1991 (12) TMI 75 - CGOVT - Customs

Summary

Issues:
1. Whether the drawback claim filed by the respondents is admissible under Section 76 of the Customs Act, 1962.

Detailed Analysis:
The review proposal was filed by the Collector of Customs (Judicial), Bombay against the order-in-appeal passed by the Collector of Customs (Appeals), Bombay. The respondents imported a defective crank shaft and re-exported it under a free shipping bill without claiming drawback under Section 74 of the Customs Act, 1962. They later requested a refund of duty paid on the replacement received. The drawback claim filed by the respondents was rejected as they did not fulfill the requirements of Section 74, including establishing the identity of the goods and declaring the market value of the goods at the time of re-export.

The respondents appealed the rejection, and the Collector (Appeals) allowed the appeal, stating that the identity of the goods was established through import documents, and the market value was not crucial. However, a show cause notice was issued to the respondents, and after hearing their submissions, the government reviewed the case.

The government emphasized the essential ingredients for a drawback claim, which include establishing the identity of the exported goods and ensuring that the claim does not exceed the prevailing market price of the goods. While agreeing that the goods exported were the same as imported, the government found difficulty in the second ingredient. The value declared in the documents for foreign exchange regulation purposes was deemed irrelevant to the market value required by Section 76.

The government highlighted the necessity of declaring the market value of defective goods for drawback claims, citing a previous tribunal decision. It was noted that the declared FOB value in the shipping bill did not equate to the market value, making the drawback claim inadmissible under Section 76. As a result, the Order-in-Appeal was set aside, and the Order-in-Original was reinstated, denying the drawback claim due to non-compliance with Section 76 of the Customs Act, 1962.