2006 (6) TMI 6 - HC - Central Excise

Central Excise Drawback (1) Petitioner failure to realize sale proceeds within specific time (2) Proceeding related to penalty and recovery of drawback (3) Exemption

Summary

Issues:
1. Recovery of drawback amounts paid to the petitioner.
2. Consideration of waiver under Rule 17 of the Customs and Central Excise Duties Drawback Rules, 1995.

Analysis:
1. The petitioner, a manufacturer and exporter of ready-made garments, availed services of Canara Bank Overseas Branch for export documents. After claiming drawback concession under Customs Act, the petitioner failed to realize sale proceeds within the prescribed period, leading to a show cause notice under Customs and Central Excise Duties Drawback Rules, 1995. Ex parte decision directed the petitioner to repay drawback amounts under six shipment bills. Appeals and revision were dismissed, leading to the current petition.

2. Petitioner argued that Enforcement Directorate's order favored them, stating inability to realize export proceeds. They sought waiver under Rule 17 for drawback concession despite non-receipt of export proceeds. Respondent contended that Enforcement Directorate proceedings were separate from Customs Act proceedings. The court noted the independent nature of FERA proceedings and Customs Act proceedings, emphasizing the obligation to realize export proceeds within the stipulated time.

3. The court highlighted that the obligation to realize export proceeds within six months is crucial for granting drawback concessions. Negligence by the banker was not a valid ground for waiver. The State's entitlement to recover drawback amounts was emphasized to ensure revenue from foreign exchange. Even though penalty proceedings under FERA were dropped, recovery of drawback amounts was deemed necessary.

4. The petitioner's request for relaxation or exemption under Rule 17 was rejected by the Revisional Authority, stating that conditions regarding realization of sale proceeds cannot be waived. The court upheld this decision, emphasizing the legal validity of the orders issued for recovery of drawback amounts.

5. The court concluded that the impugned orders were justified and legal, dismissing the writ petition. The petitioner's contentions were not accepted, and there was no reason found to interfere with the recovery of drawback amounts. The court upheld the decision of the authorities to proceed with the recovery process, emphasizing the importance of fulfilling obligations under the Customs Act and related rules.