Gujarat High Court
Leighton vs Union on 16 December, 2010
Author: Harsha Devani
Bench: Harsha Devani
Gujarat High Court Case Information System
Print
SCA/11323/2010 22/ 22 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No. 11323 of 2010
For
Approval and Signature:
HONOURABLE
MS.JUSTICE HARSHA DEVANI
HONOURABLE
MR.JUSTICE H.B.ANTANI
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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, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge ?
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LEIGHTON
CONTRACTORS (INDIA) PVT LTD - Petitioner(s)
Versus
UNION
OF INDIA THROUGH SECRETARY & 4 - Respondent(s)
=========================================
Appearance :
MR
PRAKASH SHAH with MR SN THAKKAR
for Petitioner
MS AMEE
YAJNIK for Respondents
=========================================
CORAM
:
HONOURABLE
MS.JUSTICE HARSHA DEVANI
and
HONOURABLE
MR.JUSTICE H.B.ANTANI
Date
: 16/12/2010
ORAL
JUDGMENT
(Per : HONOURABLE MS.JUSTICE HARSHA DEVANI) Having regard to the controversy involved in the present case which lies in a very narrow compass, the petition is taken up for hearing today.
Rule.
Ms. Amee Yajnik, learned Senior Standing Counsel waives service of rule on behalf of the respondents.
By this petition under Article 226 of the Constitution of India, the petitioner seeks a direction against the respondents to forthwith implement and comply with the Order-in-Appeal No.11/Commr(A)/JMN/2010 dated 21.01.2010 passed by the respondent No.3, Commissioner of Customs (Appeals) and grant sanction to the petitioner of drawback of Rs.1,47,59,740/- along with interest at the appropriate rate.
The facts stated briefly are that the petitioner herein had imported goods being Used Barge "Leighton Mynx" Singapore Flag GRT 2770, NRT 832, built 2002, and filed bill of entry claiming benefit of Exemption Notification No.27/2002-Cus dated 1st March, 2002 which came to be allowed. The petitioner, accordingly, paid the duty of Rs.29,51,948/- on the imported barge vide TR-6 Challan No.351 dated 16th October, 2007. Vide letter dated 27th December, 2007 the petitioner was informed that it has wrongly availed the exemption to the tune of Rs.1,67,27,706/- and requested the petitioner to pay the amount immediately. The petitioner, accordingly, paid the aforesaid amount vide TR-6 Challan No.645 dated 14th February, 2008. The petitioner, exported the said barge vide Shipping Bill No.F-125 dated 2nd June, 2008. The Shipping Bill was filed under the claim of drawback in terms of section 74 of the Customs Act, 1962 (the Act).
The petitioner thereafter, filed an application in the prescribed format claiming total drawback of Rs.1,47,59,740/-. Vide deficiency memo dated 21.7.2008, the petitioner was called upon to submit original import documents. In compliance with the deficiency memo, the petitioner vide letter dated 13.8.2008 submitted the required original import documents. Vide a show cause notice dated 29.7.2008, the petitioner was called upon to show cause as to why the drawback amounting to Rs.1,47,59,740/- filed by the petitioner vide its application dated 17.7.2008 should not be rejected under section 74 of the Act. The show cause notice came to be adjudicated vide order dated 22.9.2008 made by the adjudicating authority. Being aggrieved, the petitioner preferred an appeal under section 128(1) of the Act before the Commissioner of Customs (Appeals). Vide order dated 21.1.2010, the Commissioner (Appeals) allowed the appeal preferred by the petitioner and held that the petitioner was entitled to the drawback of duty as per eligibility in terms of notification dated 6.2.1965 (as amended from time to time) under section 74(2) of the Act on re-export of the duty paid Barge imported against bill of entry No.F-87 dated 16.10.2007. The appeal was allowed with consequential relief to the petitioner.
