2017 (2) TMI 875 - HC - Customs

Duty Drawback - petitioner claim that once the goods have been cleared for export and the goods have been released and exported and after the export commitments are fulfilled, there is no reason for withholding the drawback amount - Held that - This Court is of the opinion that the Department cannot indefinitely delay or suspend consideration of the duty drawback claims of the petitioner. No doubt, the Department is at liberty to inquire in full details about the export or import in connection with the transaction which is the basis for the claim of duty drawback. However, it is expected that such inquiry or investigation as contemplated by the Department cannot be prolonged beyond a particular point of time. Section 75A provides for payment of interest to the petitioners if the drawback claim is delayed beyond a period of one month, in that view of the matter, it would be prudent to direct the Department to conclude the investigation in contemplation or inquiry, if any, within a stipulated period of time. Petition allowed.

Issues:
1. Delay in releasing duty drawback amount to the petitioner.
2. Department's contention of pending investigation by DRI on the export made by the petitioner.
3. Petitioner's claim for release of drawback and interest under Customs Act.
4. Court's consideration of duty drawback claims and issuance of appropriate directions.

Analysis:

Issue 1: Delay in releasing duty drawback amount to the petitioner
The petitioner filed a petition under Article 226 of the Constitution of India seeking a direction to the Revenue authorities to release an amount of ?40 lakhs towards the claim of drawback along with applicable interest under Section 75A of the Customs Act. The petitioner, engaged in the manufacture and export of forgings and casting items, exported various containers in 2014. Despite fulfilling all export commitments and no objections raised by the Department, the drawback application submitted by the petitioner was not decided, leading to the delay in releasing the amount.

Issue 2: Department's contention of pending investigation by DRI
The Department contended that the drawback claim was not decided due to an investigation by the Directorate of Revenue Intelligence (DRI) on prima facie grounds that the exports made by the petitioner were not proper. The Department raised queries visible on the website regarding the exports, but instead of responding to these queries, the petitioner persistently sent reminders for the release of the drawback claims. The Department expressed concerns about releasing the claims during the ongoing investigation, fearing the inability to recover the amount if discrepancies were found post-investigation.

Issue 3: Petitioner's claim for release of drawback and interest under Customs Act
The petitioner's advocate argued that once goods are cleared for export and all export commitments are fulfilled, there should be no reason for withholding the drawback amount. Referring to relevant provisions of the Customs Act, the advocate emphasized that the petitioner faced no departmental proceedings and was entitled to the drawback without any disputes. Citing a previous court decision, the advocate highlighted that the Department cannot indefinitely delay or suspend consideration of drawback claims, especially when no investigations or seizure memos were pending against the petitioner.

Issue 4: Court's consideration of duty drawback claims and issuance of appropriate directions
The Court acknowledged that while the Department has the right to inquire into export transactions related to duty drawback claims, such inquiries should not be prolonged indefinitely. Considering Section 75A providing for interest payment if the drawback claim is delayed, the Court directed the Department to conclude the investigation within six months and process the rebate claim thereafter. The Court emphasized the need for timely resolution of the petitioner's claim and ordered the Department to render a decision within one month after the investigation period.

In conclusion, the Court disposed of the petitions by directing the concerned Department to complete the investigation within a specified timeframe and process the rebate claim accordingly, ensuring compliance with the law and timely resolution of the petitioner's claim.

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