Gujarat High Court
Gargip International vs Union Of India & 2 on 12 June, 2017
Author: S.R.Brahmbhatt
Bench: S.R.Brahmbhatt, A.G.Uraizee
C/SCA/17255/2016 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 17255 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE S.R.BRAHMBHATT
and
HONOURABLE MR.JUSTICE A.G.URAIZEE
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1 Whether Reporters of Local Papers may be
allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the
fair copy of the judgment ?
4 Whether this case involves a substantial
question of law as to the interpretation of
the Constitution of India or any order made
thereunder ?
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GARGIP INTERNATIONAL....Petitioner
UNION OF INDIA & 2....Respondents
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Appearance:
MR DIPEN DESAI, ADVOCATE for the Petitioner
MR DEVANG VYAS, ADVOCATE for the Respondent No. 1
MR SUDHIR M MEHTA, ADVOCATE for the Respondents No. 2 - 3
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CORAM: HONOURABLE MR.JUSTICE S.R.BRAHMBHATT
and
HONOURABLE MR.JUSTICE A.G.URAIZEE
Date : 12/06/2017
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE S.R.BRAHMBHATT)
1. Rule. Shri Sudhir M. Mehta, learned advocate waives service of notice of rule on behalf Page 1 of 9 HC-NIC Page 1 of 9 Created On Fri Aug 18 07:49:13 IST 2017 C/SCA/17255/2016 JUDGMENT of respondents no.2 and 3. Shri Devang Vyas, learned A.S.G. waives service of notice of rule on behalf of respondent no.1. By consent, rule is fixed forthwith.
2. Being aggrieved by the deficiency memo issued by the respondent no.2, the petitioner has approached this Court by way of this petition under Article 226 of the Constitution of India with following prayers.
(A) The Hon'ble Court be pleased to issue a writ of certiorari or writ in the nature of Certiorari or any other appropriate writ, order or direction, quashing and setting aside the impugned deficiency memo dated 30.12.2015 at Annexure-A to the petition and be pleased to quash and set aside the proceedings initiated consequential to the deficiency memo issued by the respondent No.2 at Annexure-A to the petition.
(B) The Hon'ble Court be pleased to issue a writ of mandamus or writ in the nature of mandamus or any other appropriate writ, order or direction, directing the respondent authorities to immediately release the drawback amount of Rs.42,44,130/- outstanding of the petitioner with interest as provided under Section-75A of the Act within such time as may be stipulated by this Page 2 of 9 HC-NIC Page 2 of 9 Created On Fri Aug 18 07:49:13 IST 2017 C/SCA/17255/2016 JUDGMENT Hon'ble Court;
(C) Pending hearing and final disposal of the petition, the Hon'ble Court be pleased to stay the execution, operation and implementation of the impugned deficiency memo dated 30.12.2015 at Annexure-A to the petition and be pleased stay the proceedings initiated consequential to the deficiency memo issued by the respondent No.2 at Annexure-A to the petition.
(D) Pass such other and further relief that is deemed fit and proper by this Hon'ble Court.
3. The petitioner, a proprietary concern, engaged in the business of export of goods, viz., Nuts, Bolts, Hand Tools, Fasteners etc. falling under Chapter heading 7318, 8205 and 3923 of the Customs Tariff Act, 1975. The petitioner is exporting the said goods to Dubai, UAE and such Arab Countries. As per Customs Act 1962, Exporter who seeks clearance for export of goods has to file shipping bill in terms of provision of Section 50 of the Customs Act before Custom officer. The Custom Officer permits clearance and loading of goods for exportation after being satisfied that goods entered for export are not prohibited goods and the exporter has paid the duty if any assessed thereon as per Section 51.
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4. That Government to promote export has
declared different incentive schemes like Advance
Licence Scheme, Export Promotion Capital Goods
Scheme, Duty Entitlement Pass Book scheme, Duty
Drawback Scheme. The Ministry of Finance under
Section 75 and 76 of the Customs Act has declared duty drawback scheme. The petitioner in ordinary course of its business, has exported various containers by way of different invoices and different shipping bills from September, 2014 till December, 2014 and details of the said transactions are stated in the statement. The said goods have been cleared and the export transaction has been completed i.e. goods have also been received by the importer without any objection whatsoever being raised by the Department. Even let export order (LEO) under Section 51 has been passed and the goods have been assessed under Section 17 under the classification which was submitted at the time of filing of the shipping bills and no objection whatsoever has been raised by the department. However, the drawback which is claimed for the said goods and for which the petitioner is legally entitled to is not being released by the respondents since long for no reason.
5. It is the case of the petitioner that once the goods have been cleared for export and the goods have been released and exported and the entire export commitment is fulfilled, there is no reason for not releasing the amount of drawback. It is the say of Page 4 of 9 HC-NIC Page 4 of 9 Created On Fri Aug 18 07:49:13 IST 2017 C/SCA/17255/2016 JUDGMENT the petitioner that no show-cause notice has been issued to the petitioner in respect of the shipping bills in question, however, only because for subsequent exports of other exporters with regards to the same kind of goods, some inquiry is going on, the same would not mean that for completed exports transactions for which there is no dispute and for which there is no show-cause notice, drawback can be withheld. Therefore, there is no reason to withhold the release of the drawback. The petitioner though submitted drawback claims for the respective shipping bills within the time limit prescribed and requested to the authority to release the drawback for the respective shipping bills, the authorities have not released the drawback.
