2016 (2) TMI 1065 - HC - Customs

Duty drawback - rejected as time barred on the ground that the petitioner had not complied with the requirements pointed out in the deficiency memo within the statutory period of six months provided in R. 5 of the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995 - whether Rule 5(4)(a) of the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995 is applicable to a claim for drawback only, under S. 74 of the Customs Act? - Held that - Where the claimant has applied for drawback on re-export of duty paid goods only under S. 74 of the CA, 1962, the time bar under R. 5(4)(a) and (b) of the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995 cannot be applied; but it can be pressed into service, where the claim is for interest on drawback under S. 75(A) of the CA, 1962. Where any claim for interest on drawback is returned to the claimant as incomplete in any material particulars or is without the documents specified, unless the requirements specified in deficiency memo are complied within thirty days from the date of receipt of deficiency memo, the same will not be treated as claim filed under sub-rule (1) of Rule 5 of the aforesaid Rules - claim is for drawback only under S. 74 and interest is not claimed. So, R. 5(4)(a) and (b) will not come into application; but the 5th respondent Revisional Authority went wrong by applying R. 5(4) and (b) of the above Rule. But the 5th respondent failed to appreciate the distinction between R. 74 and 75A in its correct perspective - petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge to Ext.P7 order by revisional authority under S. 129DD of the Customs Act, 1962 regarding rejection of drawback claim as time-barred due to non-compliance with requirements within statutory period.

Analysis:
The Writ Petition challenges the Ext.P7 order passed by the revisional authority under S. 129DD of the Customs Act, 1962, which set aside an order passed in Appeal No. 325/2008 and restored an earlier order rejecting the petitioner's claim for drawback as time-barred. The petitioner exported certain parts of a Bipolar Membrane Cell Electrolyser, re-exported them under a claim for drawback under S. 74 of the Customs Act, 1962, within the prescribed time limit. However, the revisional authority set aside the claim due to a defect in the application not cured within six months, as per R. 5(4)(a) of the Drawback Rules.

The main argument presented is the distinction between S. 74 and 75A of the Customs Act, where S. 74 deals with eligibility for drawback, and 75A deals with eligibility for interest on drawback. The petitioner contends that R. 5(4) of the Drawback Rules, which deals with the procedure for claiming interest, should not apply as interest was not claimed under S. 75A. Conversely, the Standing Counsel argues that R. 5(4)(a) applies to both Ss. 74 and 75A, and since the defect was not cured within six months, the application should be deemed not filed, justifying the revisional authority's decision.

The key issue revolves around the applicability of R. 5(4)(a) of the Drawback Rules to a claim for drawback under S. 74. The rule specifies that incomplete claims shall not be accepted for the purpose of S. 75A and shall be deemed not filed if the deficiencies are not cured within a specified period. However, the rule's rigor can only be applied for the purpose it specifies, i.e., interest claims under S. 75A, not for general drawback claims under S. 74.

In conclusion, the Court finds that R. 5(4)(a) and (b) of the Drawback Rules should not apply to a drawback claim under S. 74 where interest is not claimed. As the revisional authority erred in applying these rules incorrectly, the Ext.P7 order is set aside, and the earlier order rejecting the claim is restored. The Writ Petition is allowed in favor of the petitioner.