2014 (3) TMI 840 - HC - Customs

Recovery of Duty drawback - failure to produce bank realisation certificates evidencing the realisation of export proceeds within the period stipulated - Rule 16A of the Drawback Rules, 1995 - Held that - The petitioner had moved the Reserve Bank of India for granting extension of time to realise the payments of export proceeds. From the order of the Revisional Authority, it appears that the Reserve Bank had initially allowed the extension of time for realisation of the proceeds until 13 June 2013. Subsequently, on 5 March 2014 the Reserve Bank extended the time for receipt of the export proceeds until 31 March 2014 - The case of the petitioner, as set up in the writ petition, is that the petitioner has in fact realised the sale proceeds. Matter remanded back to the Revisional Authority to verify the documentary evidence which has been relied upon by the petitioner for the purposes of establishing the realisation of the export proceeds within the extended period of time as granted by the Reserve Bank of India in respect of the shipping bills covered by the duty drawback which has been received. - Decided partly in favor of assessee.

Summary

Issues:
Claim of drawback of duties, notice issued under Rule 16-A of Customs Rules, order to deposit amount, confirmation by Commissioner (Appeals), dismissal of revision by Union Government, interpretation of Rule 16A, extension of time by Reserve Bank, realization of export proceeds, Delhi High Court precedent, verification of documentary evidence, direction to Revisional Authority, disposal of proceedings, production of evidence, further inquiry, timeline for completion.

Analysis:
The petitioner, engaged in manufacturing and exporting goods, faced a notice under Rule 16-A of the Customs Rules for not producing bank realisation certificates within the stipulated period. Despite submitting evidence of repatriation of sale proceeds and extension of time by the Reserve Bank of India, the Adjudicating Officer directed the petitioner to deposit a substantial amount under Rule 16-A. This decision was upheld by the Commissioner (Appeals) and the Union Government, leading to the filing of a writ petition challenging the orders.

The key provision in question, Rule 16A of the Drawback Rules, 1995, outlines the recovery of drawback where export proceeds are not realized within the specified period. The rule mandates the production of evidence of realization within thirty days, failing which the amount of drawback paid must be recovered. However, if the exporter repays the amount within the stipulated time, recovery shall be made as per the laid down procedure.

In a significant reference to a Delhi High Court case, it was established that if the sale proceeds are realized within the initial or extended period allowed by the Reserve Bank, the drawback cannot be recovered retrospectively. In the present case, as no recovery had been made against the petitioner for the realized drawback, the provisions of sub-rule (4) of Rule 16A were deemed inapplicable. However, the factual verification of the petitioner's claim regarding the realization of export proceeds was deemed necessary, which the Court could not undertake under its writ jurisdiction.

Consequently, the Court directed the Revisional Authority to verify the documentary evidence provided by the petitioner to establish the realization of export proceeds within the extended period granted by the Reserve Bank. The impugned order was set aside, and the proceedings were restored for fresh disposal. The petitioner was instructed to produce all material evidence before the Revisional Authority, which was granted the liberty to conduct further inquiries as needed. A timeline of three months was set for the completion of this verification process, emphasizing expeditious resolution.

In conclusion, the writ petition was disposed of, with the Court emphasizing the need for factual verification by the Revisional Authority and providing clear directions for the verification process, evidence production, inquiry, and the timeline for completion to ensure a fair and efficient resolution of the dispute.