2018 (1) TMI 1451 - CGOVT - Customs

Erroneous paid Duty Drawback - applicant took nine months to reply to the deficiency memo issued by the department when it was mandatory to reply within 30 days of the issuance of deficiency memo under the said Rules, 1995 - Held that - Rule 5(4)(a) of the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995 stipulates that any claim which is incomplete in any material particular or is found without the documents specified in sub-rule (2) shall not be accepted for the purpose of Section 75A and such claim shall be returned to the claimant with the deficiency memo in the form prescribed by the Commissioner of Customs within fifteen days of submission and shall be deemed not to have been filed - But in the instant case, the applicant s drawback claim was never returned in accordance with the above stated rule and instead it was sanctioned after being satisfied about the admissibility of the drawback claim. Accordingly there is no scope for the application of above Rule 5(4)(a) & (b) in this case and initiation of recovery proceeding against the applicant has been entirely without any legal basis - revision application allowed.

Summary

Issues:
Challenge to demand of drawback claim based on delay in replying to deficiency memo under the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995.

Analysis:
The case involved a challenge to a demand raised by the department against an applicant regarding a drawback claim for re-exported goods. The applicant had initially imported storage unit MP3 players, paid customs duty, re-exported a portion, and filed a drawback claim under Section 74 of the Customs Act, 1962. The department later issued a show cause notice alleging that the drawback was paid erroneously due to a delay in the applicant's response to a deficiency memo, which should have been replied to within 30 days as per the Rules. The jurisdictional Dy. Commissioner upheld the demand, a decision affirmed by the Commissioner (Appeals). The applicant, in a revision application, contested this decision, arguing that it was contrary to the provisions of the Rules.

During a personal hearing, the applicant reiterated the grounds of revision already presented in their application. Upon examination of the records, the Government noted that the applicant had filed the claim in 2006, with subsequent communications from the department regarding missing documents. The applicant responded in 2007, and the drawback claim was eventually sanctioned. Rule 5(4)(a) of the Rules specifies that incomplete claims should be returned within 15 days with a deficiency memo, failing which the claim is deemed not filed. However, in this case, the applicant's claim was never returned as per the rule and was instead accepted after due satisfaction. Therefore, the application of Rule 5(4)(a) & (b) was deemed inapplicable, and the recovery proceedings initiated against the applicant were found to lack a legal basis. Consequently, the orders of the Dy. Commissioner and the Commissioner (Appeals) were deemed legally unsustainable.

In conclusion, the revision application was allowed, and the order of the Commissioner (Appeals) was set aside. This judgment highlights the importance of adhering to procedural rules and ensuring that recovery proceedings are based on a solid legal foundation to prevent erroneous demands on applicants.