2012 (4) TMI 70 - HC - Customs

Re-export of consignment goods imported did not match and tally with the description of the goods mentioned in the bill of entry/invoices - petitioner paid the custom duty on default goods -fault and negligence of the consolidator - petitioner s consignment had been sent to Taiwan and the consignment that was meant for Element Fix Ltd., Taiwan had been sent to India instead permission asked to re-export the consignment - granted permission after 22 months levying a penalty of Rs.10,000/ - petitioner claimed refund or drawback being 98% of the customs duty paid by them AO rejected the refund claim goods were not entered for re-export within two years from the date of payment of customs duty Held that - the custom authorities took their own time to grant permission to re-export - permission for re-export was granted on 1st May, 2007, though the request was made on 30th June, 2005 - the lapses and default have been on the part of the Respondents - present case would be covered under Section 154 of the Act as it is a case of errors arising out of incidental slip or omission - The petitioner has been made to go through several proceedings, furnish NOC, etc - penalty imposed is quashed allowing a refund along with interest @ 10% per annum w.e.f. 1st January, 2008 till payment is made - respondents will pay costs of the present proceedings which are assessed at Rs.10,000/- within 2 months of order.

Issues Involved:
1. Delay in granting permission for re-export.
2. Denial of refund or drawback of customs duty.
3. Condonation of delay in re-export.
4. Applicability of Section 74 of the Customs Act, 1962.
5. Imposition of penalty.
6. Alternative remedy and technical objections.

Detailed Analysis:

1. Delay in Granting Permission for Re-export:
The petitioner, EMPEE Syndichem Pvt. Ltd., faced an issue where the consignment imported did not match the bill of entry. The petitioner promptly communicated with the customs authorities and sought permission to re-export the goods on 30th June 2005. However, the customs authorities delayed granting permission, which was only given on 1st May 2007, nearly 22 months later, and imposed a penalty of Rs.10,000/-. This delay was attributed to the customs authorities' lapses and not the petitioner's fault.

2. Denial of Refund or Drawback of Customs Duty:
The petitioner claimed a refund of Rs.1,49,207/- (98% of the customs duty paid). The customs authorities denied the refund on the grounds that the re-export was made beyond two years. The petitioner argued that the delay was due to the customs authorities' delay in granting re-export permission. The Assistant Commissioner of Customs stated that he did not have the competence to condone the delay, leading to the petitioner filing an appeal.

3. Condonation of Delay in Re-export:
The petitioner applied to the Central Board of Excise and Customs (CBEC) for an extension of time for re-export beyond two years under Section 74 of the Customs Act. The application remained pending until 23rd October 2008, when the CBEC directed the Chief Commissioner of Customs to consider the condonation of delay. However, the Chief Commissioner rejected the request, stating that Section 74 was not applicable as the goods were never cleared for home consumption and remained in customs custody.

4. Applicability of Section 74 of the Customs Act, 1962:
The customs authorities initially argued that the delay in re-export barred the refund under Section 74. However, the Chief Commissioner later contended that Section 74 was not applicable as the goods were never out of customs control and thus not imported into India. The court found this position contradictory and noted that if the goods were not imported, there should be no customs duty assessed or paid.

5. Imposition of Penalty:
The court found the imposition of a Rs.10,000/- penalty arbitrary and unjustified. The penalty was imposed without hearing the petitioner and without any reasoned justification. The court quashed the penalty, noting that the customs authorities had not properly considered the bonafide mistake and the importer's lack of fault as required by Circular No. 100/2003-CUS.

6. Alternative Remedy and Technical Objections:
The respondents argued that the petitioner had an alternative remedy by way of revision against the order dated 17th December 2008. The court rejected this argument, stating that filing an appeal would have been futile given the rejection of the request for extension of time under Section 74. Additionally, the court dismissed technical objections regarding the identification of goods and submission of original documents, noting that the goods remained in customs custody and the petitioner was not asked to submit originals before rejection.

Judgment:
The court allowed the writ petition, quashed the order dated 15th December 2008, and the penalty of Rs.10,000/-. The respondents were directed to refund Rs.1,49,207/- with 10% interest per annum from 1st January 2008 until payment. The respondents were also ordered to pay costs of Rs.10,000/- for the proceedings. The payments were to be made by a crossed account payee cheque sent by registered post within two months from the receipt of the order.

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