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2017 DIGILAW 1391 (RAJ)

Vinayaka Images Private Ltd. v. Union Of India

2017-05-31

K.S.JHAVERI, VIRENDRA KUMAR MATHUR

body2017
JUDGMENT K.S. Jhaveri, J. - By way of this writ petition, the petitioners have prayed for following reliefs : "(i) By issue of an appropriate writ, order or direction, the impugned order, dated 7-1-2004 passed by the learned Respondent No. 2 be quash and set aside and also the order, dated 24-1-1998 and 18-12-2003 passed by the Respondent Nos. 4 and 3 respectively may also please be quashed and set aside. (ii) Any other appropriate relief may be granted to the petitioner which this Hon''ble Court may deem fit and proper in the facts and circumstances of the present case by issuing an appropriate writ, order or direction." 2. The facts of the case are that the petitioners are a company having the business of export of ready-made garments. The petitioner is said to have exported garments worth US $ 10,44,400 of which US $ 40,000 stood realised and had received Duty Drawback of Rs. 32,81,895.00 of which Rs. 1,26,079.00 pertained to the realized Export proceeds and Rs. 31,55,816.00 to unrealized exports. 3. The Assistant Commissioner of Customs-Respondent No. 4 herein issued a show cause notice to the Company about Duty Drawback recovery of Rs. 31,55,816.00 which was replied by the petitioners herein on 26-12-1997. Though in spite of the reply the Assistant Commissioner of Customs sought recovery of Rs. 31,55,816.00 against which the petitioners preferred an appeal before the Commissioner (Appeals) on 28-3-1998. The appeal came to be dismissed on 18-12-2003 read with order, dated 9-3-2004. Against the said order the petitioners preferred a revision application before the Joint Secretary, Ministry of Finance, Government of India on 19-3-2004 which also came to be dismissed on 7-12-2004. 4. This Court while entertaining this appeal has vide order, dated 14-5-2007 has observed as under : "We heard Mr. Rajendra Salecha, the counsel for the petitioners and Mr. Ajay Shukla the counsel for the respondents. 2. On 8-5-2007 the matter was adjourned to enable the counsel for the respondents to find out as to whether the Supreme Court or this Court or any other High Court has considered the retro-spectivity of Rule 16A of the Customs and Central Excise Duty Drawback Rules, 1995 and accordingly the matter was adjourned. 3. The counsel for the respondents submits that he has been unable to lay hands to any such decision in this regard. 4. The matter requires consideration. 5. Hence Rule. 6. Mr. 3. The counsel for the respondents submits that he has been unable to lay hands to any such decision in this regard. 4. The matter requires consideration. 5. Hence Rule. 6. Mr. Ajay Shukla waives service for the respondents. 7. The counsel for the petitioners submits that for the present, the petitioners are not desirous of pressing the prayer for interim relief. 8. The prayer for interim relief is, accordingly, rejected." 5. Counsel for the appellant has contended that the Rule which was sought to be noticed was issued and the reasonings which were adopted by the first authority in para 11 reads as under: "11. Now, therefore, M/s. Vinayaka Images (P) Ltd. Dikshit Bhawan, Hawa Sadak Jaipur and its Director Sh. Sanjeev Saraogi who looked after the activities of the company are called upon in terms of Rule 16A of the Customs and Central Excise Duty Drawback Rules, 1995 to produce before the Asstt. Commissioner of Customs, Inland Container Depot, Sanganer Jaipur the proof of realisation of export proceeds in respect of export as detailed in the chart Annex "A" within a period of 30 days from the date of receipt of this notice failing which it would be competent for the Asstt. Commissioner of Customs, ICD Jaipur to recover amount of drawback totalling to Rs. 31,55,816/- from M/s. Vinayaka Images (P) Ltd., Jaipur in terms of Rule 16A of the Customs and Central Excise Duty Drawback Rules, 1995 and other provisions for recovery of sums due under the Customs Act, 1962." 6. In the recent decision in the case of Surinder Singh v. Union of India, 2016 (340) E.L.T. 97 (S.C.) , the Supreme Court in paras 13 and 15 observed as under : "13. Section 37 of the Central Excise Act, 1944 is a general provision encapsulating the rule making power of the Central Government and nothing more. Rule 14 of the Duty Drawback Rules, 1971, only provided for repayment of erroneous or excess payment of drawback and clearly that provision could not be pressed into service in a situation where the export proceeds were not realised. Such a provision was introduced in the context of excise duty for the first time only by way of Rule 16A of the Duty Drawback Rules, 1995, with effect from 6-12-1995. Such a provision was introduced in the context of excise duty for the first time only by way of Rule 16A of the Duty Drawback Rules, 1995, with effect from 6-12-1995. The High Court observed that there being no corresponding earlier substantive provision in the Central Excise Act, 1944, Rule 16A could obviously not be made retrospective to apply even to those exports, like those in the instant case, which were made prior to 6-12.