Gujarat High Court
Ratnamani Metals And Tubes Ltd vs Union Of India on 24 January, 2019
Author: S.R.Brahmbhatt
Bench: S.R.Brahmbhatt, A.G.Uraizee
C/SCA/10826/2018 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 10826 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE S.R.BRAHMBHATT
and
HONOURABLE MR.JUSTICE A.G.URAIZEE
===============================================================
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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RATNAMANI METALS AND TUBES LTD
Versus
UNION OF INDIA
================================================================
Appearance:
AMAL PARESH DAVE(8961) for the PETITIONER(s) No. 1,2
MR PARESH M DAVE(260) for the PETITIONER(s) No. 1,2
MR ANKIT SHAH(6371) for the RESPONDENT(s) No. 1,2,3
===============================================================
CORAM: HONOURABLE MR.JUSTICE S.R.BRAHMBHATT
and
HONOURABLE MR.JUSTICE A.G.URAIZEE
Date : 24/01/2019
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE S.R.BRAHMBHATT) Page 1 of 14 C/SCA/10826/2018 JUDGMENT
1. Heard learned counsels for the parties.
2. As the issue involved in this petition was in a narrow compass, the Court called upon the counsels to make submissions for final disposal of the matter so as to obviate the intermediate steps of admitting and issuing Rule and avoiding unnecessary delay in final disposal of the matter. Thus, the counsels were heard at length on merits of the matter. Hence, Rule. Shri Ankit Shah, learned advocate waives service notice of Rule on behalf of respondents. By consent, Rule is fixed forthwith.
3. The petitioners, by way of this petition have approached this Court invoking Article 226 of the Constitution of India, with following prayers:
"(A) That Your Lordships may be pleased to issue a writ of Mandamus or any other appropriate writ, order or direction thereby directing the Respondent No. 2 herein to pay in the Petitioner's favour Drawback aggregating to Rs.20,69,357/-
with interest under Section 75A of the Customs Act, 1962;
(B) That Your Lordships may be pleased to issue a Writ of Mandamus or a Writ of Certiorari or any other appropriate writ, direction or order, quashing and setting aside the decision contained in letter F.No.VIII/48- 1688/EXP/AMD/MP&SEZ/2017-18 dated 17.5.2018 [Annexure-"J"] and be further pleased to direct Respondent no. 2 and 3 herein to forthwith allow amendment of concerned shipping bill by substituting Scheme Code 47 in place of Scheme Code 20 and pay Drawback aggregating to Rs.20,69,357/- with interest to the Petitioners for exports made under such shipping bills;
(C) Pending hearing and final disposal of the present petition, Your Lordships may be pleased to direct the Respondent No. 2 herein to pay the Petitioners Drawback Page 2 of 14 C/SCA/10826/2018 JUDGMENT aggregating to Rs.20,69,357/- on terms and conditions that may be deemed fit by this Hon'ble Court;
(D) That an ex-parte ad-interim relief in terms of para 25(C) above may kindly be granted."
Thus, what is essentially under challenge is the illegal denial of the duty of back drop on untenable objections, resulting into violation of petitioner's fundamental rights under Article 14 of the Constitution of India.
4. The facts could be stated by reproducing the chronology of events from the petition, that would be sufficient for appreciating the rival contentions of the parties :
"The petitioner Company is manufacturing goods like Carbon Steel Welded Pipes, Polyethylene coated pipes etc. July, August and October, 2012 : The petitioner company has exported the above referred goods from Mundra Customs under four Shipping Bills declaring in each of the shipping bills that the goods were exported under Drawback claim under Section 75 of the Customs Act.
11.09.2012 & 07.12.2012 : Since all industry rate of Drawback (which is admissible to all exporters) was not fixed for the goods in question, the petitioner company submitted two applications dated for fixation of brand rate of Drawback for the above referred exports made by them.
19.04.2013 : The Additional Commissioner of Customs, Rajkot passed an adjudication order and rejected the petitioners' application for fixation of brand rate of Drawback mainly on the ground that either Drawback or Cenvat credit of Additional Page 3 of 14 C/SCA/10826/2018 JUDGMENT Customs duty was admissible, because the petitioners had paid such duties on the imported raw materials by utilizing DEPB Scrip, and not in cash. The petitioners' Drawback claims were accordingly not considered.
11.07.2013, the Commissioner (Appeals) allowed the petitioners' appeal against the above adjudication order and held that Drawback was admissible in respect of basic customs duty in cases like the present one and the rejection of the applications for brand rate fixation was incorrect.
