Madras High Court
Sigma Mat (P) Ltd vs Joint Secretary on 24 September, 2018
Author: J.Nisha Banu
Bench: J.Nisha Banu
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 24.09.2018
RESERVED ON : 29.08.2018
PRONOUNCED ON: 24.09.2018
CORAM
THE HONOURABLE MRS.JUSTICE J.NISHA BANU
W.P(MD)No.7402 of 2012
Sigma Mat (P) Ltd.,
A private Limited Company,
rep. by its Director,
Mr.Sashi Kumar Fomra,
having its office at
Shed No.28, Mahia Industrial Estate,
Uranganpatti,
Madurai. .. Petitioner
Vs.
1.Joint Secretary,
Ministry of Finance,
(Department of Revenue),
Government of India,
New Delhi.
2.Commissioner,
(Appeals),
Customs and Central Excise,
Contonment,
Trichy.
3.Assistant Commissioner of Customs (Refunds),
Office of the Commissioner of Customs,
Custom House,
Tuticorin. .. Respondents
PRAYER: Writ Petition has been filed under Article 226 of the Constitution of
India, praying for issuance of a Writ of Certiorarified Mandamus to call for
the records relating to the order, dated 28.12.2011, passed by the first
respondent in Order No.1714/11-CX and quash the same and consequently direct
the 3rd respondent to refund a sum of Rs.6,16,944/- as duty drawback to the
petitioner.
!For Petitioner : Mr.S.Anand Chandrasekar,
for M/s.Sarvabhauman Associates
^For Respondents : Mr.S.Gururmoorthy
:ORDER
This writ petition has been filed by the petitioner challenging the order passed by the first respondent in Order No.1714/11-CX and for a direction to the third respondent to refund a sum of Rs.6,16,944/-.
2.0. The petitioner is a manufacturer and exporter of polypropylene mats. During 2007, the petitioner exported 50,776.730 kgs of polypropylene mats along with 374.031 kgs of packing material under Duty Free Import Authorization (DFIA) scheme and issued with a license bearing SL.No.3510020104/3/26/00, dated 27.12.2006. As per SION ? H229, the petitioner was allowed to import 61,952.000 kgs of polypropylene granules as raw materials and 378 kgs of Polypropylene granules as packing material in terms of para 4.4.6 of Foreign Trade Policy 2004 ? 2009, without payment of basic customs duty, additional customs duty, education less, antidumping and other safeguards, if any. The license was valid for a period of 24 months. No Cenvat facility was available for inputs either imported or procured indigenously against such authorization. As per para 4.4.8 of FTP 2006-07, drawback shall be available in respect of any duty paid material whether imported or indigenously used in the export product as per drawback rate fixed by Ministry of Finance.
2.1. By amendment slip 1, dated 06.06.2007 issued in file No.35/21/76/16/AM07, the Joint Director General of Foreign Trade, Madurai, made the import license transferable and as such, the petitioner transferred Duty Free Import Authorization license to M/s.Petro Plast Industries Limited, Sowcarpet, Chennai, who in turn imported 49.500 MT of Polypropylene granules under bill of entry No.078355, dated 24.09.2007 and paid additional customs duty, cess on CVD, educational cess and other additional duty, totalling Rs.6,16,994/-.
2.2. As per the amendment slip issued by the Joint Director General of Foreign Trade and as per paragraph No.4.4.6 of Foreign Trade Policy 2007-2008 additional customs duty / excise duty paid has to be reimbursed to the exporter as drawback. When the petitioner claimed refund of the additional duty paid by the transferee of license M/s.Petro Plast Industries Limited, the third respondent has rejected the same, by his order, dated 18.07.2008, passed in Order No.103/2008 holding that as per Foreign Trade Policy and drawback rules, only the duty paid by the exporter can be reimbursed. The third respondent has further stated that claiming of additional customs duty and cess paid by the importer as refund by the exporter is not at all envisaged. Hence, aggrieved by the order passed by the third respondent, the petitioner has preferred an appeal before the 2nd respondent. The second respondent, by his order dated 04.06.2009, passed in Appeal No.58 of 2009 has dismissed the appeal holding that the petitioner has not produced any valid evidence to prove that M/s.Petro Plast Industries Ltd, namely importer has taken Cenvat Credit or their buyers have taken any Cenvat Credit since the drawback has to be reduced on the basis of the credit so taken. Aggrieved by the order passed by the 2nd respondent, the petitioner has preferred a revision petition before the 1st respondent. The first respondent has dismissed the revision petition, vide impugned order dated 28.12.2011, confirming the order passed by the 2nd and 3rd respondents. Aggrieved by the order passed by the 1st respondent, the petitioner is before this Court.
3. The learned counsel appearing for the petitioner would submit that the intention or objection of the Foreign Trade Policy is to compensate the exporter for the duty paid raw material used at the time of production for export. Paragraph 4.4.6 of Foreign Trade Policy 2007-08 makes it clear that the additional customs duty/exercise duty paid by the importer would be reimbursed to exporter as drawback and therefore, the respondents are estopped from refusing the claim of refund to the petitioner. He would further submit that the petitioner is only a transferor of license and he cannot be expected to know the acts committed by the transferee in furtherance of such transfer and the respondents, without considering the same, has erroneously rejected the claim of the petitioner holding that the petitioner has failed to show that the transferee of license has claimed Cenvat Credit. Thus, he prayed to set aside the impugned order and to issue a direction to refund a sum of Rs.6,16,944/- to the petitioner.
