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2022 (11) TMI 1286 - HC - CustomsDuty Drawback - Provisional attachment order - Fraudulent/unlawful availment of duty drawback - bogus dummy Importer Exporter Codes - stand of the petitioner is that if in the first instance the action was contrary to law, the same could not have been cured by issuance of subsequent provisional attachment order - whether we should allow the petitioner to take benefit of the duty drawback amounting to Rs.49,23,635/- lying credited in its bank account, while the adjudication is on? HELD THAT - A careful perusal of sub-rule (1) of Rule 18 of the 2017 Rules shows, that where duty drawback has been paid to an exporter, or a person authorized by him, but the sale proceeds in respect of such exports have not been realized by or on behalf of the exporter located in India, within the period allowed under the Foreign Exchange Management Act, 1999 FEMA or within such time as extended by the concerned authority, such drawback is required to be recovered except in circumstances or conditions specified in sub-rule (5) in the manner specified in the said Rule. A case where duty drawback has been paid to the exporter in the instant case, the petitioner , but admittedly, up until now, sale proceeds have not been received against such exports, and therefore the deeming provision incorporated in the second (2nd) proviso to Section 75 of the Act will kick in - since the amount, which is lying credited to the petitioner s account, concededly, represents a part of the duty drawback sanctioned in favour of the petitioner against 20 shipping bills, no such direction can be issued which would result, ultimately, in the petitioner, at this stage, getting access to those funds. The petitioner s assertion vis-a-vis these summons is, that it remained available at the given premises, and for this purpose, it has placed reliance on a rent agreement dated 16.09.2020 - these are not the aspects up for adjudication, in this writ petition - the petitioner will be free to operate the impugned bank account, as at the moment, there is no legal impediment, given the fact that the provisional attachment orders which were issued to make course correction have outlived their legal efficacy. Petition disposed off.
Issues Involved:
1. Legality of the impugned communication dated 29.07.2021 issued by the Senior Intelligence Officer, DRI. 2. Allegations of fraudulent duty drawback claims by the petitioner. 3. Provisional attachment orders and their legal implications. 4. Non-receipt of sale proceeds against the exported goods. 5. Compliance with Section 75 of the Customs Act, 1962, and Rule 18 of the Customs and Central Excise Duties Drawback Rules, 2017. 6. Petitioner's right to operate the bank account and access the duty drawback amount. Detailed Analysis: 1. Legality of the Impugned Communication: The writ petition challenges the communication dated 29.07.2021, issued by the Senior Intelligence Officer, DRI, Mumbai Zonal Unit, which prevented the petitioner's bank from making any debit entries in the petitioner's account. The petitioner argued that the communication was issued without legal authority, citing Section 110 of the Customs Act, 1962. The court acknowledged that the impugned communication was flawed as it was issued before complying with the requirements of Section 110 of the Act. 2. Allegations of Fraudulent Duty Drawback Claims: The official respondents/revenue alleged that the petitioner was part of a syndicate involved in fraudulent duty drawback claims using bogus Importer Exporter Codes (IECs). The petitioner was accused of exporting overvalued goods and illegally availing duty drawback amounting to Rs. 52 crores. The petitioner admitted to exporting goods worth Rs. 20,92,85,278.50/- and lodging a duty drawback claim of Rs. 63,71,452/-. The court noted that the petitioner had obtained duty drawback against 20 shipping bills amounting to Rs. 49,23,635/-. 3. Provisional Attachment Orders: The court observed that a provisional attachment order was issued on 23.08.2021 and extended on 18.02.2022, in accordance with Section 110(5) of the Act. The statutory timeframe of one year for the provisional attachment expired on 23.08.2022. The court noted that the provisional attachment orders were not challenged by the petitioner. 4. Non-receipt of Sale Proceeds: The court highlighted that the sale proceeds against the 26 shipping bills had not been received. The petitioner argued that the impugned communication prevented buyers from remitting money. However, the court found this submission untenable, as the communication only prevented outward transactions, not inward remittances. The court emphasized the importance of receiving sale proceeds within the timeframe allowed under the Foreign Exchange Management Act, 1999 (FEMA), as per Section 75 of the Customs Act. 5. Compliance with Section 75 of the Customs Act and Rule 18 of the 2017 Rules: The court referred to Section 75 of the Customs Act, which stipulates that duty drawback is deemed never to have been allowed if sale proceeds are not received within the timeframe allowed under FEMA. Rule 18 of the 2017 Rules outlines the procedure for recovering duty drawback if sale proceeds are not realized. The court noted that the duty drawback paid to the petitioner was deemed never to have been allowed due to non-receipt of sale proceeds. 6. Petitioner's Right to Operate the Bank Account and Access the Duty Drawback Amount: The court allowed the petitioner to operate the bank account as the provisional attachment orders had expired. However, the court directed that the duty drawback amount of Rs. 49,23,635/- credited in the petitioner's account be remitted to the official respondents/revenue and invested in an interest-bearing fixed deposit. The petitioner was granted four weeks to respond to the show-cause notice dated 28.07.2022, and the adjudicating authority was directed to conclude the proceedings within three months. The court also provided the petitioner with the liberty to approach the concerned authority for the release of duty drawback if sale proceeds were received. Conclusion: The writ petition was disposed of with specific directions, allowing the petitioner to operate the bank account while ensuring the duty drawback amount was remitted to the official respondents/revenue. The court emphasized compliance with legal provisions regarding duty drawback and sale proceeds, and directed the adjudicating authority to expedite the proceedings. Pending applications were closed.
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