2019 (11) TMI 626 - HC - Customs

Jurisdiction to issue SCN - Discretionary Jurisdiction - applicability of Circular No. 83/2003-Cus., dated 18-9-2003 - HELD THAT - It is a rule of discretion and it is not a rule of compulsion, but it should be applied with utmost rigour when it comes to matters pertaining to taxes, cess, fees etc., In other words, when it comes to matters pertains to fiscal law. As it is nobody s case that this case falls under any one of the rare exceptions set out supra, this Court refrains from interfering with the impugned SCN. 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 - petition disposed off.

Summary

Issues:
Challenge to show cause notice regarding drawback claim applicability post GST era.

Analysis:
The petitioner, a manufacturer and exporter of leather footwear, challenged a show cause notice (SCN) issued by the first respondent regarding the rejection of the All Industry Rate of Drawback claim for finished leather/lining leather portion of inputs used in exported goods. The petitioner contended that the first respondent was unclear about the applicability of Circular No. 83/2003-Cus. post GST era, leading to doubts in the petitioner's mind.

The Standing Counsel for the first respondent argued that the circular was not applicable post-GST era as there was no Central Excise duty on leather goods, and exporters were eligible for GST credit on processing rawhides. The reason for rejecting the drawback claim post-GST era was clearly stated in the impugned SCN.

The Court considered the principles laid down by the Supreme Court regarding interference in writ jurisdiction concerning challenges to SCNs. It was noted that writ jurisdiction should only be exercised in rare and exceptional cases, such as when the SCN is issued without jurisdiction, reopens a well-settled legal position, prejudges the issue, or is issued due to mala fides. Since the instant case did not fall under any of these exceptions, the Court refrained from interfering with the impugned SCN.

The Assistant Solicitor General assured the Court that the third respondent Board would issue a clarification regarding the applicability of the circular post-GST era. The Court directed that the impugned SCN be kept in abeyance for eight weeks from the date of the order, during which the Board must issue a clarification. Depending on the clarification provided, the show cause proceedings would either continue or be dropped after the specified period.

In conclusion, the Court disposed of the writ petition with no costs, keeping the impugned SCN in abeyance pending the clarification from the third respondent Board. The connected miscellaneous petition was also closed as a result of this decision.