Subsequent thereto, the petitioner vide communication dated 16.2.2010 requested the respondent No.5, Assistant Commissioner of Customs, Jamnagar to grant the petitioner's drawback in compliance with the Order-in-appeal. In the meanwhile it appears that the respondents have preferred a revision application against the Order-in-Appeal pursuant to which, a show cause came to be issued to the petitioner calling upon it as to why the order made by the Commissioner (Appeals) should not be annulled. Since, despite the fact that no stay had been granted against the order made by Commissioner (Appeals), the drawback duty was not paid to the petitioner in terms of the order made by the Commissioner (Appeals), the petitioner has moved the present petition seeking the relief noted hereinabove.
In response to the petition, the respondent No.5 has filed an affidavit-in-reply dated 18.10.2010 wherein a stand has been taken that pursuant to the communication dated 16.2.2010 of the petitioner calling upon the Assistant Commissioner to grant drawback in terms of the order made by the Commissioner (Appeals), respondent No.5 had addressed a letter dated 6.3.2010 inviting the attention of the petitioner to sub-rule (5) of rule 5 of the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995 (the Rules), under which it is stipulated that where an order for payment of drawback is made by the Commissioner (Appeals), the manufacturer exporter may file a claim in the prescribed manner in the said Rules, that is, rules 5(1) and 5(2), and requesting the petitioner to file its claim in the manner prescribed in rule 5 of the said Rules. The petitioner has filed an affidavit in rejoinder dealing with the averments made in the affidavit in reply.
Mr. Prakash Shah, learned advocate appearing for the petitioner submitted that the stand of the respondent No.5, as stated in the affidavit-in-reply calling upon the petitioner to file a fresh application under rule 5 of the Rules is unjustified and motivated by the mala fide intention of depriving the petitioner of the interest due on the amount in question under section 75A of the Act. It was pointed out that the order made by the Commissioner (Appeals) was an order in proceedings arising out of the original claim application made by the petitioner under sub-rule (1) of rule 5 of the Rules. It was on this application made by the petitioner claiming drawback on re-export of duty paid goods, that the respondent No.5, Assistant Commissioner, had passed the order dated 22nd September, 2008 rejecting the drawback amounting to Rs.1,47,59,740/- and that it was against the said order, that the petitioner had preferred appeal before the Commissioner (Appeals) which came to be allowed vide order dated 21.01.2010, pursuant to which the respondent No.5 is duty bound to grant the drawback to the petitioner in terms of the said order. It was submitted that appeal being a continuation of the original proceedings, the order of the Assistant Commissioner would merge with the Order-in-Appeal and, in effect and substance, the order made by the Commissioner (Appeals) is an order made on the application made by the petitioner under sub-rule (1) of rule 5 of the Rules and as such the respondent No.5 is not justified in calling upon the petitioner to file a fresh application.
Referring to sub-rule (1) of rule 5 of the Rules, it was pointed out that a claim for drawback under the Rules is required to be filed in the form at Annexure II within three months from the date on which an order permitting clearance and loading of goods for exportation under section 51 is made by proper officer of customs. Inviting attention to sub-rule (5) of rule 5 of the Rules, it was pointed out that the said rule provides that where any order for payment of drawback is made by the Commissioner (Appeals), Central Government or any Court against an order of the proper officer of customs, the manufacturer exporter may file a claim in the manner prescribed in the Rules within three months from the date of receipt of the order so passed by the Commissioner (Appeals), Central Government or the Court, as the case may be. It was submitted that rule (1) of rule 5 applies in case where there is an order of the proper officer under section 51 of the Act in respect of which the exporter has no grievance, in which case the exporter would file an application under sub-rule (1) of rule 5 of the Rules within the period of limitation prescribed thereunder. However, in case the exporter is aggrieved by an order made by the proper officer of customs, he would prefer an appeal against the said order before the appellate authority and thereafter, in case an order of payment is made by the appellate authority, resort would be required to be made to sub-rule (5) of rule 5 of the Rules and a claim for drawback would be required to be made within the period of limitation prescribed thereunder in the manner prescribed under rule 5 of the Rules. It was submitted that in the facts of the present case, the order dated 11.09.2008 of the respondent No.5 as well as the order dated 21.01.2010 of the Commissioner (Appeals), were orders made on the claim filed by the petitioner under sub-rule (1) of rule 5 of the Rules. The order made by the Commissioner (Appeals) was not an order of the nature contemplated under sub-rule (5) of rule 5 of the Rules inasmuch as, the order of the Commissioner (Appeals) was made in respect of an order made by the Assistant Commissioner of Customs on a claim filed under sub-rule (1) of rule 5 of the Rules and not against an order of the proper officer of customs. It was submitted that in the circumstances, the respondent No.5 is not justified in calling upon the petitioner to file a fresh application under sub-rule (5) of rule 5 of the Rules.
