2001 (1) TMI 95 - HC - Central Excise

Summary

Issues Involved:
1. Rejection of the petitioner's application for an advance license.
2. Rejection of the petitioner's application for duty drawback benefits.
3. Application of Rule 6 and Rule 15 of the Customs and Central Excise Duties Drawback Rules, 1971.
4. Government's policy decision versus statutory rules.

Detailed Analysis:

1. Rejection of the petitioner's application for an advance license:
The petitioner entered into an export contract and applied for an Advance Licence to avail benefits under the Duty Exemption Scheme. The application was initially rejected on the grounds of low value addition. Upon filing a revised application, it was again rejected because the export realization was not in U.S. Dollars. Consequently, the petitioner abandoned the advance license application, making it impossible to realize the export in U.S. Dollars.

2. Rejection of the petitioner's application for duty drawback benefits:
After abandoning the advance license application, the petitioner applied for duty drawback benefits. This application was rejected on the grounds of being time-barred. The petitioner submitted an explanation for the delay, but the Ministry of Finance rejected it. The petitioner then sought relaxation under Rule 15, which was also rejected based on a policy decision not to invoke general powers of relaxation for applications filed beyond 60 days from the export date.

3. Application of Rule 6 and Rule 15 of the Customs and Central Excise Duties Drawback Rules, 1971:
- Rule 6: Allows manufacturers or exporters to apply for drawback determination within 30 days from the export date, with a possible extension of another 30 days if sufficient cause is shown.
- Rule 15: Grants the Central Government the power to exempt exporters from rule compliance if it is satisfied that non-compliance was beyond the exporter's control, allowing for drawback benefits.

The petitioner argued that the authorities failed to exercise their jurisdiction under Rule 15 by not considering the application on its merits and instead rejecting it based on a policy decision. The petitioner contended that Rule 15 imposes a duty on the authority to consider and record satisfaction or otherwise before granting or denying relaxation.

4. Government's policy decision versus statutory rules:
The respondents argued that the limitation period under Rule 6 could not be extended beyond 60 days and that the policy decision not to invoke Rule 15 for late applications was consistent since the mid-eighties. The court, however, opined that policy decisions cannot override statutory rules unless the rules are amended. The court emphasized that Rule 15 is meant to protect exporters who fail to comply with rules due to circumstances beyond their control and that the government must record reasons for satisfaction or otherwise before granting exemptions.

Judgment:
The court quashed the letters dated 18-3-1993 and 10-11-1993, rejecting the petitioner's application for duty drawback benefits. The court issued a writ of mandamus directing the respondents to reconsider the petitioner's application under Rule 15. If the petitioner establishes that non-compliance with the rule was beyond their control, the government should grant the exemption. If not, the application under Rule 6 would be dismissed. The court directed the government to dispose of the application within four months from the date of the order's communication. The costs of the petition were to be borne by the parties respectively.