2016 (1) TMI 286 - HC - Customs

Claim of duty drawback - The grievance of the petitioner is that the petitioner s draw back claim on completed exports have not been processed and cleared by the department - The petitioner imports certain raw materials and after value addition re-exports - Held that - If in the present case therefore the department found that in subsequent imports there were alleged irregularities it may also be open for the department to for a reasonable period delay the consideration of draw back claims pending such investigation. However by no means this so called pending investigation can be the basis for indefinitely refusing to process draw back claims. As pointed out by the counsel for the petitioner even in cases where the alleged irregularities were noticed by the department at the outset at the time of import till date no show cause notices have been issued and presumably therefore the investigation is not completed. In cases of export consignments which are the basis of draw back claims the department has not stated the stage of investigation and the nature of materials so far collected. May be at this stage the department would not like to reveal such facts nor we insist making the same part of record. In any case the department cannot indefinitely delay the consideration of rebate claims of the petitioner. All the petitions are disposed of with the direction that if by 31.3.2016 the DRI investigation is not over and show cause notices for adjudication is not issued against the petitioners with respect to import and export in question the respondents shall process the rebate claims in accordance with law.

Summary

Issues:
Delay in processing duty draw back claims due to pending investigation by the DRI.

Analysis:
The case involved the petitioner, a manufacturer exporter, who faced delays in the processing of duty draw back claims by the department due to a pending investigation by the Directorate of Revenue Intelligence (DRI). The petitioner imported raw materials, completed manufacturing, and re-exported goods but encountered issues with the department regarding misdeclaration of weight and misclassification of products in later imports. The department seized goods based on these allegations, leading to delays in processing the draw back claims. The petitioner argued that since there were no objections raised during the initial import and export processes, the department had no grounds to withhold the draw back claims. The petitioner cited relevant sections of the Customs Act to support their claim for timely processing and interest on delayed payments.

The department's stance was that due to ongoing investigations into the petitioner's later imports, which were suspected of irregularities, it was necessary to probe the earlier imports and exports as well. The department justified the delay in processing draw back claims by emphasizing the need to await the outcome of the DRI investigation before releasing the claims. However, the petitioner contended that the department's prolonged delay in processing the claims, coupled with incomplete investigations, was unjustified. The court noted that while it was reasonable for the department to scrutinize import and export details related to the duty draw back claims, indefinite suspension or delay based solely on pending investigations was unwarranted.

After considering arguments from both parties and reviewing the case documents, the court held that the department could not indefinitely suspend the consideration of the draw back claims. The court acknowledged the department's right to investigate import and export details relevant to the claims but emphasized that such investigations should not unreasonably delay the processing of legitimate claims. The court directed the department to process the rebate claims by a specified date if the DRI investigation was not concluded by then, ensuring that the claims were handled promptly and in accordance with the law. The court's decision aimed to balance the interests of both the petitioner and the department, ensuring fair treatment and timely resolution of the matter.