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2016 (5) TMI 440 - HC - CustomsEligibility for duty drawback - Flanges manufactured by the process of forging and exported from the country - Not availed CENVAT in relation to the inputs used for manufacturing the Flanges - Petitioners contended that Flanges manufactured by them and exported during the period 10th December, 2002 to 6th April, 2003 are covered under SS No. 73.29 under Chapter 73 of the Table of Drawback Rates 2002-03 notified by Custom Notification No. 33/2002 (NT) as amended by Notification No. 80/2002 (NT) dated 10th December, 2002 and the Flanges exported by them after 6th April, 2003 till 30th June, 2003 are covered under SS 73.28 of the Table of Drawback Rates 2003-04 as notified by Notification No. 26/2003 (NT). Held that - insofar as exports made under shipping bills prior to the notification dated 1st April, 2003 are concerned, the Respondents are seeking to deny the benefits solely on the basis that the data related to the said products was not considered while fixing the All Industry Rates of duty drawback. Although, it was also mentioned that the Petitioners have not provided proof of payment of duties, the said line of argument was not pressed. Thus, the only question to be addressed in respect of claims made under the Drawback Schedule 2002-03 is whether the benefit of duty drawback could be denied to the Petitioners on the ground that the data relating to Flanges had not been provided by EEPC and, therefore, was not considered by the Central Government while fixing the All Industry Rates. Insofar as the exports made under shipping bills after the Drawback Schedule 2003-04 was notified are concerned, the Respondents have sought to deny the benefit, additionally on the basis of the Corrigendum dated 13th May, 2003 issued by the Central Government. Thus, it is also necessary to consider whether the Central Government could rectify the notification dated 1st April, 2003 with retrospective effect by a public notice issued on 13th May, 2003. It cannot be disputed that the Flanges exported by the Petitioners conformed to the description as specified in SS 73.29 of Drawback Schedule 2002-03 and SS 73.28 of Drawback Schedule 2003- 04 inasmuch as, (i) the Flanges were manufactured from carbon steel; (ii) they were manufactured by the process of forging; and (iii) CENVAT credit on the inputs had not been claimed. Thus, the Petitioners would clearly be entitled to duty drawback at the notified rates in respect of the Flanges exported by them. All Industry Rates for duty drawback as notified by the Central Government are in pursuance of the powers of delegated legislation conferred under Section 75 of the Act read with the Rules. The All Industry Rates of duty drawbacks as fixed by the Central Government are statutory. Thus, we find it difficult to accept that such statutory notifications could be whittled down or amended by an executive circular. It is not open for a Court, while interpreting any statute, to examine the material which weighed with the authority while framing that law if the provisions of the statute are clear and unequivocal. The scope of the entries in question have to be interpreted on the plain language of the entries, if the same is unambiguous, and it is not open for a Court to interpret the entries in the light of data which may or may not be collected by the Central Government in framing those entries and fixing the All Industry Rates. In the present case, it is found that the language of the entries is clear and unequivocal and, thus, there is no room to attempt to discover the intention of the Central Government by taking recourse to any other external aid. Therefore, the clarification dated 8th April, 2003 has no statutory force. The express language of the Drawback Schedules as notified by Central Government in exercise of statutory powers cannot be diluted or whittled down by the letter dated 8th April, 2003 and, accordingly, the same is liable to be set aside. It is well established that the devices of public notice or circulars cannot be adopted for modifying the substantive provisions of a statutory notification. Therefore, a benefit granted by a statutory notification cannot be withdrawn with retrospective effect and that too by a device of a public notice. The Petitioners, here, claim to have made exports and priced their shipments on the basis of the Drawback Schedules notified by the Central Government. Thus, the benefit of duty drawback cannot be denied to them. Maintainability - Respondents submitted that this Court had no jurisdiction to entertain W.P.(C) inasmuch as the Petitioner therein had impugned two show cause notices of even date i.e. 20th June, 2003, which were issued by the Assistant Commissioner of Customs, Ludhiana. Also the Petitioner was also located at Ludhiana and, therefore, no part of cause of action had arisen within the jurisdiction of this Court. Since the authority issuing the show cause notices was at Ludhiana, the cause of action for filing the petition lay entirely outside the territories of Delhi. Held that - although, there is merit in Respondent s contention that situs of passing a legislation would not give rise to a cause of action to file a writ petition challenging its validity. However, in the present case, the Petitioner has also impugned the letter dated 8th April, 2003 which is not in the nature of a legislative instrument but is an executive direction. Hence, it is apparent that a part of the cause of action has arisen within the territorial jurisdiction of this Court. Consequently, we are unable to accept that the W.P.(C) is not maintainable. Hence, the Respondents are directed to process the Petitioners claims for duty drawback in accordance with law. - Decided in favour of petitioner
Issues Involved:
1. Denial of duty drawback on "Flanges" manufactured by the Petitioners. 2. Validity of show cause notices issued to the Petitioners. 3. Interpretation of the Drawback Schedules 2002-03 and 2003-04. 4. Validity of the corrigendum and public notice issued by the Central Government. 5. Jurisdiction of the Delhi High Court to entertain the petitions. Detailed Analysis: 1. Denial of Duty Drawback on "Flanges": The controversy centers on the denial of duty drawback on "Flanges" manufactured by the Petitioners through forging and exported during specific periods. The Petitioners assert that their Flanges are covered under SS No. 73.29 and SS No. 73.28 of the Drawback Schedules 2002-03 and 2003-04, respectively. The Respondents argue that Flanges, made from low-grade steel, are not covered under these schedules as the data for Flanges was not considered while fixing the All Industry Rates of duty drawback. 2. Validity of Show Cause Notices: The Petitioners challenge the show cause notices issued to them, which call for the rejection of their duty drawback claims and the recovery of previously sanctioned amounts. The notices are based on the Respondents' assertion that Flanges are not eligible for duty drawback under the relevant schedules. 3. Interpretation of the Drawback Schedules 2002-03 and 2003-04: The Court examined whether the Flanges exported by the Petitioners fall within the descriptions provided in SS 73.29 of the Drawback Schedule 2002-03 and SS 73.28 of the Drawback Schedule 2003-04. It was found that the Flanges, manufactured from carbon steel by forging and without availing CENVAT credit, meet the criteria specified in these entries. The Court emphasized that the drawback rates are fixed based on industry averages, and the actual duties paid by individual manufacturers are not relevant. 4. Validity of the Corrigendum and Public Notice: The Central Government issued a corrigendum on 13th May 2003, attempting to rectify entries in the Drawback Schedule 2003-04 with retrospective effect. The Court held that such substantial amendments to statutory notifications cannot be made through public notices or circulars. The Court also invalidated the letter dated 8th April 2003 from the Joint Secretary (Drawback), which sought to deny duty drawback for Flanges on the grounds that the data for Flanges was not considered while fixing the rates. 5. Jurisdiction of the Delhi High Court: The Respondents contested the jurisdiction of the Delhi High Court to entertain W.P.(C) 5394/2003, arguing that the show cause notices were issued by the Assistant Commissioner of Customs in Ludhiana, and the Petitioner was also located there. The Court, however, held that since the Petitioner also challenged the letter dated 8th April 2003, which was an executive direction issued by the Central Government in Delhi, a part of the cause of action arose within the jurisdiction of the Delhi High Court. Conclusion: The Court allowed the petitions, directing the Respondents to process the Petitioners' claims for duty drawback in accordance with the law. The Court invalidated the executive directions and public notices that sought to deny the duty drawback benefits to the Petitioners, emphasizing that statutory notifications cannot be amended or diluted by such means.
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