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2010 (2) TMI 334 - HC - CustomsDrawback- The petitioner claims that it is entitled for refund/rebate of the amount corresponding to the duties both customs and excise suffered or leviable on the inputs that go into the manufacture of the exported products. The petitioner made an application on 30th December, 2003 to the Respondent No. 2. Director General of Foreign Trade ( DGFT ) for fixation of the rate of duty drawback on sesame seeds deemed export under para 8.3(b) of the EXIM Policy 2002-07. Clause 8.3(b) of the EXIM Policy provides that the deemed exports draw back shall be eligible for deemed export duty drawback. Revenue contending that goods not suffered customs or excise duty and drawback sanctioned liable for recovery. Held that- veracity of disclaimer certificate doubtful. Shifting of stand to change basis of claim not possible. Plea on promissory estoppel not acceptable as there is no estoppel against illegality. Coercive steps to recover wrongly released drawback, sustainable. Petition dismissed.
Issues Involved:
1. Entitlement of the petitioner to duty drawback on deemed exports. 2. Requirement of proof of duty incidence for claiming duty drawback. 3. Validity of the disclaimer certificates provided by the petitioner. 4. Compliance with principles of natural justice in the withdrawal of duty drawback. 5. Applicability of promissory estoppel against the Respondents. 6. Allegation of retrospective application of the Foreign Trade Policy (FTP). Detailed Analysis: 1. Entitlement of the Petitioner to Duty Drawback on Deemed Exports: The petitioner, an Export Oriented Unit (EOU), claimed duty drawbacks on sesame seeds deemed exports under the Export and Import Policy (Exim Policy) 2002-07. The petitioner argued that goods sourced from the Domestic Tariff Area (DTA) are eligible for duty drawbacks as deemed exports. The petitioner relied on Clause 6.12(a) of the Exim Policy, which states that supplies from the DTA to EOU are regarded as deemed exports, and the EOU is eligible for entitlements under Chapter 8 of the Policy upon producing a suitable disclaimer from the DTA supplier. 2. Requirement of Proof of Duty Incidence for Claiming Duty Drawback: The Respondents argued that the petitioner did not provide proof of the incidence of duty suffered on the goods procured from DTA suppliers. The petitioner claimed that the concept of duty drawback did not mandate proof of duty incidence and maintained that the sesame seeds were imported and thus suffered customs duty. However, the Respondents found that the sesame seeds were locally grown and not imported, as confirmed by the Agricultural Produce Market Committee (APMC), Rajkot, and affidavits from DTA suppliers. 3. Validity of the Disclaimer Certificates Provided by the Petitioner: The Respondents detected discrepancies in the disclaimer certificates provided by the petitioner. Affidavits from DTA suppliers stated that they had not prepared the disclaimer certificates, and the sesame seeds were locally produced. The court found that the veracity of the disclaimer certificates was doubtful, and the petitioner could not substantiate its claims with reliable documents. 4. Compliance with Principles of Natural Justice in the Withdrawal of Duty Drawback: The court examined whether the Respondents' decision to withdraw the duty drawback was just, fair, and reasonable. The court found that the petitioner was given numerous opportunities to justify its claim but failed to provide proof of duty incidence. The decision to withdraw the benefit was based on relevant material, and there was sufficient compliance with the principles of natural justice. 5. Applicability of Promissory Estoppel Against the Respondents: The petitioner argued that the Respondents should be estopped from withdrawing the duty drawback based on promissory estoppel. However, the court held that there is no estoppel against an illegality. Since the petitioner was not entitled to the duty drawback in law, the Respondents were justified in taking corrective steps to recover the amounts wrongly released. 6. Allegation of Retrospective Application of the Foreign Trade Policy (FTP): The petitioner contended that the Respondents were applying the FTP retrospectively. The court found that the factual basis for the petitioner's claim under the Exim Policy was non-existent. The disclaimer certificates were unreliable, and the petitioner failed to prove that the sesame seeds were imported. Consequently, the court dismissed the petition and upheld the Respondents' decision to withdraw the duty drawback. Conclusion: The court dismissed the petition, finding no legal infirmity in the Respondents' decision to withdraw the deemed export duty drawback granted to the petitioner. The petitioner was ordered to pay costs of Rs. 20,000/- to the Respondents within four weeks. All interim orders were vacated, and the applications were dismissed.
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