The withdrawal of privileges under the Foreign Trade Policy was justified due to the petitioner's irregularities, and the impugned circular was found to be valid and in line with the relevant provisions of law.

1. This writ petition has been filed praying for a Writ of Declaration to declare the impugned Circular MF(DR) No.58/2004-Cus, dated 21.10.2004, of the first respondent, as null and void, as it is contrary to the provisions of the Foreign Trade Policy, Foreign Trade (Development and Regulation) Act, 1992, Customs Act, 1962 and Articles 14, 19 (1)(g) and 21 of the Constitution of India.

2. It has been stated that the petitioner is engaged in the manufacture of Woven bags meant for export to foreign countries. The petitioner is one of the biggest exporters of such goods and it is recognised as a star export house, by the Director General of Foreign Trade, Bangalore. It has been further stated that Paragraph 3.10.4 of the Foreign Trade Policy confers certain privileges to the status holders like the petitioner, who are eligible for the following privileges:

3.10.4 states that a status Holder shall be eligible for privileges as under:

i) Authorization and Customs Clearances for both imports and exports on self-declaration basis;

ii) Fixation of Input-Output norms on priority within 60 days;

iii) Exemption from compulsory negotiation of documents through banks.

Remittance/Receipts, however, would be received through banking channels;

iv) 100% retention of foreign exchange in EEFC account;

v) Exemption from furnishing of BG in Schemes under FTP;

v) SEHs and above shall be permitted to establish Export Warehouses, as per DoR guidelines.

vii) For status holders, a decision on conferring of ACP status shall be communicated by Customs within 30 days from receipt of application with Customs.

viii) As an option, for Premier Trading House (PTH), the average level of exports under EPCG Scheme shall be the arithmetic mean of export performance in last 5 years, instead of 3 years

ix) Status Holders of specified sectors shall be eligible for Status Holder Incentive Scrip under Para 3.16 of FTP."

3. It has been further stated that, by the impugned circular of the first respondent, dated 21.10.2004, as amended from time to time, the benefits and privileges conferred under the Foreign Trade Policy have been curtailed or withdrawn. The exporters, who are status holders, have been issued with show cause notices, by the various officers, under the Customs Act, 1962, forcing them to furnish bank guarantees for the entire duty to be paid by them. Such notices are being issued arbitrarily, jeopardising the operation of the exporters, contrary to the benefits conferred under the Foreign Trade Policy.

4. It has been further stated that the third respondent had issued a show cause notice, dated 13.12.2010, demanding from the petitioner an amount of Rs.1,05,107/-. The petitioner had submitted a suitable reply. A personal hearing had also been conducted on 6.1.2011. However, no orders had been passed by the third respondent, till date. Whileso, M/s.Big Bags India Private Limited had merged with the petitioner. A demand notice had been issued demanding an amount of customs duty to the tune of Rs.2.42 lakhs. The petitioner has contested the demand, as it is time barred.

5. It has been further stated that the officers from the office of the second and the third respondents have been employing coercive methods to make the petitioner pay the customs duty, as demanded by them, by withholding and delaying the clearance of imports and exports. Therefore, the petitioner has been paying the duty demanded by the second and the third respondents, under protest.

6. It has been stated that the third respondent had issued a letter bearing Reference No.F.NO.S.Misc.70/2011-DFIA, dated 23.2.2011, requiring the petitioner to issue bank guarantee for securing the entire duty, said to be payable for the goods cleared under the Export Promotion Scheme, as per the Foreign Trade Policy, based on the impugned circular of the first respondent, dated 21.10.2004.

7. The learned counsel for the petitioner had submitted that the impugned circular of the first respondent is