Inviting attention to section 75A of the Act, which makes provision for "interest on drawback", it was pointed out that interest on drawback would be payable after expiry of one month from the date of filing of a claim for payment of such drawback, to submit that if the petitioner is required to file a fresh claim as submitted by the respondent No.5, the petitioner would be deprived of the interest payable under section 75A of the Act despite the fact that it had made its application as early as on 17.7.2008.
It was urged that once the order had been made by Commissioner (Appeals) against which no stay had been granted by a higher forum, the respondent No.5 was duty bound to comply with the order of the Commissioner (Appeals) and grant the drawback claim made by the petitioner. In support of the said submission, the learned advocate placed reliance upon a decision of this Court in the case of Sterlite Industries (India) Ltd. v. Union of India, 2007 (7) S.T.R. 606 (Guj.). Reliance was also placed upon a Circular No.572/9/2001-CX dated 22.2.2001 issued by the Central Board of Excise & Customs wherein, it has been stated that in cases where refund arises due to order of Commissioner (Appeals) or Commissioner of Central Excise/Customs and decision is taken to contest them before CEGAT, in such cases, appeal/stay application should be filed expeditiously, well before the expiry of stipulated period of three months. However, no refund/rebate claim should be withheld on the ground that an appeal has been filed against the order giving the relief, unless stay order has been obtained.
Referring to the proforma for claiming drawback of re-export, it was pointed that along with application, the exporter is required to submit original documents as prescribed thereunder. That in the facts of the present case, the petitioner has already submitted the original documents along with the original application made under sub-rule (1) of rule 5 of the Rules and as such, in case the petitioner is required to make another application, the petitioner would not be in a position to annex the original documents inasmuch as, the said documents are lying with the respondent No.5. In conclusion, it was submitted that the respondent No.5 is not justified in calling upon the petitioner to file a fresh application as contemplated under sub-rule (1) of rule 5 of the rules and in not making payment of drawback in terms of the order made by the Commissioner (Appeals) and that in the circumstances, the petition deserves to be allowed.
Opposing the petition, Ms.Amee Yajnik, learned Senior Standing Counsel appearing for the respondents placed reliance upon the averments made in the affidavit in-reply filed by respondent No.5. It was submitted that in the light of the provisions of sub-rule (5) of rule 5 of the Rules, the petitioner is required to file a proper claim application under sub-rule (1) of rule 5 of the Rules pursuant to the order made by Commissioner (Appeals) and as such, no case is made out so as to warrant interference by this Court.
From the facts noted hereinabove, it is apparent that pursuant to re-export of the duty paid barge imported by the petitioner, the petitioner had filed a claim for drawback in the prescribed form claiming drawback on re-export of duty paid goods under section 74 of the Act. The said claim came to be rejected by the respondent No.5, Assistant Commissioner of Customs, against which, the petitioner went in appeal before the Commissioner (Appeals) who vide order dated 21.01.2010, allowed the appeal, holding that the petitioner is eligible for drawback of duty on re-export of the duty paid barge imported against the bill of entry dated 16.10.2007. Thus, the order made by the Commissioner (Appeals) is in effect and substance, an order allowing the claim filed by the petitioner under sub-rule (1) of rule 5 of the Rules. However, according to the respondent No.5, in view of the provisions of sub-rule (5) of rule 5 of the Rules, the petitioner is required to file a fresh claim application pursuant to the order made by the Commissioner (Appeals). In this regard it may be germane to refer to the provisions of rule 5 of the Rules.
