2018 (5) TMI 688 - HC - Customs

Duty Drawback alongwith interest - failure on the part of Revenue to provide necessary documents - Held that - the export made by the petitioner has not been denied. In fact, in the counter affidavit filed by the respondent in this writ petition, it has been candidly admitted that the question of export has never been disputed by the Department. In such a situation, it has to be seen as to whether the respondent was justified in rejecting the petitioner s claim for drawback. The Department admitted the fact that the documents are not traceable. When the petitioner was directed to produce the documents, they were also in the position because, at the time when the claims were made in the year 1978, all original documents were submitted. Therefore, the petitioner had produced such of those documents, which were available with them and most of which are found mentioned in writ petition and counter affidavit filed by the Department. The respondents cannot deny the claims for the reasons set out in the impugned orders. In fact the petitioner s rights cannot be infringed for the fault committed by the Department. Entitlement to interest - Whether interest is payable on the said amount and the period for which interest has to be paid? - Held that - the fault lies on the Department in not keeping the file safe and at this distance of time, the Department cannot state that the petitioner should have produced adequate copies as and when the Department called for. The Department having accepted the drawback claim along with original documents, was bound to protect the same till orders are passed and disposal of the documents should be done in accordance with the Rules, which cover destruction of records. Therefore, the petitioner is entitled for interest on the delay in effecting payment of the drawback claimed. Rate of interest - from what date interest is payable? - Held that - Since the Court is convinced that the petitioner is entitled for the amount, interest of justice would be met if the respondent paid interest from the date of filing of this writ petition, i.e., 31.07.2003 - With regard to rate of interest, this Court is of the view that there has been variable rate of interest fixed under Section 27 A of the Customs Act by several notifications and the notification, which came to be issued in September, 2003 could be very well adopted and the rate of the interest is fixed at 6%. Petition allowed.

Summary

Issues Involved:
1. Entitlement to drawback claims for exports made in 1973.
2. Justification for rejection of drawback claims due to missing documents.
3. Entitlement to interest on delayed payment of drawback claims.
4. Rate of interest and period for which it is payable.

Detailed Analysis:

1. Entitlement to drawback claims for exports made in 1973:
The petitioner, a company registered under the Companies Act, 1956, sought a writ of certiorarified mandamus to quash the order by the Revisional Authority under Section 129 DD of the Customs Act, 1962, and to direct the respondents to pay ?7,45,347.43 as drawback amount with interest. The petitioner exported cotton sewing thread in 1973, filed drawback claims, and awaited the Government of India to fix specific drawback rates. The rates were fixed on 08.04.1975, and the petitioner applied for payment of the claims, which were initially rejected. Subsequent writ petitions led to a common order on 30.09.1982, directing the respondents to verify and pay the drawback dues.

2. Justification for rejection of drawback claims due to missing documents:
Despite the court's directive, the Department stated it was unable to verify the quantum of drawback due to missing documents. The petitioner provided available documents and argued that the Department's inability to trace records should not impede their claim. The court noted that the Department had settled part of the claims and admitted the exports in their counter affidavits. The court held that the Department's failure to maintain records could not justify rejecting the petitioner's claims, especially when the exports were undisputed.

3. Entitlement to interest on delayed payment of drawback claims:
The petitioner argued for interest on the delayed payment, citing the Supreme Court's decision in Sandvik Asia Ltd. v. Commissioner of Income Tax I, Pune, which mandated compensation for departmental delays. The court agreed, noting that the petitioner had complied with all obligations and that the Department's failure to safeguard documents caused the delay. Thus, the petitioner was entitled to interest.

4. Rate of interest and period for which it is payable:
The court considered the appropriate rate and period for interest. Although the petitioner initially claimed 12% interest, the court decided on a rate of 6%, referencing the variable rates under Section 27 A of the Customs Act and a notification from September 2003. The court directed that interest be calculated from the date of filing the writ petition (31.07.2003) until payment.

Conclusion:
The writ petition was allowed, directing the respondents to pay ?7,45,347.43 with 6% simple interest from 31.07.2003 until the date of payment, to be completed within three months. No costs were awarded, and the connected miscellaneous petition was closed.