petition filed by ITMA Hotels India Private Limited challenging the Customs Department’s notice invoking a bank guarantee. The dispute revolves around the alleged improper import of capital goods under the EPCG Scheme.
Detailed Analysis: The Customs Department contends that ITMA Hotels failed to meet the conditions of the Export Promotion of Capital Goods (EPCG) Scheme, accusing them of violating the scheme during the import of capital goods for their hotels. The department demands a significant sum of Rs.4,14,72,500/- as a due demand for customs duty.
The court, however, emphasizes that interference against the invocation of a bank guarantee is only permissible in cases of fraud or irretrievable injury to the party providing the guarantee. In this instance, the court finds neither ground applicable to the writ petition. The total customs duty demand amounts to Rs.9,31,44,529/-, surpassing the Rs.4,14,72,500/- covered by the bank guarantee.
In light of these considerations, the court dismisses the writ petition, directing the Customs Department to proceed with the adjudication of show cause notices promptly. The new management of ITMA Hotels is instructed to be notified of the hearing by the 1st respondent.
Conclusion: The judgment underscores the limited grounds for interfering with the invocation of a bank guarantee, emphasizing the absence of fraud or irretrievable injury in the present case. ITMA Hotels is now required to address the customs duty demand through the due legal process, with the court dismissing the writ petition and providing specific directives for the resolution of the dispute.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The present writ petition has been filed under Article 226 of Constitution of India impugning the notice dated 11.01.2023 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 fulfill the conditions of Export Promotion of Capital Goods Scheme of the Government and they had imported the capital goods in violation of the said scheme. In view thereof it was said that the petitioner was liable to pay a due demand of Rs.4,14,72,500/- by way of Demand Draft drawn in favour of the Commissioner of Customs, Cochin for which the petitioner had furnished bank guarantee of. Rs.4,14,72,500/-.
2. This Court can interfere against invocation of bank guarantee only on two ground i.e, fraud or irretrievable injury or loss to the person who has furnished bank guarantee. None of the grounds are available in the present writ petition against the notice invoking the bank guarantee furnished by the petitioner under the EPCG Scheme. The total customs duty demand is Rs.9,31,44,529/- which would include the duty and the interest. The bank guarantee is only to an extent of Rs.4,14,72,500/-.
3. Considering the scope for interference in respect of invocation of the bank guarantee, and I find no ground available in the present writ petition. The writ petition is not maintainable and therefore, the writ petition is dismissed. The 1st respondent should proceed with adjudication of Exts.P1 to P3 show cause notices in accordance with law, expeditiously. New management of the petitioner should be put to notice of hearing by the 1st respondent.
With the aforesaid direction, the present writ petition stands dismissed.
