2014 (5) TMI 1095 - CGOVT - Customs

Demand of drawback availed, where export proceeds finally could not realized within stipulated period - Export of leather footwear and finished leather goods under drawback shipping bills - Exporter failed to submit BRCs evidencing realisation of export sale proceeds in respect of shipping bills - Held that - the Reserve Bank, has granted extension up to 31-3-2014 subject to the condition that no further extension would be granted. Applicant has submitted 13 E-BRCs in respect of shipping bills in question evidencing realisation of export sales proceeds within extended time limit allowed by the RBI and said E-BRCs have been verified by the concerned bank and the same may be accepted. Therefore, there is no case for recovery of already sanctioned drawback claims. The demand of said sanctioned drawback is not legally sustainable and hence required to be dropped. - Revision petition allowed with consequential relief

Summary

Issues:
Appeal against Orders-in-Appeal No. 324 & 325/CUS/APPL/KNP/2012, non-realization of export proceeds within stipulated time, rejection of appeals by Commissioner (Appeals), revision applications under Section 129 DD of Customs Act, 1962 before Central Government, rejection of revision applications, challenge in High Court, verification of documentary evidence, compliance with High Court order, submission of E-BRCs, verification of E-BRCs, extension of time granted by RBI, dropping of demand for sanctioned drawback claim.

Analysis:
The revision applications were filed against Orders-in-Appeal by M/s. Zaz and Zaz Pvt. Ltd., Kanpur, regarding non-realization of export proceeds within the stipulated time frame as per Rule 16A of the Customs & Central Excise Duties Drawback Rules, 1995. The Reserve Bank of India had prescribed a deadline of 12 months from the date of export for realization and repatriation of export proceeds. Failure to submit proof of realization led to a demand notice for recovery of duty drawback. Appeals were rejected by the Commissioner (Appeals), prompting the filing of revision applications before the Central Government.

The revision applications challenged the rejection mainly on the grounds that the applicant was actively pursuing the realization of payments, had applied for an extension of the realization period from RBI, and the request was pending with RBI. The applicants argued that the adjudicating authority should have waited for RBI's decision on the extension request before demanding recovery. They also cited Rule 16A(4) of the Drawback Rules to support their entitlement to the drawback benefit.

The Central Government initially rejected the revision applications, leading to a challenge in the High Court. The High Court directed the Revisional Authority to verify the documentary evidence provided by the petitioner regarding the realization of export proceeds within the extended period granted by RBI. In compliance with the High Court order, the applicant submitted E-BRCs and related documents, including communications with RBI and the authorized bank regarding the extension granted.

Upon verification of the E-BRCs by the Assistant Commissioner of Customs, it was confirmed that all 13 E-BRCs submitted by the applicant were genuine. The Reserve Bank had granted an extension until 31-3-2014 for realization of export proceeds, subject to no further extensions. As the E-BRCs evidenced realization within the extended period, the demand for recovery of sanctioned drawback claims was deemed legally unsustainable. Consequently, the Government set aside the demand for recovery and allowed the revision applications, providing consequential reliefs to the applicant.

In conclusion, the impugned orders were set aside, and the revision applications succeeded in securing relief for the applicant.