2018 (10) TMI 1486 - HC - Customs

100% EOU - conversion of shipping bills into Drawback shipping bills - petitioner decided to exit from the EOU to function under Export Promotion Capital Goods (EPCG) Scheme - case of Revenue is that till the Exit Letter was issued, the petitioner was permitted to file only EOU shipping bills and therefore, for the reasons beyond their control, they could not claim any Drawback till the Exit Letter was issued - non-speaking order - principles of natural justice. Held that - The Technical Officer (Drawback) has not considered the case of the petitioner in a proper manner. The Technical Officer should have considered the case of the petitioner and passed a detailed order - also, the communication dated 13.03.2009 issued by the Joint Commissioner (CCO) was only based on the direction of the Chief Commissioner for the recovery of Drawback amount, which was already sanctioned and disbursed to the petitioner. The order dated 05.05.2009 is a non-speaking order, which cannot be sustained. Since the order passed by the Technical Officer (Drawback) is a non-speaking order, the same is liable to be set aside and the Technical Officer should be directed to decide the matter afresh after taking into consideration the case of the petitioner in accordance with law. Petition allowed by way of remand.

Summary

Issues involved:
1. Grant of Drawback to the petitioner for shipping bills.
2. Rejection of petitioner's request for Drawback and subsequent communication.
3. Demand cum show cause notice issued to the petitioner.
4. Jurisdiction of the Commissioner of Customs to review earlier orders.
5. Compliance with Customs and Central Excise Duties and Service Tax Drawback Rules.

Issue 1: Grant of Drawback to the petitioner for shipping bills
The petitioner, a 100% Export Oriented Unit (EOU), sought Drawback for 207 shipping bills after converting to Export Promotion Capital Goods (EPCG) Scheme. The petitioner's request for Drawback was initially rejected by the Commissioner of Customs, citing failure to provide reasons beyond their control for not filing Drawback shipping bills before the Final Exit order. The petitioner challenged this rejection, claiming they were unable to file until the Exit order was issued. The respondents argued against granting Drawback, stating the goods exported were made from non-duty paid inputs/raw materials, making Drawback inadmissible. The respondents also highlighted legal provisions prohibiting Drawback post-export duty payment on inputs/raw materials.

Issue 2: Rejection of petitioner's request for Drawback and subsequent communication
The rejection of the petitioner's Drawback request was communicated to them through an application under the Right to Information Act. The subsequent communication from the Central Board of Excise and Customs on 05.05.2009 confirmed the rejection of the Drawback claim for consignments exported before the issuance of a No Dues Certificate. The court found the communication to be a non-speaking order, directing the Technical Officer to reconsider the case and issue a detailed order after notice and reply from the petitioner.

Issue 3: Demand cum show cause notice issued to the petitioner
A demand cum show cause notice was issued to the petitioner for the recovery of Drawback amount disbursed. The basis of this demand was the rejection letter from the Commissioner of Customs. The petitioner responded with various defenses, and the court directed the Commissioner of Customs to consider the petitioner's reply independently without influence from higher authorities.

Issue 4: Jurisdiction of the Commissioner of Customs to review earlier orders
The petitioner challenged the Commissioner's jurisdiction to review earlier orders, arguing it was barred by limitation and violated principles of natural justice. The court directed the Commissioner to decide the matter independently without being influenced by higher authorities, emphasizing the need for due process and document disclosure to the petitioner.

Issue 5: Compliance with Customs and Central Excise Duties and Service Tax Drawback Rules
The court analyzed the compliance with Customs and Central Excise Duties and Service Tax Drawback Rules, emphasizing the need for reasons beyond the petitioner's control for failure to declare Drawback claims. The court highlighted the importance of legal provisions regarding duty payment on inputs/raw materials and the inadmissibility of Drawback post-export duty payment.

In conclusion, the court disposed of the Writ Petitions, closing one, dismissing another, allowing one with specific directions, and disposing of the last with further directions. The court emphasized the need for independent decision-making, compliance with legal provisions, and due process in dealing with Drawback claims and related communications.