2011 (2) TMI 693 - CGOVT - Customs

Duty Drawback - Assessee claimed benefit of exemption notification at the time of import - he paid differential duty later after receipt of letter from the superintendent - on re-export of such goods assessee claimed duty drawback - department denied the claim of duty drawback on the ground that payment of differential duty subsequent to Department s letter dated 27-12-2007 cannot be termed as duty for the purpose of Section 74 of the Act - Commissioner (Appeals) allowed claim of duty drawback - held that - Here Government finds nothing wrong legally or other wise in Respondent party s claim of re-export duty-Drawback under Notification No. 19-Cus., dated 6-2-1965 (as amended) of Section 74(2) of the Customs Act, 1962. - Decided in favor of assessee. While drawing a distinction between a procedural condition of technical nature and a substantive condition in interpreting statute similar view was also propounded by the Apex Court in Mangalore Chemicals and Fertilizers Ltd. v. Dy. Commissioner (1991 -TMI - 42996 - SUPREME COURT OF INDIA). In fact, as regards Drawback rebate specifically, it is now a title law that the procedural infraction of Notifications, circulars, etc. are to be condoned if exports have really taken place, and the law is settled now that substantive benefit cannot be denied for procedural lapses.

Issues Involved:

1. Eligibility for exemption under Notification No. 27/2002-Cus.
2. Validity of the Drawback claim under Section 74 of the Customs Act, 1962.
3. Interpretation and application of relevant notifications and statutory provisions.
4. Alleged misdeclaration regarding the "lease-basis" condition.

Issue-wise Detailed Analysis:

1. Eligibility for exemption under Notification No. 27/2002-Cus.:

The Respondent imported a used barge on a temporary basis and claimed the benefit of exemption under Notification No. 27/2002-Cus., which provides a concessional rate of duty subject to certain conditions, including the requirement that the goods be imported temporarily for execution of a contract and be re-exported. The goods were cleared on payment of 15% of the aggregate duties of customs and on execution of a bond and bank guarantee for the differential duty. However, based on an audit objection, the department contended that the imported goods were not "leased goods" and demanded the differential duty, which the Respondent paid. The Respondent subsequently re-exported the barge and claimed a drawback under Section 74 of the Customs Act, 1962.

2. Validity of the Drawback claim under Section 74 of the Customs Act, 1962:

The Respondent filed a claim for a drawback of 75% of the duty paid at the time of importation, in terms of Notification No. 19-Cus., dated 6-2-1965, as amended. The original authority rejected the drawback claim, stating that the payment of differential duty subsequent to the department's letter could not be termed as duty for the purpose of Section 74 of the Act. However, the Commissioner (Appeals) allowed the appeal with consequential relief to the Respondent. The department contended that the final assessment of the Bill of Entry under Notification No. 27/2002-Cus. remained valid and that the Respondent's voluntary payment of differential duty did not change the legal status of the Bill of Entry.

3. Interpretation and application of relevant notifications and statutory provisions:

The department argued that the Respondent did not comply with the conditions of Notification No. 27/2002-Cus., as the re-export was made between six months to one year, contrary to the chosen option of re-export within six months. The department also contended that there was no provision in the notification for changing the option once exercised. The Government, however, noted that the conditions stipulated under Section 74 of the Customs Act were satisfied, as the goods were identified to the satisfaction of the Assistant/Deputy Commissioner of Customs and were exported within two years from the date of importation. The duty paid on imported goods was claimed as a drawback, and Section 74 did not impose any condition regarding the rate or specific notification under which the duties were paid.

4. Alleged misdeclaration regarding the "lease-basis" condition:

The department claimed that the Respondent misdeclared the imported goods as "leased goods" to avail the exemption under Notification No. 27/2002-Cus. The Government observed that the Respondent paid the differential duty with interest after failing to fulfill the required conditions of the initially claimed notification. The Government found that the Respondent was entitled to claim the drawback under Notification No. 19-Cus., dated 6-2-1965, as amended, after completing the required re-export procedure.

Conclusion:

The Government upheld the conclusions of the Commissioner (Appeals), noting that the conditions stipulated under Section 74 of the Customs Act were satisfied, and the Respondent was entitled to claim the drawback. The Government rejected the department's contentions, emphasizing that the statutory provisions and notifications should be interpreted strictly and plainly. The Government found no evidence of fraud or misdeclaration and concluded that the procedural infractions should be condoned in favor of the substantive benefit of the Respondent. The Revision Application was rejected for being devoid of merits.

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