6. The claims for drawback are to be made on electronically and as per circular issued by the Union of India more particularly circular No.25/2000 dated 30.03.2000, it is provided that the time limit for processing drawback claims under the EDI system is 3 days, whereas in manual cases, it would be 5 days. Thereafter, as requires under Section-74A of the Act, the drawback claims has to be processed and payment has to be made within a period of one month, failing which, interest shall have to be paid to the exporter. Therefore, there is a legislative mandate that drawback claims has to be cleared and payment has to be made within a period of one month from the date of making such claim. The petitioner made various requests to the higher authorities and Page 5 of 9 HC-NIC Page 5 of 9 Created On Fri Aug 18 07:49:13 IST 2017 C/SCA/17255/2016 JUDGMENT without an inquiry being initiated, the impugned deficiency memo is issued by the respondent no.2 on 30.12.2015 to make a show that some inquiry is initiated with regards to the drawback claims and therefore, the same can be taken as a reason to further withhold the drawback claims.
7. Once final assessment is made and once classification of goods are already made and approved by the proper officer, no officer can reopen such assessment unless as provided under law. Secondly, Rule 13(3) of Customs Central Excise Duties and Service Tax Drawback Rules, 1995 provides that deficiency memo can be issued only if claim of drawback is not complete in any material particular or without the document specified in sub rule-2 and that too within 10 days from the submission of claim. It is the case of the petitioner that when the exporter has exported the goods under Electronic shipping Bills in Electronic Date Interchange (EDI) under the claim of drawback, the Electronic shipping Bills itself shall be treated as claim for drawback. Therefore, deficiency memo can be issued only when drawback claim is incomplete in any material particulars and that too it can be issued only within 10 days. Therefore, no deficiency note can be issued after expiry of 10 days and it can only be issued for the reasons provided in Rule-13(3). In the present case, the deficiency memo is issued to change the classification under which the goods have been assessed. The same is clearly impermissible in law as Page 6 of 9 HC-NIC Page 6 of 9 Created On Fri Aug 18 07:49:13 IST 2017 C/SCA/17255/2016 JUDGMENT the same would amount to review in the assessment or cancelling the assessment already done under Section017, which is not permissible under law.
8. The petitioner replied to the said letter dated 30.12.2015 vide letter dated 12.01.2016 by stating that the goods are properly classified and therefore, the deficiency memo may be dropped. In spite of the above, no reply is received by the petitioner and on the other hand, the drawback claims were not cleared or processed and the drawback claim is not cleared. The petitioner has requested the authorities on several occasions for release of drawback, however, the authorities have not cleared the drawback claim of the petitioner. Lastly, the petitioner vide representation dated 21.07.2016 requested the authority to release the drawback, however, neither any reply is given to the said representation nor the drawback is released. Therefore, the present petition is concerned with regards to the drawback for the export transactions where no dispute has arisen regarding any mis- declaration or under weighing of the goods and the authorities have permitted clearance of the goods without any objection and the assessment under Section 17 is made and export order under Section 51 is also passed. In spite of receipt of aforesaid representation, the respondents have neither replied to the said representations nor have acted as per the said representations and thereby were not releasing the drawback to the petitioner.
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9. The petitioner has exported nuts by
classifying them under chapter heading 73181600 and clamps by classifying them under chapter heading 82057000, therefore, specific description is provided for both the exported goods and they have been classified in that specific head. Even as per the say of the department, by the impugned deficiency note, heading which provides the most specific description shall be preferred to a general description. The classification provided by the petitioner and accepted by the proper officer is under the head providing specific description whereas the department wants to take it to general head. The similar deficiency memo was issued to another exporter M/s. New Pensla Industries Limited on the same lines. The said exporter has approached this Court challenging the deficiency memo by way of preferring petition and this Court vide order dated 10.02.2016 issued notice and by way of interim relief stayed further proceedings pursuant to the deficiency memo.
10. Therefore, the petitioner has approached this Court by way of present petition under Article 226 of the Constitution of India for quashment of deficiency memo and the proceeding initiated by thereunder and for releasing of the drawback amount of Rs.42,44,130/- outstanding of the petitioner with interest.
11. Mr. Dipen Desai, learned advocate for the petitioner has produced on record judgment of co-
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ordinate bench of this Court passed in Special Civil Application No.1836 of 2016 on 10.02.2017 and submitted that this matter is an identical matter and same order may be passed, as has been passed in the aforesaid matter, to which Shri Sudhir M. Mehta, learned advocate appearing for respondent nos.2 and 3 submitted that Court may pass appropriate order.
12. Orders accordingly. The petition succeeds and is, accordingly, allowed. The impugned deficiency memo dated 30th December, 2015 (Annexure "A" to the petition) is hereby quashed and set aside and the respondents are directed to forthwith process the drawback claims of the petitioner and release the drawback amount with interest as provided under section 75A of the Act, as expeditiously as possible. Rule is made absolute accordingly with no order as to costs.
(S.R.BRAHMBHATT, J.) (A.G.URAIZEE,J) Pankaj Page 9 of 9 HC-NIC Page 9 of 9 Created On Fri Aug 18 07:49:13 IST 2017