Rule 5 of the Rules insofar as the same is relevant for the present purpose reads thus:
"5.
Manner and time of claiming drawback on goods exported other than by post. - (1) A claim for drawback under these rules shall be filed in the form at Annexure II within three months from the date on which an order permitting clearance and loading of goods for exportation under section 51 is made by proper officer of customs :
Provided that the Assistant Collector of Customs may, if he is satisfied that the exporter was prevented by sufficient cause to file his claim within the aforesaid period of three months, allow the exporter to file his claim within a further period of three months.(2)
The claim shall be filed in duplicate alongwith the following documents, namely:-
(a) Triplicate copy of the Shipping Bill bearing examination report recorded by the proper officer of the customs at the time of export.
(b) Copy of Bill of Entry or any other prescribed document against which goods were cleared on importation.
(c) Import invoice.
(d) Evidence of payment of duty paid at the time of importation of the goods.
(e) Permission from Reserve Bank of India for re-export of goods, wherever necessary.
(f) Export invoice and packing list.
(g) Copy of Bill of lading or Airway bill.
(h) Any other documents as may be specified in the deficiency memo.(3)
The date of filing of the claim for the purpose of section 75A shall be the date of affixing the Dated Receipt Stamp on the claims which are complete in all respects, and for which an acknowledgement shall be issued in such form as may be prescribed by the Collector of Customs.
(4)(a) Any claim which is incomplete in any material particulars or is without the documents specified in sub-rule (2) shall not be accepted for the purpose of section 75A and such claim shall be returned to the claimant with the deficiency memo in the form prescribed by the Collector of Customs within fifteen days of submission and shall be deemed not to have been filed;
(b) Where exporter complies with requirements specified in deficiency memo within thirty days from the date of receipt of deficiency memo, the same will be treated as a claim filed under sub-rule (1).
(5)Where any order for payment of drawback is made by the Commissioner (Appeals), Central Government or any Court against an order of the proper officer of customs, the manufacturer exporter may file a claim in the manner prescribed in this rule within three months from the date of receipt of the order so passed by the Collector (Appeals), Central Government or the Court, as the case may be."
On a plain reading of sub-rule (1) of rule 5 of the Rules, it is apparent that what is required under the said rule is that a claim for drawback under the Rules should be filed in the form at Annexure II within three months from the date on which an order permitting clearance and loading of goods for exportation under section 51 is made by proper officer of customs. Thus, in a case where a claim in filed under sub-rule (1) of rule 5 of the Rules, the limitation starts running from the date of the order under section 51 of the Act made by the proper officer. From the language employed in sub rule (5) of rule 5 of the Rules, it is apparent that the same provides that where the manufacturer exporter has preferred an appeal against an order made by the proper officer of customs before the Commissioner (Appeals), Central Government or any Court and in that appeal any order for payment of drawback is made by the appellate authority, then in such case, the manufacturer exporter is required to file a claim in the manner prescribed in the rule within three months from the date of receipt of the order so passed by the appellate authority. In such a case, the limitation starts running from the date of receipt of the order of the appellate authority.
