2019 (6) TMI 980 - HC - Customs

Duty Drawback - applicability of Circular No.83/2003-Customs dated 18.09.2003 in post GST era - HELD THAT - The Learned Assistant Solicitor General, who is before this Court, submitted that the third respondent Board will issue a clarification qua said circular. If this is done that will put an end to the controversy in instant writ petition and that will douse the anxiety of the writ petitioner in the instant writ petition. The impugned SCN is not quashed, but kept in abeyance for period of eight weeks from the date of receipt of a copy of this order. Within the aforesaid eight weeks, the third respondent Board shall issue a clarification particularly with reference to issue raised by the writ petitioner pertaining to applicability of said circular post GST era - Depending on the clarification, either show-cause will get revived and carried to its logical end or dropped, obviously post eight weeks. Petition disposed off.

Summary

Issues:
Challenge to show-cause notice regarding drawback claim post-GST era applicability of circular - Writ jurisdiction interference based on rare exceptions.

Analysis:

1. Challenge to Show-Cause Notice: The petitioner, a manufacturer and exporter of leather footwear, challenged a show-cause notice (SCN) issued by the first respondent regarding the drawback claim for finished leather/lining leather portion of inputs used in exported goods. The petitioner contended that the circular issued by the third respondent Board, Circular No.83/2003-Customs, was unclear in its applicability post-GST era. The first respondent argued that the circular was not applicable due to the absence of central excise duty on leather goods and the eligibility of exporters for GST credit on rawhide processing.

2. Writ Jurisdiction Interference: The High Court considered the principles laid down by the Hon'ble Supreme Court regarding interference in writ jurisdiction concerning challenges to SCNs. Referring to the Kunisetty Satyanarayana case, the Court highlighted that writ jurisdiction should only be exercised in rare and exceptional cases where the SCN is wholly without jurisdiction or illegal. The Court emphasized that alternate remedy is a rule of discretion, especially in fiscal law matters, as seen in the Satyawati Tandon and K.C. Mathew cases.

3. Rare Exceptions for Writ Jurisdiction: The Court outlined the rare and exceptional cases where writ jurisdiction could be exercised for quashing SCNs, including instances where the SCN is issued without jurisdiction, reopens a well-settled legal position, prejudges the issue, or is issued due to malafides. It clarified that these categories are not exhaustive but provide a framework for evaluating challenges to SCNs based on specific circumstances.

4. Court's Decision: Given that the case did not fall under any of the rare exceptions for interference in writ jurisdiction, the Court refrained from quashing the impugned SCN. However, in response to the Assistant Solicitor General's submission, the Court directed the third respondent Board to issue a clarification regarding the circular's applicability post-GST era within eight weeks. Depending on the clarification, the show-cause proceedings would either continue or be dropped after the specified period.

5. Disposition: The Court disposed of the writ petition without costs, keeping the impugned SCN in abeyance pending the clarification from the third respondent Board. The decision aimed to resolve the controversy and alleviate the petitioner's concerns regarding the circular's applicability in the post-GST era, ensuring a fair and informed resolution of the matter.