2019 (10) TMI 1 - AT - Customs

Duty Drawback - Section 74 of the Customs Act, 1962 - re-export of imported Oil Well Equipment after completion of the project in India - pilferage - rejection of duty drawback - imposition of penalty - time limitation - HELD THAT - The Appellants claimed that some goods have been pilfered and they have lodged a police complaint. Therefore, it is evident from the records of the case that identity of at least part of the goods has been established by the report of the experts i.e. Intertek. To this extent one should not have any doubt regarding the admissibility of re-export of the imported goods - it is not the case of the department that the imported goods have been sold or diverted and some other goods were presented for export. No evidence to that extent has been adduced by Revenue. The only question that was raised was with reference to the establishment of identity and the same is answered by the report of Intertek in respect of the goods mentioned in their report. Therefore, the issue of admissibility of drawback on the goods re-exported is settled in the appellants favour. Time Limitation - HELD THAT - In the instant case, the imports have occurred during July to September 2010; initially the goods were put for export by filing shipping bills on 01.12.2010. The goods could not be exported due to the objections raised by the department and the Show Cause Notice issued and the subsequent proceedings in the Tribunal. After fulfilling the conditions laid down by the Tribunal customs have allowed the goods to be re-exported on 08.02.2013; LEO was issued on 29.03.2013 and goods were finally exported on 13.04.2013. It is not the case of the department that the goods presented for export on 01.12.2010 and goods which were exported finally on 13.04.2013 are not different. Therefore, the time period of two years requires to be reckoned up to the initial filing of the shipping bills i.e. 01.12.2010 and not the date on which LEO was given after prolonged litigation. It is a settled principle of law that while computing the limitation time taken for litigation should be excluded. In view of the same, we find that he Appellants cannot be put to jeopardy due to the objections raised by the department which to a greater extent got nullified by the report of Intertek, the exports appointed for this purpose. Therefore, we are inclined to consider the submissions of the Appellants that the reexport should be treated as made in time and drawback should be allowed to the extent of the part of the goods that were actually reexported. The goods shall be treated as re-exported within time. Lower authorities are directed consider appellants request to grant drawback to the extent of goods actually re-exported - Appeal allowed.

Summary

Issues:
1. Identity of goods re-exported under claim of drawback.
2. Compliance with statutory requirements for claiming drawback under Section 74.
3. Time limit for filing drawback shipping bills and re-exporting goods.

Issue 1: Identity of goods re-exported under claim of drawback:
The case involved exporters who filed shipping bills for re-export of imported Oil Well Equipment under Section 74 of the Customs Act, 1962. The Customs officers raised concerns about the identity of the goods, leading to a Show Cause Notice and subsequent adjudication. The Commissioner rejected the drawback claims and imposed penalties. The exporters appealed, and the Tribunal directed re-examination by experts. Upon re-examination, the goods were allowed to be re-exported, and a drawback claim was filed within the statutory time limit. The Commissioner's observations of altered marks on the goods were challenged by the exporters, who claimed that some goods were pilfered during the prolonged detention. The expert report confirmed the identity of the goods, leading to the settlement in favor of the exporters regarding the admissibility of drawback on the re-exported goods.

Issue 2: Compliance with statutory requirements for claiming drawback under Section 74:
The exporters contended that they complied with the statutory requirements for claiming drawback under Section 74. They argued that the shipping bills were filed within two years from the date of import duty payment, as required by Section 74(1)(b). Additionally, they asserted that the claim for drawback was filed within three months of the Let Export Order, fulfilling Rule 5 of the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995. The exporters maintained that there was no non-compliance with the statutory requirements for claiming drawback under Section 74, as the goods were re-exported within the stipulated timelines.

Issue 3: Time limit for filing drawback shipping bills and re-exporting goods:
The Department argued that the goods were re-exported beyond the two-year period specified under Section 74(i)(b) of the Customs Act, 1962, as the re-export occurred in February 2013, while the imports were from July to September 2010. However, they acknowledged that the drawback claim was filed within the prescribed time limit under Rule 5 of the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995. The Tribunal found that the delay in re-export was due to objections raised by the Department, leading to prolonged litigation. Considering the principle that time taken for litigation should be excluded while computing limitations, the Tribunal held that the re-export should be treated as made in time, and drawback should be allowed for the goods actually re-exported, setting aside the impugned order and directing the lower authorities to consider granting drawback accordingly.

In conclusion, the Tribunal's judgment resolved the issues surrounding the identity of the re-exported goods, compliance with statutory requirements for claiming drawback under Section 74, and the time limit for filing drawback shipping bills and re-exporting goods in favor of the exporters.