1994 (4) TMI 391 - Commissioner - Customs

Issues Involved:
1. Entitlement to drawback at 6% of FOB.
2. Rejection of request for conversion of DEEC shipping bill into a Drawback shipping bill.
3. Alleged misdeclaration of the constituent yarn content.
4. Procedural compliance under Rule 11 of the Customs and Central Excise Duty Drawback Rules, 1971.
5. Applicability of Rule 14 of the Customs and Central Excise Duty Drawback Rules, 1991.
6. Amendment of shipping bill under Section 149 of the Customs Act.
7. Procedural lapse and substantial compliance.

Detailed Analysis:

1. Entitlement to Drawback at 6% of FOB:
The appellants argued that they were entitled to a normal drawback at the rate of 6% of FOB as no Advance licence was granted. The Ministry's letter dated 3-3-1992, which rejected the conversion request, did not provide reasons for the rejection. The impugned order was vague and defective, violating the principle of Audi Alteram Partem. The court observed that the goods exported were covered by the description under Sr. No. 27.04 of the Drawback Schedule, entitling the appellants to a 6% drawback.

2. Rejection of Request for Conversion of DEEC Shipping Bill into a Drawback Shipping Bill:
The appellants contended that they never requested the conversion of a DEEC shipping bill into a Drawback shipping bill, and therefore, the rejection of such a request was unfounded. The court noted that the DEEC licence was not granted, and thus, the goods were not covered by the note to Serial No. 2704. Consequently, the goods were eligible for the drawback as per the description under Sr. No. 27.04.

3. Alleged Misdeclaration of the Constituent Yarn Content:
The department alleged misdeclaration regarding the use of polyester filament yarn. However, the court found that since the DEEC licence was not granted, the note to Serial No. 2704 was not applicable. The goods were made wholly or mainly from cotton knitted yarn and viscose yarn, thus meeting the description under Sr. No. 2704. The court ruled that the alleged misdeclaration was imaginary and not relevant to the case.

4. Procedural Compliance under Rule 11 of the Customs and Central Excise Duty Drawback Rules, 1971:
The appellants argued that they had complied with the procedural requirements by providing necessary particulars on the shipping bills. The court held that Rule 11 was procedural and did not prescribe that a discrepancy in the declaration would disallow the drawback. The court emphasized that substantial compliance with the rule was sufficient, and the statutory right to drawback could not be denied due to procedural lapses.

5. Applicability of Rule 14 of the Customs and Central Excise Duty Drawback Rules, 1991:
The appellants contended that Rule 14 was wrongfully invoked as the payment of drawback was neither erroneous nor excessive. The court agreed, stating that the appellants were entitled to the drawback as per the statutory provisions, and Rule 14 was not applicable in this case.

6. Amendment of Shipping Bill under Section 149 of the Customs Act:
The appellants argued that the Asstt. Collector had the power to amend the shipping bill under Section 149 of the Customs Act. The court noted that the documentary evidence supporting the amendment was in existence at the time of export, and the amendment was procedural. Therefore, the Asstt. Collector could have carried out the amendment.

7. Procedural Lapse and Substantial Compliance:
The court emphasized the principle of substantial compliance, stating that procedural lapses should not deny the statutory right to drawback. The goods were covered by the description under Sr. No. 2704, and the DEEC was not granted, making the note to Serial No. 2704 inapplicable. The court ruled that the appellants were entitled to the drawback at the rate of 6% and allowed the appeal.

Conclusion:
The appeal was allowed, and the appellants were granted a drawback at the rate of 6% of FOB. The court emphasized that procedural lapses should not deny the statutory right to drawback, and substantial compliance with the rules was sufficient. The alleged misdeclaration was deemed irrelevant, and the appellants' entitlement to drawback was upheld.

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