2019 (10) TMI 642 - HC - Customs

Recovery of duty drawback incentive availed at the time of export - power to reassess shipping bill - Rule 16 of the Customs Central Excise Duties and Service Tax Drawback Rules 1995 - Free on Board (FOB) value of the goods exported during 2007-08 to 2012-13 rejected - definition of export goods - application of Valuation Rules 2007 to exported goods. HELD THAT - It is apparent from the definition of export goods that the goods which have already been taken out of India do not remain export goods instead are referable as exported goods. The definition of imported goods makes things more than clear that goods which have already been cleared are not imported goods . Similarly goods which have already been exported are no more export goods . In the definition part as well in the various Sections of 1962 Act and Rules made thereunder we find that word imported goods or export goods has been used which shows true intention of the legislature. The transaction value of imported and export goods is the thumb rule to determine duty payable however declared value may be rejected and proper officer may redetermine value applying Valuation Rules 2007. Rule 1(3) provides that Valuation Rules 2007 are applicable to export goods and not goods which have already been taken out of India. The declared value may be accepted or reassessed and in case re-assessed value is not accepted by exporter proper officer has to pass speaking order - Thus as per scheme of the 1962 Act department is not remediless and courts are bound to interpret law as such. Courts while interpreting law can neither add nor subtract any word from the plain language irrespective of consequences. It is the legislature who has to rectify repair or amend the law in case any judgment interpreting law is not acceptable or is contrary to intent and purport of enactment. On plain reading of Section 17 50 and 51 with Valuation Rules 2007 we find that Respondent is neither vested with power of reassessment of goods already exported under Rule 16 of Drawback Rules 1995 nor Valuation Rules 2007. The goods which stand exported do not fall within ambit of export goods as defined under Section 2(19) of 1962 Act thus Respondent cannot invoke Rule 6 8 of Valuation Rules 2007 - Respondent in terms of Rule 16 of Drawback Rules 1995 as well Valuation Rules 2007 has no power to reassess a shipping bill which was duly assessed by proper officer at the time of export of goods. In the present case goods in question stood exported thus impugned order is not sustainable. Petition allowed.

Summary

Issues Involved:
1. Reasonable period of limitation to issue show cause notice.
2. Absence of mechanism to raise demand of duty drawback.
3. Power of Respondent to reassess value of goods already exported.

Detailed Analysis:

1. Reasonable Period of Limitation to Issue Show Cause Notice:
The court examined the issue of the reasonable period for issuing a show cause notice for the recovery of duty drawback. It was observed that the period of 5 years from the date of export/assessment is considered reasonable, as established in the judgments of the Supreme Court and various High Courts, including State of Punjab vs. Bhatinda District Co-Op. Milk P. Union Ltd. and Gupta Smelters Pvt. Ltd. vs. Union of India. In the present case, the show cause notice dated 4.9.2014 was issued for goods exported during 2007-08 to April 2012. The court concluded that the demand for the period 2007-08 to September 2009 was raised beyond the reasonable period of 5 years and thus was not sustainable, while the remaining demand was within the permissible period.

2. Absence of Mechanism to Raise Demand of Duty Drawback:
The court held that the mechanism to declare already paid duty drawback as excess and demand its recovery is missing in Rule 16 of the Drawback Rules, 1995. This finding was consistent with the judgment in Famina Knit Fabs vs. UOI & Ors. The court noted that the Drawback Rules, 1995, do not provide a specific procedure for such reassessment and recovery, making the demand under Rule 16 unsustainable. Consequently, the order-in-original dated 25.11.2016 demanding duty drawback was quashed.

3. Power of Respondent to Reassess Value of Goods Already Exported:
The court scrutinized whether the Respondent had the authority to reassess the value of goods that had already been exported. It was determined that neither Section 14 of the Customs Act, 1962, nor the Valuation Rules, 2007, empower the Respondent to reassess the value of goods post-export. The court emphasized that the term "export goods" applies only to goods intended to be taken out of India, not those already exported. Additionally, the court referenced the Supreme Court's judgment in ITC Ltd. vs. Commissioner of Central Excise, Kolkata-IV, which clarified that refund proceedings under Section 27 of the Customs Act are in the nature of execution proceedings and do not permit reassessment of already assessed goods. The court concluded that the Respondent lacks the power to reassess the value of goods already exported under Rule 16 of the Drawback Rules, 1995, or the Valuation Rules, 2007.

Conclusion:
The court allowed the writ petitions on all counts, namely, limitation, absence of mechanism, and lack of power to reassess goods already exported. The impugned order dated 25.11.2016 was quashed, and no costs were imposed. The judgment reaffirms the principles established in Famina Knit Fabs and aligns with the Supreme Court's interpretation in ITC Ltd. vs. Commissioner of Central Excise, Kolkata-IV.