Thus, rule 5 of the Rules, envisages making of claim for drawback in two contingencies. Firstly where an order is made by the proper officer under section 51 of the Act permitting clearance of goods for exportation, the exporter is required to file his claim in the manner prescribed under sub-rule (1) of rule 5 of the Rules, within the period of limitation prescribed thereunder. However, in case an adverse order is made by the proper officer, the exporter may challenge the same before the concerned appellate authority and file the claim after the order is passed by the appellate authority. In such a case, where the exporter challenges the order made by the proper officer, he would not be in a position to file a claim within the period prescribed under sub-rule (1) of rule 5 of the Rules in which case, if he ultimately succeeds in appeal, his claim would become time barred. Sub-rule (5) of rule 5 of the Rules takes care of such a situation, and provides that in case where the exporter has preferred an appeal against the order of the proper officer, he is required to file the claim within a period of three months from the date of receipt of the order of the appellate authority. Thus, rule 5(2) of the Rules extends the period of limitation for filing a claim for drawback in case where the exporter has preferred an appeal against the order of the proper officer, in which case the limitation starts running from the date of receipt of the order of the appellate authority. Thus, for the purpose of invoking rule 5(5) of the Rules, the order made by the appellate authority should be an order in appeal against an order made by the proper officer.
Examining the facts of the present case in the light of the aforesaid statutory provisions, it is not in dispute that pursuant to an order made by the proper officer under section 51 of the Act permitting clearance and loading of goods for exportation, on 17th July, 2008 the petitioner filed a claim for drawback in the prescribed form under sub-rule (1) of rule 5 of the Rules along with the documents specified in item 14 of the said application, a copy whereof is annexed as Annexure G to the petition. Vide deficiency memo dated 21.07.2008 the petitioner was called upon to submit original import documents, which came to be submitted by the petitioner on 13.08.2008. After issuing a show cause notice to the petitioner as to why the drawback claimed by the petitioner should not be rejected for the reasons stated therein, the claim came to be rejected by the respondent No.5 vide order dated 22.09.2008. In the appeal preferred by the petitioner against the said order, the Commissioner (Appeals) allowed the appeal and granted the claim of drawback made by the petitioner. Thus, the claim for drawback made by the petitioner under sub-rule (1) of rule 5 of the Rules came to be allowed by the order-in-appeal made by the Commissioner (Appeals). Thus, the present case is a case where a claim for drawback had been filed pursuant to an order made by the proper officer as contemplated under sub-rule (1) of rule 5 and not pursuant to an order made by an appellate authority as contemplated under sub-rule (5) of rule 5 of the Rules. In the circumstances, the order made by the Commissioner (Appeals) being an order made on a claim for drawback filed under sub-rule (1) of the Rules, there would be no question of again filing a claim as envisaged under sub-rule (5) of rule 5. More so, when the order made by the Commissioner (Appeals) is not an order made in an appeal against an order made by the proper officer as contemplated under sub-rule (5) of rule 5 of the Rules. In the circumstances, the respondent No.5 is not justified in taking support of sub-rule (5) of rule 5 of the Rules and calling upon the petitioner to file a fresh claim for drawback under rule 5 of the Rules.
Examining the matter from another angle, section 75A of the Act which provides for "Interest on drawback", insofar as the same is relevant for the present purpose reads thus:
75-A. Interest on drawback.--(1) Where any drawback payable to a claimant under Section 74 or Section 75 is not paid within a period of one month from the date of filing a claim for payment of such drawback, there shall be paid to that claimant in addition to the amount of drawback, interest at the rate fixed under Section 27-A from the date after the expiry of the said period of one month till the date of payment of such drawback.
Thus, section 75A provides for payment of interest to a claimant in case where the drawback payable to him under section 74 or 75 of the Act is not paid within a period of one month from the date of filing a claim for payment of such drawback. In the present case the petitioner had filed its claim for drawback under section 74 of the Act on 17th July, 2008. If the stand adopted by the respondent No.5 were to be accepted, the petitioner would be required to file a fresh application within the period of limitation prescribed under sub-rule (5) of rule 5 of the Rules and would be entitled to claim interest only if drawback is not paid within one month from the date of the fresh application, which would result in denial to the petitioner of the interest on the drawback claim as computed from the date of its original claim application, that is, 10.07.2008. This could never have been the intention of the rule making authority. The stand of the respondent No.5 that the petitioner should file a fresh claim as contemplated under rule 5(5) of the Rules is therefore, contrary to the statutory scheme and therefore, cannot be accepted.
