2008 (7) TMI 422 - HC - Customs

Refund of the customs duty paid on the components imported for carrying out the repairs to the Stone Processing Machine denied - Held that - The revisional authority while did not find it a fit case for interference has nevertheless fully discussed the scope of Section 74 of the Act which is a provision which enables an importer to claim refund up to 98% of the customs duty paid if the very goods was re-exported which was not the position in the case of the petitioner and the possibility of extending a benefit under Section 75 of the Act which contemplates duty drawback on imported material used for manufacture of goods which are exported did not arise in the petitioner s case. In a matter of the present nature no such particulars were forthcoming and as to whether a Section 74 application can be converted into Section 75 application itself is a doubtful aspect and on the other hand the authorities have shown their awareness to the contentions of the petitioner and found they were not tenable which find to be neither improper nor tainted with any illegality. Thus no scope for interference under Article 227 of the Constitution of India in a matter of this nature and for this reason the Writ Petition is dismissed without going into further merits of the matter.

Summary

Issues:
1. Claim for refund of customs duty paid on imported components for repairing a machine.
2. Application under Section 74 of the Customs Act rejected, seeking benefit under Section 75.
3. Interpretation of duty drawback schemes under Sections 74 and 75 of the Act.
4. Applicability of Board Circular No. 40/2003-Cus for extending benefits.
5. Consideration of technicalities and statutory provisions in granting duty drawbacks.

Analysis:
The petitioner claimed a refund of customs duty paid on imported components used for repairing a 'Stone Processing Machine', which was later re-exported. The petitioner applied under Section 74 of the Customs Act, seeking a refund, but the application was rejected as it did not qualify for duty drawback under Section 75. The Central Government, as the Revisional authority, upheld the rejection, stating that the procedures and conditions for claiming benefits under the two sections are distinct. The petitioner approached the High Court under Article 227 of the Constitution of India, challenging the decision.

The petitioner argued that the authorities overlooked Board Circular No. 40/2003-Cus, which allowed benefits to be shifted between duty export schemes. They contended that the customs authorities should have considered the application under Section 74 as one for relief under Section 75 based on this circular. However, the Revisional authority found no grounds for interference, emphasizing the different scopes of Section 74 and Section 75 benefits. The petitioner's counsel highlighted the duty drawback scheme's statutory nature and criticized the authorities for being overly technical, leading to a lack of consideration for the benefits sought under the Act.

In response, the Central Government supported the rejection order, referencing the revisional authority's acknowledgment of the petitioner's contentions. The revisional authority extensively discussed the provisions of Section 74 and Section 75, noting that the petitioner did not meet the criteria for duty drawback under Section 75. The debate centered on whether the term 'manufacture' in Section 75 could encompass repair and re-export scenarios, with the Central Government asserting the need for factual verification and compliance with procedures specified in notifications issued by the Central Government.

The High Court dismissed the Writ Petition, stating that the authorities had considered the petitioner's arguments but found them untenable. The Court concluded that there was no legal basis for interference under Article 227, given the nature of the case and the authorities' awareness of the contentions raised. The judgment emphasized the importance of factual verification and compliance with statutory provisions in claiming duty drawbacks under the Customs Act.