The court emphasized the importance of fulfilling export obligations under the EPCG Scheme and upheld the validity of the investigation by the Directorate of Revenue Intelligence.

( 1 ) ISSUE Rule. Mr. P. P. Malhotra, Additional Solicitor General appears for the respondents. With consent, this petition has been heard for final disposal.

( 2 ) DIRECTORATE of Revenue Intelligence has, in the course of an investigation initiated by it, seized three out of seven luxury cars imported by the petitioner under what is known as b Export Promotion Capital Goods schemeb ( epcg for short ). Aggrieved, the petitioner has rushed to this Court not only for release of the seized cars but also for quashing of the on going investigation. The controversy arises in the following backdrop.

( 3 ) THE petitioner-company is a service provider engaged in the business of arranging international tours and travels. Apart from being the general sale agent of 14 international airlines, the petitioner claims to be engaged in providing sales, reservation and other allied customer services to its clients.

( 4 ) IN terms of section 5 of the Foreign Trade (Development and regulation) Act, 1992, the Central Government formulates and announces the import export policy every five years. The said policies for the relevant years envisaged an EPCG Scheme, whereunder capital goods could be imported at a concessional customs duty of 5%, subject to an export obligation equivalent to five times of CIF value of such goods to be fulfilled by the importer over a period of 8 years reckoned from the date of the issue of the import license. It is common ground that the said Scheme permitted imports even by service providers like the petitioner company.

( 5 ) TAKING advantage of the Scheme, the petitioner company appears to have imported seven luxury cars of BMW make. The petitioner s case is that the import of these cars was like other capital goods, subject to the condition that the petitioner fulfills the export obligation envisaged under the Scheme. Its further case is that the export obligation qua two of the cars imported by it had been fulfilled in recognition whereof the Director General of Foreign trade (DGFT) had issued two discharge certificates dated 16th September, 2004 and 30th August, 2005, while the request for the issue of such a certificate in regard to the third car was pending consideration.

( 6 ) ON 24th November, 2005, the officers of the Department of revenue Intelligence seized the afore-mentioned three cars out of a total of seven imported by the petitioner from the corporate office of the petitioner company situate in DLF City, Phase-III, Gurgaon. The officers making the seizure justified the action on the ground that the export obligation qua the said cars had not been properly fulfilled. An investigation was on that premise initiated by the officers in the course whereof the statements of the Directors of the petitioner company and other employees were recorded. According to the petitioner, the officers seizing the cars had offered to release the same upon payment of differential customs duty and furnishing a bank guarantee and a bond for the requisite amount as though the export obligation under the Scheme had not been fulfilled.

( 7 ) THE seizure of the cars and the on going investigation have been assailed by the petitioner in the above backdrop primarily on the ground that the DGFT having issued the requisite certificates regarding fulfillment of the export obligation, the officers of the Directorate of Revenue Intelligence had no legal authority to initiate any investigation or to seize the cars in question and that the officers making the seizures had no reason to believe that the cars in question were liable for confiscation under section 111 of the customs Act, 1962.

( 8 ) APPEARING for the petitioner-company Mr. Arun Jaitley strenuously argued that the seizure of the cars and the investigation initiated by the respondents were incompetent and in excess of their jurisdiction. He urged that the DGFT was the final authority to determine whether or not the export obligation qua capital goods imported und