Also as rightly pointed out by the learned advocate for the petitioner, sub-rule (2) of rule 5 of the Rules provides for filing of the documents specified thereunder along with the claim application. Sub-rule (4) of rule 5 provides that any claim which is incomplete in any material particulars or without the documents specified under sub-rule (2) shall not be accepted for the purpose of section 75A and such claim shall be returned to the claimant with the deficiency memo within fifteen days of submission and shall be deemed to not have been filed. In the present case, the petitioner has filed the claim on 17.07.2008 along with the required documents which are still lying with the respondent No.5. Thus, the petitioner would not be in a position to file a fresh application along with the same documents, which are in the possession of the respondent No.5. In case, a fresh claim were to be filed by the petitioner the same would be returned to it and deemed to have not been filed. Thus, reading rule 5 of the Rules as a whole it is apparent that the rule envisages filing of only one claim application, either pursuant to an order made by the proper officer under section 51 of the Act or pursuant to an order made by an appellate authority as envisaged under sub-rule (5) thereof. The said rule does not and cannot provide for filing of a fresh claim application even after the original claim application is allowed. The interpretation sought to be canvassed on behalf of the respondent No.5 is fallacious and misconceived and contrary to the provisions of the Act and the Rules.
Vide Circular No.572/9/2001-CX dated 22nd February, 2001 issued by the Central Board of Excise and Customs, has issued guidelines which inter alia provide thus:
(3)The cases where refund arises due to order of Commissioner (Appeals) or Commissioner of Central Excise/Customs and decision is taken to contest them before CEGAT.
In such cases appeal/stay application should be filed expeditiously well before the expiry of stipulated period of three months (and not waiting for the last date of filing of appeal). However, no refund/rebate claim should be withheld on the ground that an appeal has been filed against the order giving relief, unless stay order has been obtained. It would be the responsibility of the concerned Commissioner to obtain stay order expeditiously where the orders passed by Commissioner (Appeals) suffer from serious infirmities and it involves grant of heavy refunds." (Emphasis supplied) Thus, in terms of the aforesaid circular, which is binding on the respondent No.5, in the absence any stay order having been obtained, it is not permissible for the respondent No.5 to withhold the drawback claim of the petitioner on the ground that a revision application has been filed against the order of Commissioner (Appeals).
In the light of the aforesaid discussion, the petitioner having already filed its claim for drawback in the prescribed form, which has been allowed by the Commissioner (Appeals), the respondent No.5 is duty bound to treat the original application made by the petitioner under sub-rule (1) of rule 5 of the Rules as having been allowed and to grant the duty drawback. Insistence on part of the respondent No.5 that the petitioner should file a fresh application under sub-rule (1) of rule 5 of the Rules, is contrary to the provisions of the Act and the Rules, and the petitioner appears to be justified in contending that such stand has been adopted only with a view to deny the petitioner the benefit of interest under section 75A of the Act.
This Court in Sterlite Industries (India) Ltd. v. Union of India (supra), has held that the principles of judicial discipline require that the order of a higher authority is required to be followed unreservedly by the subordinate authority; even if an appeal is filed, it cannot furnish a ground for not following the order of the superior forum unless the operation of the order has been stayed by a competent higher forum. In the affidavit in-reply filed by the respondent No.5, it is not the case of the respondent that any superior forum has made an order staying the order made by the Commissioner (Appeals). In the circumstances, it is not open for the respondent No.5 to refuse to comply with the order of the Commissioner (Appeals).
For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The respondent No.5 is directed to forthwith implement and comply with the Order-in-Appeal No.11/Commr(A)/JMN/2010 dated 21.01.2010 passed by respondent No.3, Commissioner of Customs (Appeals) and sanction the petitioner's claim for drawback of Rs.1,47,59,740/- along with interest in accordance with law. Rule is made absolute accordingly, with no order as to costs.
[HARSHA DEVANI, J.] [H.B.ANTANI, J.] parmar* Top