2009 (10) TMI 256 - HC - Customs

Drawback- The petitioner is a merchant-exporter. It exported goods and for the purpose took credit facilities provided by the Punjab and Sind Bank. In connection with the exports it became entitled to duty drawback. Customs paid it Rs.53,04,272/- by several cheques all dated May 21, 2008. The payment was made in terms of an order of the Customs, Excise & Service Tax Appellate Tribunal, Eastern Zonal Bench, Kolkata dated November 5, 2007 2008 (223) E.L.T. 483 (Tri. - Kolkata) . When two more shipping bills were in process customs received a letter dated June 2, 2008 from one P.J. Khoshy who described himself as an advocate and independent investigator. In view of the letter, customs stopped payment in terms of the shipping bills. Under the circumstances, the writ petition was filed. Held that- It is not known under what authority P.J. Khoshy claiming to be an advocate as also claimed to an independent investigator. His letter dated June 2, 2008 is of no consequence. It was not issued under any provision of any statute. Hence customs were not under any statutory obligation to stop payment. Thus, allow the writ petition.

Summary

Issues:
1. Dispute over duty drawback payment to a merchant-exporter due to a letter from an advocate and independent investigator.
2. Claim by the bank for payment from customs due to credit facilities provided for exports.

Analysis:
1. The petitioner, a merchant-exporter, was entitled to duty drawback for exports and received payment from customs. However, customs stopped further payments upon receiving a letter from an advocate and investigator alleging fraudulent activities by the petitioner. The customs and the bank filed oppositions, with the customs citing the letter as the reason for payment stoppage. The court noted that the letter was not issued under any statutory provision, and customs had no legal obligation to withhold payment based on it. The court held that the petitioner was entitled to the balance duty drawback with interest as per the law, and ordered customs to make the payment within a specified time frame.

2. The bank claimed that since the petitioner availed credit facilities for exports, customs should issue the cheques in the bank's name. The court disagreed with the bank's argument, stating that the petitioner, being entitled to duty drawback, should receive the payment directly. The court highlighted that the bank had initiated recovery proceedings separately for any dues owed by the petitioner. As the bank had no legal right to demand payment from customs, the court ruled in favor of the petitioner, directing customs to pay the balance duty drawback with interest. No costs were awarded, and all parties were instructed to comply with the court's decision promptly.

This judgment clarifies the legal obligations regarding duty drawback payments to exporters and the role of banks in such transactions. It emphasizes the importance of statutory provisions in decision-making and upholds the rights of the entitled party to receive payments directly.