1991 (8) TMI 107 - HC - Customs

Summary

Issues Involved:
1. Entitlement to exemption from customs duty under Section 25 of the Customs Act.
2. Entitlement to 98% customs duty drawback under Section 74 of the Customs Act.
3. Applicability of Section 75 of the Customs Act.
4. Use of Hydra-jack in India and its impact on the drawback rate.
5. Compliance with the Customs & Central Excise Duties Drawback Rules, 1971.

Detailed Analysis:

1. Entitlement to Exemption from Customs Duty under Section 25 of the Customs Act:
The petitioner initially sought complete exemption from customs duty under Section 25 of the Customs Act, arguing that the erection of the Monolithic Buddha statue was in public interest. However, this point was not pressed during the arguments. The petitioner stated that if their contention regarding 98% of the drawback allowance on the customs duty was accepted, they would not press this contention based on Section 25.

2. Entitlement to 98% Customs Duty Drawback under Section 74 of the Customs Act:
The petitioner claimed a drawback of 98% of the customs duty paid for the Hydra-jack, which was imported for erecting the Monolithic Buddha statue. The statue sank in the Hussain Sagar Lake before reaching the Gibraltar rock, rendering the Hydra-jack unused. The court analyzed Section 74, which allows for a 98% drawback if the goods are re-exported without being used. The court concluded that the Hydra-jack was an easily identifiable article and had not been used in India, thus entitling the petitioner to a 98% drawback.

3. Applicability of Section 75 of the Customs Act:
The court distinguished between Sections 74 and 75 of the Customs Act. Section 75 applies to imported materials used in the manufacture of goods that are exported, whereas Section 74 applies to re-exported articles that are easily identifiable. Since the Hydra-jack was an article and not a material used in manufacturing, Section 75 was deemed inapplicable.

4. Use of Hydra-jack in India and Its Impact on the Drawback Rate:
The respondents argued that only 85% of the customs duty was permissible as a drawback because the Hydra-jack had been used in India. They relied on various notifications, including Notification No. 19-Customs dated 6th February 1965, which stipulates an 85% drawback if the goods are used in India. However, the court found no evidence that the Hydra-jack was used after its import. The court noted that the Hydra-jack was intended to be used but was not actually used due to the statue sinking. Thus, the petitioner substantially complied with the requirement for a 98% drawback.

5. Compliance with the Customs & Central Excise Duties Drawback Rules, 1971:
The respondents also cited Rule 11 of the Customs & Central Excise Duties Drawback Rules, 1971, which requires a statement of non-use of the article in India on the shipping bill. The court clarified that these rules apply under Section 75, not Section 74. Since the Hydra-jack falls under Section 74, the relevant rules would be those made by the Board under Section 74, which were not on record. The court concluded that the petitioner had substantially complied with the notification requirements, entitling them to a 98% drawback.

Conclusion:
The court partially succeeded the petition, confirming the petitioner's entitlement to a 98% customs duty drawback under Section 74 of the Customs Act. Since 85% of the duty had already been received, the court ordered the payment of the remaining 13%, amounting to Rs. 6,84,123, within one and a half months. No costs were awarded.