-1995. Therefore, in this respect, the High Court was in complete agreement with the order, dated 11-6-1999 passed by the Central Government in the appellant''s revision petition. The said order has attained finality with the dismissal of the Civil Appeal filed by the Government. It was further held that the order, dated 12-6-2003 passed by the authorities has also rightly directed the refund to the appellant of the excise component of the drawback as well as the interest charged thereon. It was further held that although the above substantive provision was introduced by the Finance Act, 1991, with effect from 27-12-1991, there is no corresponding provision in the duty Drawback Rules, 1971. The Department would, therefore, have to fall back on Section 142(1) of the Customs Act, 1962, which prescribes the procedure for recovery of sums due to Government. When, ultimately, Rule 16A was introduced, it was only consistent with the existing provisions in the Customs Act, 1962, for recovery of drawback where export proceeds were not realised. In other words, when Rule 16A was introduced in the Duty Drawback Rules, 1995, no new provision was being introduced substantively for the first time concerning the customs duty component whereas it was as far the excise duty component was concerned. * * * * * 15. After hearing learned counsel for the parties, we are of the opinion that the impugned order passed by the High Court does not suffer from any infirmity and, therefore, no interference therein is called for. Suffice is to point out that the effect of Section 75 of the Customs Act, 1962, is that in case value/price of the goods exported is not received, it is to be presumed as if no drawback was ever allowed and in that view of the matter, the duty drawback which was taken by the appellant had to be refunded. That would be the position even de hors Rule 16A of the Duty Drawback Rules, 1995. That would be the position even de hors Rule 16A of the Duty Drawback Rules, 1995. Therefore, we are inclined to agree that Rule 16A is a clarificatory provision clarifying the position of law which already exists in the form of Section 75 of the Customs Act, 1962, and therefore, will have retrospective effect. The appeal is accordingly, dismissed." 7. Counsel for the respondents Mr. Singhi has opposed the contention of the petitioners which is based on rules which were not applicable when he had done export. The export was done between March, 1995 to May, 1995. The rules came into force on 26-5-1995. Therefore, the contention that during the period from March, 1995 to May, 1995 when the export was done he was not entitled to the duty drawback on 26-5-1995. The complete case of the department was based on the extension which was granted for the recovery of the export was extended up to 13-11-1996 during which he has received payment. In that view of the matter, the extension period which he is not received the amount and the main contention in view of the fact even he has not received foreign exchange and the very purpose of the duty drawback has been frustrated. Therefore, the contention of the petitioners is required to be rejected on two counts; firstly, the export was done when the rules were not in force and, secondly, the rules which came into force notice under Section 16A was issued and in spite of the extension up to 13-11-1996 he has not recovered the foreign exchange to claim the duty drawback. 8. It will not be out of place to mention that we are considering the show cause notice which was issued by the Authority under Section 16A, para 11 of which reads as under : "11. The applicants also submitted that there is distinction in legal position between Customs and Excise Components of drawback and that it was only when Rule 16A of the Customs and Central Excise Duty Drawback Rules, 1995 came into existence with effect from 6-12-1995, as statutory instrument that drawback amount of Central Excise duty element paid to the exporter became recoverable in case the sale proceeds of the export goods were not realised." 9. Even the authority has passed the order under Section 16A. Even the authority has passed the order under Section 16A. In that view of the matter, the basic contention of the petitioners that Section 16A cannot be retrospective effect is required to be accepted in view of the decision of the Supreme Court in the case of Surinder Singh v. Union of India (supra). The contention of Mr. Singhi is attractive on the first point but he has not received the foreign exchange and claimed duty drawback. In that view of the matter, it will not be appropriate to decide that issue in the present proceedings. 10. In that view of the matter, the recovery under Section 16A is not permissible and, therefore, the show cause notice which was issued under Section 16A is required to be quashed and set aside. 11. Consequently, the writ petition is allowed. The show cause notice, dated 26-11-1997 is quashed and set aside in view of the decision of Supreme Court in the case of Surinder Singh v. Union of India (supra). We make it clear that we are not travelling beyond the show cause notice. The contention of the respondents cannot be decided as to whether there is no intention of the duty drawback and the other claims which are sought to be argued by the respondents.