4. The learned counsel appearing for the respondents would submit that as per proviso to Rule 3(c) of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 (hereinafter referred to as 'the Rules?), where the duty paid is taken as credit, drawback admissible on the goods shall be restricted to the credit already availed. It is the contention of the petitioner that irrespective of the fact whether the importer had availed Cenvat Credit or not, he is eligible for the reimbursement. If the Additional Customs Duty was refunded as claimed by the petitioner, then the petitioner will get this amount as refund/drawback and the importer M/s.Petro Plast Industries Limited, Chennai will get the same amount as Cenvat Credit, which will result in doubt benefit. The petitioner has not produced any document to the effect that the importer viz., M/s.Petro Plast Industries Limited, has not availed Cenvat Credit of duty paid on the goods imported against the said DFIA License. Therefore, the respondents have rejected the claim of the petitioner. Thus, he prayed to dismiss this writ petition.
5. Heard the learned counsel appearing for both sides and perused the records carefully.
6. Admittedly, the petitioner transferred Duty Free Import Authorization (DFIA) Licence to M/s.Petro Plast Industries Ltd., Sowcarpet, Chennai, who in turn imported 49.500 MT of Polypropylene granules on 29.04.2007 and paid Additional Customs Duty, Cess on CVD, Educational Cess and other Additional Duty, totaling Rs.6,16,994/-. Now, he sought refund of the duties paid by the transferee.
7. The respondents have stated in paragraph Nos.4 to 6 of the counter affidavit as under:
?4. It is submitted that the writ petitioner relies on excerpts of part of the para 4.4.6. of Foreign Trade Policy 2007-2008 and claims that additional customs duty / excise duty paid by the importer would be reimbursed to exporter as 'drawback' and alleged that the respondents are estopped from refusing the claim of refund to the petitioner stating that it is the consistent policy of government that the exporter should be allowed to get the duty suffered on inputs at all stages and cited Foreign Trade Policy 2006-2007, 2007-2008 and 2009 a basis for their claim.
Therefore, the full version of para 4.4.6 of Foreign Trade Policy 2007- 2008 is reproduced below for better appreciation.
?Once transferability is endorsed, imports against authorization or transfer of imported inputs shall be subject to payment of applicable additional customs duty / excise duty. While endorsing transferability, authorization would bear a note as to liability of such additional customs duty / excise duty. Such additional customs duty / excise duty would be reimbursed to exporter as drawback in case of local sales by excisable unit, CENVAT credit would be equal excise duty already paid.?
5. It is submitted that thus, as per Foreign Trade Policy, such additional customs duty / excise duty would be reimbursed as drawback and in case of local sales, CENVAT Credit would be equal to the excise duty already paid. (Additional Customs Duty (CVD) is the Excise Duty). It is not that such duty would be reimbursed to exporter as drawback and they are eligible for CENVAT Credit also if the goods are sold in the local market.
6. It is submitted that on a careful reading of the provisions of Foreign Trade Policy for the year 2006/07, 2007-08 and 2008-09, the following facts are noticed. The Foreign Trade Policy envisages the exporter (the original holder of DFIA) and the importer (the holder after DFIA transfer) to claim back the duty suffered on the inputs used in the manufactured goods for export (in this case, exporter) as drawback and the duty paid on input imported as Cenvat credit (in this case, importer).
The mode of compensating them had been as detailed below:
Exporter 2006-2007 2007-2008 2008-2009 (Original DFIA holder) As Drawback rate fixed by Government on inputs used in the manufacturer of goods As Drawback duty suffered on input Exemption of Additional Customs Duty if no Cenvat credit availed / Cenvat credit Import (DFIA holder after transfer) No Additional Customs Duty Cenvat for inputs imported or procured indigenously Cenvat credit for inputs either imported or procured indigenously
8. As per para 4.4.6 of Foreign Trade Policy -2007-08, when DFIA licence is transferred to the third parties, owing to the quantity restrictions imposed on import of Polypropylene granules, imports are subjected to additional customs duty or CVD and an endorsement to that effect has to be made in the license. The additional duties paid against the goods imported under the license will be eligible for Cenvat Credit, if sold locally or shall be claimed as drawback if used in exports.
9. The petitioner had made a claim of drawback of the Additional Customs Duties paid by the transferee unit - M/s.Petro Plast Industries Limited before the third respondent. Rule 3(c) of the Rules allows drawback of duty paid on inputs only, when the credit of duty of the inputs are not availed. The third respondent issued a notice seeking documents / evidences to show that the Additional Customs Duty paid on the goods imported under license are not availed and to satisfy the condition in Rule 3(c). Since the petitioner did not submit any document to satisfy Rule 3(c), the refund was rejected.
10. It is the contention of the petitioner that the policy itself says that the Additional Customs Duty paid on goods imported under license is available as credit or duty drawback to the exporter. It is to be noted that the exporter mentioned in the policy is the one who exports goods manufactured from out of the imported goods and not the petitioner. Under the DFIA Scheme, it is inferred that once the license is transferred to a third party legitimately, the benefits accrued under the license on the transferor terminates. The respondents have rightly rejected the claim of the petitioner. This Court does not find any reason to interfere with the impugned order. There is no merit in the writ petition.
11. In the result, this Writ Petition is dismissed. No costs.
To
1.Joint Secretary, Ministry of Finance, (Department of Revenue), Government of India, New Delhi.
2.Commissioner, (Appeals), Customs and Central Excise, Contonment, Trichy.
3.Assistant Commissioner of Customs (Refunds), Office of the Commissioner of Customs, Custom House, Tuticorin.
.