By TIOL News Service

MUMBAI, MAR 10, 2018: THE petitioner seeks release of the outstanding quantities of replenishment gold pertaining to seven exports made by the petitioner under the Replenishment Scheme of the Foreign Trade Policy 2015-2020 without insisting on any security whatsoever.

The petitioner has referred to a Notification dated 23-2-2017, amending para 4.34 (i) of the FTP.It is stated that in terms of this amendment, after exporting the consignments of gold jewellery, the petitioner became entitled to receive 169 Kgs. of replenished gold.

The respondent responded by, inter alia, stating that the transaction under the Replenishment Scheme is currently under investigation by the Central Government Agencies. It, therefore, insisted that the petitioner provide a security, namely, Fixed Deposit/Bank Guarantee towards the customs duty which will be used as a cover for its liability.

The petitioner was called upon by the third respondent to submit documentary evidence, particularly proving that the petitioner has not availed Cenvat credit of the duty paid on the inputs used in the manufacture of gold jewellery. The petitioner clarified but the petitioner was still not granted the replenishment.

The petitioner, therefore, demanded that either the gold be replenished or a sum of Rupees Six Crores with interest at 18% be paid to it in lieu thereof.

The third respondent by a letter dated 10.04.2017 inter alia stated -

++ In case you submit the declaration that you have not availed cenvat credit or input rebate, duly supported by the documents as mentioned earlier, we can process your requests immediately as we have already done for all similar cases.

++ In case you submit the declaration for having availed cenvat credit or input rebate, we shall consider release of gold following the procedure as laid down in the aforesaid Notification.

++ In case you fail to submit the desired declaration within a week (with excise invoices and ARE 1 / ARE 2 in support thereof), we shall be constrained to conclude that you have failed to comply with the said DGFT Notification for which it will not be possible for us to process your requests for release of duty free gold thereafter.

After considering the submissions made, the High Court observed thus -

"35. We are of the firm view that in the facts and circumstances peculiar to the petitioner's case, particularly bearing in mind that in the past such replenishment has been granted to the petitioner, interest of justice would be served if the petitioner executes an Indemnity Bond, indemnifying respondent No.3 against all the claims that would be raised by the competent authorities in the Central Government and exercising powers under the Customs Act, 1962, the Central Excise Act, 1944 and the FTDR Act, 1992. In the event any claims and demands are raised on the third respondent, the petitioner should indemnify the third respondent against them. Meaning thereby, all consequences of such claims being raised or demands being enforced shall be borne entirely by the petitioner to the exclusion of the third respondent. The petitioner is ready and willing to execute such an Indemnity Bond and in the widest of the terms as noted by us. Once such an agreement is forthcoming from the petitioner, then in the facts and circumstances peculiar to this case, we direct the respondents not to insist on furnishing of a Fixed Deposit/Bank Guarantee by the petitioner and in lieu thereof accept this Indemnity Bond. To allay any apprehension of the third respondent, we direct and clarify that this order shall not be treated as a precedent in any future cases of the present nature. It is only in the facts and circumstances peculiar to the petitioner's case, as highlighted by us, and bearing in mind the past transactions that we have issued this direction…"

The writ petition was disposed of.

(See 2018-TIOL-410-HC-MUM-CUS)