2018 (7) TMI 1019 - HC - Customs

Duty Drawback - condonation of delay in terms of Rule 17 of the Customs and Central Excise Duties Drawback Rules, 1995 - supplementary claim - revision of rates with retrospective effect - the claims were rejected by the second respondent on the ground of delay as they were filed after 12 months period including the three months condonable period granted under the Drawback Rules - supplementary claim - Rule 15 of the Drawback Rules - Held that - Rule 15 can be invoked when the exporter finds that the amount of drawback paid to him is less than what he is entitled to - In the instant case, the supplementary claim made by the petitioner for the 27 export consignments was as a result of the Central Government issuing N/N. 77/2003-CUS(NT) dated 18.09.2003, revising the drawback rates with retrospective effect on the goods, which were exported by the petitioner. Thus, the supplementary claim made by the petitioner was not on account of any error or mis-calculation done by the petitioner or for any reason attributable to the petitioner. What occasioned the supplementary claim was the decision of the Government of India to revise the drawback rates with retrospective effect. Thus, it goes without saying that if there is a revised rate of drawback determined that too with retrospective effect, then every exporter, who is entitled for the benefit of the notification, is entitled to maintain a supplementary claim as a matter of right - the period of limitation as per Rule 15(1)(i) read with the second proviso is 3 months 9 months, i.e., 12 months. The language of Rule 17 is so couched to confer power on the Central Government to grant exemption in favor of an exporter from the provisions of any of the Rules and allow drawback. The power of exemption is conferred on the Central Government to exempt an exporter, who has failed to comply with any of the provisions of the Drawback Rules, the object being that the exporter should be entitled to drawback. In fact, the Rules specifically empower the Central Government not only to exempt exporter from the provisions of the Rules for compliance of any of the provisions, but also make an order allowing drawback in respect of such goods. The power conferred on the Assistant Commissioner / Deputy Commissioner of Customs under the second proviso to Rule 15 is no doubt limited. So far as the procedural aspect is concerned, always liberal interpretation is given so that the exporter or the importer gets the benefit of the scheme framed by the Government - what the petitioner has stated is that they were not properly advised that they would have entitled to get the benefit of the revised drawback rate only upon filing a supplementary claim and on enquiry, they were orally informed that the drawback amount would be automatically credited to their account, since it is the decision of the Government of India to revise the rate of drawback retrospectively - the petitioner should not be non-suited on the ground stated by the respondents. Period of delay - Held that - So far as the first 12 months is concerned, there is sufficient power vested with the second respondent to exercise discretion and condone the delay of 9 months. In the instant case, there is a further delay of 7 days over and above 12 months period, though cumulatively taken delay is 9 months and 7 days. However, the first 9 months period is a condonable period even at the instance of the proper officer, the second respondent. Thus, even if a different interpretation is sought to be given to Rule 17, this is not a case where the petitioner should be denied the benefit of revised rate on such interpretation, as the delay beyond 12 months is only 7 days. Petition allowed.

Issues Involved:

1. Rejection of supplementary drawback claims due to delay.
2. Application of Rule 17 of the Customs and Central Excise Duties Drawback Rules, 1995 for condonation of delay.
3. Interpretation of Rule 15 and Rule 17 of the Drawback Rules.

Detailed Analysis:

1. Rejection of Supplementary Drawback Claims Due to Delay:

The petitioner filed 27 supplementary claims under Rule 15 of the Drawback Rules, which were rejected by the second respondent on the ground of delay. The claims were filed after the permissible period of 12 months, including the three months condonable period. The petitioner appealed to the Commissioner of Customs (Appeals), who dismissed the appeal, stating that the Commissioner had no power to condone the delay. Subsequently, the petitioner filed Revision Applications before the first respondent under Section 129DD of the Customs Act, 1962, which were also dismissed.

2. Application of Rule 17 of the Drawback Rules for Condonation of Delay:

The petitioner argued that the first respondent failed to consider the specific prayer for exercising the power under Rule 17 of the Drawback Rules. Rule 17 grants the Central Government the power to relax any provisions of the Drawback Rules if the exporter failed to comply with the provisions for reasons beyond their control. The petitioner cited several cases, including Greaves Cotton Ltd. vs. Union of India, where similar issues were addressed, and the matter was remanded for fresh consideration.

The respondents contended that Rule 17 does not apply to the condonation of delay in filing supplementary claims under Rule 15. They argued that Rule 15 is a complete code by itself, specifying the limitation period for filing supplementary claims, which cannot be extended by the Government or the Court.

3. Interpretation of Rule 15 and Rule 17 of the Drawback Rules:

Rule 15 allows exporters to file supplementary claims if the drawback paid is less than what they are entitled to, with a limitation period of three months from the date of publication of the revised rate in the official gazette. This period can be extended by the Assistant Commissioner or Deputy Commissioner of Customs for a further nine months if sufficient cause is shown. The total permissible period is 12 months.

The Court noted that the supplementary claim in this case was necessitated by the Central Government's decision to revise the drawback rates with retrospective effect. The petitioner filed the claims beyond the 12 months period, attributing the delay to improper advice from the Customs Department. The Court emphasized that the Drawback Rules aim to boost exports and should not be interpreted narrowly.

The Court examined Rule 17, which allows the Central Government to exempt exporters from any provisions of the Rules if they failed to comply for reasons beyond their control. The Court found that Rule 17 is intended to grant exemptions to ensure exporters are entitled to drawback, and it should not be interpreted narrowly to exclude supplementary claims.

The Court concluded that the petitioner should not be denied the benefit of the revised drawback rates due to a delay of only 7 days beyond the permissible period. The Court allowed the writ petition, set aside the impugned order, and directed the second respondent to apply the revised drawback rates and effect payments to the petitioner within three months.

Conclusion:

The judgment addressed the issues of delay in filing supplementary drawback claims, the application of Rule 17 for condonation of delay, and the interpretation of Rule 15 and Rule 17 of the Drawback Rules. The Court emphasized the purpose of the Drawback Rules to boost exports and granted relief to the petitioner by allowing the revised drawback rates despite a minor delay.

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