The judgment emphasizes the importance of fulfilling export obligations under the Foreign Trade (Development and Regulation) Act, 1992 and the authority of customs authorities to take action for recovery of duty in case of non-fulfilment.

JUDGMENT :

1. Writ petitioners-respondents, hereinafter referred to as `the respondents, filed writ petitions in the High Court with a prayer for issuance of a writ, order or direction declaring the action of the appellants as arbitrary, illegal, unjust, contrary to law and violative of Fundamental Rights of the respondents under Articles 14, 20, 21 and 22 and constitutional rights under Article 300A of the Constitution of India. Consequential directions were also sought to the authorities to treat the surrender of imported raw material vide letter dated 20-6-1995 in accordance with the export and import Policy as well as in the Handbook of Procedures and also the provisions of the Foreign Trade (Development and Regulation) Act, 1992 and the Rules made thereunder.

2. Prior to this, what prompted the respondents to file the writ petitions was that the appellants started taking coercive steps against the respondents and contemplated initiating prosecution against the respondents under the Customs Act, 1962 and Foreign Trade (Development and Regulation) Act, 1992. According to the learned senior counsel appearing for the respondents, respondents were arrested and applied for bail which was granted to them whereas according to the learned senior counsel for the appellants they were only detained for interrogation.

3. To understand the background under which the writ petitioners were filed, it is necessary to refer to the following facts. Facts are taken from Civil Appeal No. 3556 of 2001.

4. Respondents herein made an application to the appellants for grant of advance licence for import of 231 metric tonnes of Polyester Filament Yarn (for short `PFY')/Partial Oriented Yarn (for short `POY'), the value of which was 4,18,318.75 US $ as on 13-12-1993. The licence was granted to the respondent on 29-12-1993. Under the Scheme there is an obligation to export value added finished goods and the licence is granted subject to the exemption of custom duty on the value of the goods to be exported. The respondent, therefore, had to export goods worth 6,09,000 US $. Since the respondent had an export order for finished goods, it applied for an advance licence. The respondent imported 197.409 metric tonnes of PFY/POY out of the licensed quantity of 231 metric tonnes on various dates during the period from 14-1-1994 to 31-3-1994. The respondents made an averment that due to sudden fall in prices of the finished goods in the international market the party who had agreed to purchase the exported fabric went back on its commitment and therefore it became impossible for reasons beyond the control of the respondents to export the finished products. Since the goods were petroleum products that lose their strength with the passing of time, the respondents filed an application on 25-4-1994 for permission to sell the same to an import licence holder or to nominate somebody to whom the raw material could be surrendered, as contemplated under the export and import policy. [According to Mr. M.M. Paikadey, the learned senior counsel appearing for the Union of India, the said application was not received by the department]. After waiting for a period of fourteen months, the respondents identified a party who was holding a transferable licence and was eligible to import raw material without any payment of customs duty without corresponding obligation to export under para 127 of the Hand Book of Procedures. The respondents surrendered the raw material to M/s. Abhinandan Exports who had become the holder in due course of the transferable licence of M/s. R.K. Exports.

5. Notice on writ petitions was issued in response to which the Assistant Director, Directorate of Revenue Intelligence, Department of Customs filed his reply. In the reply, it was asserted that respondents were allowed to import the goods without payment of customs duty in terms of Notification No. 204 of 1992, dated 19-5-1992. As per this policy, the duty free raw material imported is required to be us