09.10.2014 : The Revenue's Revision Application against the above order of the Commissioner (Appeals) was allowed by the Joint Secretary, Government of India, who held that the view of the Additional Commissioner was correct. Thus, the petitioners' claim for Drawback was held to be inadmissible by the Revisionary Authority.
06.05.2016: Special Civil Application No. 8025 of 2015 filed by the petitioners before this Hon'ble Court challenging the above order of the Revisionary Authority has been allowed by virtue of a detailed judgment wherein this Hon'ble Court has held that Drawback was admissible to the petitioners for the exports in question, and accordingly, the Custom authorities were directed to determine specific brand rate of Drawback for the exports made by the petitioners.
December, 2017 and January, 2018: For 4 shipping bills, 4 separate decisions/orders are rendered by the concerned Authority thereby determining specific brand rate for the exports made by the petitioners, and also determining the Page 4 of 14 C/SCA/10826/2018 JUDGMENT amounts of Drawback at Rs.6,75,803/- Rs.4,94,206/-, Rs.7,38,777/- and Rs.1,60,571/- (i.e. total Drawback of Rs.20,69,357/-) 12/13.01.2017: The petitioners have submitted four letters before the Drawback Department of Mundra Customs requesting for payment of Drawback, and all documents like shipping bills, export invoices, brand rate fixation letters etc. are also submitted with these letters.
The Superintendent of Customs, during one of the personal visits to follow up the matter, informed the petitioners representative that Scheme Code No. 20 was shown in the shipping bills which was for 'Jobbing (JBG)" and Scheme Code No. 47 which was "Drawback and JBG" was not shown in the shipping bills, and therefore Drawback cannot be paid unless shipping bills were amended as regards the applicable Scheme Code in view of Scheme Code for Export Promotion Schemes prescribed by the Directorate General of Systems and Data Management (CBEC), New Delhi.
19.03.2018: The petitioner Company submitted a letter/application requesting the Deputy Commissioner of Customs (Drawback) for amendment of one of the shipping bills as a specimen case, for substituting Scheme Code 47 instead of Scheme Code 20 in such shipping bill.
07/09.05.2018: The petitioners submitted a reminder letter in the office of the Deputy Commissioner of Customs (Drawback) for sanctioning and paying Drawback at brand rate fixed for the petitioners exports.Page 5 of 14
C/SCA/10826/2018 JUDGMENT 17.05.2018: The Superintendent of Customs sent a letter to the petitioner Company and informed them that the Deputy Commissioner (Exports) has rejected the petitioners request for amendment of shipping bill.
04.06.2018 & 21.06.2018: The petitioners have submitted representations before the Principal Commissioner of Customs bringing to his notice the entire background of this case and also the judgment of this Hon'ble Court pursuant to which brand rate of Drawback has been specifically determined for the exports made by the petitioners. The petitioners have requested the Principal Commissioner for his intervention for payment of Drawback claims.
But, there is no response from the Custom authorities including the Principal Commissioner's office and the petitioners' Drawback claims aggregating to Rs.20,69,357/- are not paid by the Respondent Customs authorities, though exports have been made 6 years back, i.e. during July, August, and October, 2012.
The Respondents have been denying legitimate export benefits in petitioners' favour for one or the other reason, and the petitioners' are driven to litigate for securing their legitimate export benefits again and again.
Export of goods is an admitted fact; and fixation of brand rate of Drawback as well as actual amount of Drawback is also finalized by the concerned Authority pursuant to the directions of this Hon'ble Court. Admittedly, the petitioners have declared in the shipping bills that export was under Drawback under Page 6 of 14 C/SCA/10826/2018 JUDGMENT Section 75 of the Customs Act, and thus, it is also a fact on record of the case that all exports were made under claim of Drawback. Therefore, now refusing to pay Drawback amount only for a hyper-technical reason that Scheme Code 47 (which was for Drawback and Jobbing) was not shown in the shipping bills but scheme code 20 [which was for jobbing] was mentioned is wholly unreasonable, illegal and unauthorized. Scheme Code is only a procedure laid down by the Board for convenience in processing Drawback claims, but there is no legal backing to such procedure because the Drawback Rules or the Customs Act nowhere lays down such procedure for claiming Drawback.
Therefore, the export benefits for which this Hon'ble Court has held the petitioners to be eligible are required to be paid by the Respondents; and since the Respondents are still holding back such legitimate export benefits, the Petitioners are constrained to approach this Hon'ble Court once again under Article 226 of the Constitution of India"
The respondents, unfortunately rejected the claim of petitioner on wholly untenable and illegal ground, which resulted into assailing the same in this petition under Article 226 of the Constitution of India.
5. Learned counsel for the petitioners invited this Court's attention to the development of events and submitted that the respondents initially declined the claim of Drawback on the ground that duty was paid in DEPB Scrip, which was in fact subject matter of challenge, in which, the petitioners succeeded. The department took up the issue with higher authorities and ultimately, the Page 7 of 14 C/SCA/10826/2018 JUDGMENT petitioners' claim was declined and stand of the authority was upheld by Union of India, which came to be challenged by the petitioners by way of petition under Article 226 of Constitution of India, being Special Civil Application No. 8025 of 2015 and allied matters, wherein, this Court rendered its decision on 6.5.2016. The relevant portion of said decision reads as under :
"paras19 to 23 :
19.The case of imports under different other schemes substantially stand on the same footing.
Though as is bound to be, terms of each scheme are different. In case of VKGUY, the foreign policy provides for incentive with the objective to compensate high transport costs and offset other disadvantages to promote exports of various products specified therein which include the agricultural produce, minor forest produce, Gram Udyog products, forest based products etc. In case of such exports, the incentive is made available in form of duty credit scrip at the rate of 5% of the FOB value of the exports. Likewise, in case of FMS, it is provided that same is to offset high freight cost and other externalities to select international markets to enhance India's export competitiveness in these markets. Specified product exported to specified countries qualify for such benefits. Duty credit scrip at the specified rate of the FOB value of the exports would be provided. In case of FPS, the objective is to promote export of products which have high export intensity/employment potential so as to offset infrastructural inefficiencies and other associated costs involved in marketing of these products. In this scheme also, exports qualify for duty credit scrip at the rate of 2% or 5% of the FOB value as provided in the notification. It can thus be seen that in all these cases, for different reasons the Government of India provides export Page 8 of 14 C/SCA/10826/2018 JUDGMENT incentives at specified rates of the value of the exports. The intention is to make the exports viable, more competitive and to neutralise certain inherent handicap faced by the industry in the specified areas. These export incentive schemes have nothing to do with offset of duty element of imported raw materials or inputs used in export products, unlike as in the case of DEPB.
20.Thus, under these schemes, the Government of India having realised that exports in question require added incentive, provides for the same in form of credit at specified rate of FOB value of the export which credit can be utilised for payment of customs duty. To disqualify such payment for the purpose of duty drawback would indirectly amount to denying the benefit of the export incentive scheme itself.
21.Judgement of this Court in case of Gujarat Ambuja Exports Ltd(supra), was rendered in different background. The question there was chargeability of education cess which was calculated at the rate of 2% on the aggregate of duty of customs levied and collected by the Central Government. In this background, question arose where the imports are made under DEPB scheme, would education cess be applicable. Noticing that subject to adjustment in DEPB scrip, the imports are made exempt from payment of duty, it was held that there cannot be education cess on such imports. The issue in the present case is vastly different.
22.Likewise, the decision of learned Single Judge of Madras High Court relied upon by the counsel for the Revenue in case of Associated Autotex Ancillaries P.Ltd. v. Joint Secretary, MF reported in 2007(211) ELT 368(Mad), did not concern the present controversy. In the said case, it was held that modification by circular dated 28.10.2005 would be prospective and the clarification of brand rate of duty drawback Page 9 of 14 C/SCA/10826/2018 JUDGMENT would be available also in relation to additional customs duty paid through DEPB, would have no retrospective effect.
23.In the result, both the petitions are allowed. Impugned orders are reversed. Proceedings are placed back before the original authority for fixation of brand rate of duty in each case. Petitions are disposed of."
6. Pursuant thereto, the authorities made orders, which have been placed on record in this petition from page nos. 56 to 62. Passing of these aforesaid orders would clearly indicate that the claim was determined and admissibility thereof was accepted. Now, the claim was sought to be rejected on flimsy ground of not mentioning the correct scheme code and when petitioners approached the authority to overcome the hinge by way of seeking appropriate amendment in the shipping bill, the same was declined as not in consonance with Section 149 of the Customs Act, which was wholly incorrect, untenable and hence, the relief sought in this petition deserves to be granted.
7. Learned counsel for respondents submitted that the affidavit-in- reply contains specific averment and stand of the respondents that the mentioning of scheme code is essential and amendment in the shipping bill is strictly to be governed by Section 149 of the Customs Act and within time limit stipulated thereunder. The authorities therefore, cannot be said to be incorrect in declining the application for seeking amendment and as the documents did not indicate correct scheme code and contain the scheme code, which was not for Drawback, the Drawback scheme could not be processed.
Page 10 of 14C/SCA/10826/2018 JUDGMENT
8. Heard learned counsel for the parties and perused the annexures in detail. The indisputable facts, emerged therefrom, deserve to be set out for ready reference, viz -
(i) The petitioners' claim of Drawback by mentioning appropriate entry in the shipping bill themselves but the fact remains to be noted that the scheme code available in the instant case, which have been '47' instead thereof, scheme code '20' is mentioned. But the provision of Section 75 is referred to by mentioning the same and indicating that the Drawback is claimed for the goods being exported under the shipping bills.
(ii)The claim of the petitioner was rejected by the department firstly only on the ground of import duty being paid not in terms of money but by way of DEPB scrip. It is required to be noted specifically at this stage that the claim of Drawback was not rejected on any other count that of incorrect mentioning of scheme code in the shipping bills.
(iii) The ultimate decision rendered by this court in the proceedings of Special Civil Application No.8025 of 2015 also clearly indicated that the sole ground for rejection of claim namely payment of import duty in the DEPB scrip, cannot be a valid ground for denying the claim of Drawback. Even in those proceedings also, it was unfortunately not urged or argued by the respondent department that the Drawback claim is liable to be rejected also on account of incorrect mentioning of scheme code. The Court hasten to add here that had this opportunity being availed, perhaps there could have been larger scope for making submission in respect of requirement of mentioning of correct code Page 11 of 14 C/SCA/10826/2018 JUDGMENT and the effect of not mentioning the same. In the present proceedings, however that scope being not available to the respondents, as the said was not either taken up while initially examining the claim for Drawback and on the second count, when respondents were to defend the claim prayer and the order impugned thereunder in the petition being Special Civil Application No.8025 of 2015.
(iv) The provisions of Section 149 of the Customs Act, which has been pressed into service also provides for permissibility of amending in the eventualities. mentioned therein, wherein, completeness of documentary evidence is one of the ground or eventuality, in which, the amendment in the shipping bill could be effected.
(v) The orders placed on record at page nos. 56 to 62, pertain to final rendering of admissibility of the Drawback, as Competent Authority clearly stated in those orders that the said orders were rendered on the basis of furnished documents duly verified, entitling the petitioner to seek and receive Drawback as claimed.
(vi) The petitioners were therefore, strictly speaking, not require to seek any amendment in the bill, however, as they have averred in the petition that they were informed orally about the snag in finally paying the Drawback, they put up the application, which came to be rejected.
9. Against the aforesaid backdrops, the Court is examining the submissions of the counsels for the parties.
Page 12 of 14C/SCA/10826/2018 JUDGMENT
10.The Court did not elaborately dwell upon their contention qua the effect of incorrect mentioning of scheme code, as in the instant case, according to us, the same was wholly uncalled for. The respondent department could not have resurrected such a ground for denying the Drawback claim when the order at page nos. 56 to 62 were passed after due verification of all the documents by the Competent Authority pursuant to order of this Court and adjudication of the matter in form of order dated 6.5.2016, rendered by this Court in Special Civil Application No.8025 of 2015.
11.The respondents were left with no option but to release the Drawback. In light thereof the respondents' action for seeking amendment and holding out the provisions of Section 149, in our view was nothing but uncanny attempt to avoid the eventualities, which unfortunately compelled the petitioners to approach this Court for no reasons, as had the authorities acted in accordance with law and processed the Drawback claim after the order at page nos. 56 to 62 was passed, the petitioners' consternation could have been avoided. Therefore, we are of the considered view that this petition is required to be allowed and respondents are therefore, directed to process the Drawback claim based upon the order at page nos 56 to 62 without any further delay and insistence upon rectifying the entry, as in our view it hardly matters, so far as clearance of Drawback claim is concerned. We have restrained ourselves from dwelling upon the order of incorrect entries in the shipping bill consciously, as our aforesaid decision is in respect of drawback claim in the given situation, where the order dated 6.5.2016 rendered in Special Civil Application No. 8025 of 2015 and allied matter was very much available and in view of provisions of Section 149, which also, when provides appropriate Page 13 of 14 C/SCA/10826/2018 JUDGMENT rectification or amendment, the same did not detain the Court from passing appropriate order. Hence, we have issued aforesaid directions. It is expected of the authorities to process the claim of Drawback as soon as possible, preferably within period of 2 weeks from the date of writ of this order.
12.In the result, the petition is allowed to aforesaid extent. Rule is made absolute to aforesaid extent. No costs.
(S.R.BRAHMBHATT, J) (A.G.URAIZEE, J) P.S. JOSHI Page 14 of 14