2019 (12) TMI 345 - HC - Customs

Drawback of central excise duty - petitioner was of the view that the order was a non-speaking order that was passed in violation of the principles of natural justice and thus seeking to pass a proper, speaking order - principles of natural justice - HELD THAT - In the present case, the defect memo has been published and this would not satisfy the specific requirement of Rule 13(3), which states that a defect memo should be served on the assessee/exporter calling for rectification of the defects. Admittedly, no defect memo has been issued to the petitioner pointing out to it the defects that ostensibly arise in its drawback claims - Had this Rule been complied with, the petitioner might well have rectified the defects, thus paving the way for a timely disposal of its drawback claims. The flaw has occasioned at the door of the Department by the violation of principles of natural justice, specifically Rule 13(3) of the Rules. The rejection of representation dated 05.11.2004 on the ground that all drawback claims were brought to nil is flawed - the petitioner should not be denied the benefit of drawback based merely on a Public Notice, particularly when the petitioner has satisfied all other requirements under the relevant Notification/Scheme, thus frustrating the object of the scheme itself. The claim of rebate in relation to the twelve transactions denied under the impugned order shall be sanctioned and paid over to the petitioner within a period of six weeks from date of receipt of copy of this order - Petition allowed.

Summary

Issues:
1. Processing of drawback claims under a Public Notice.
2. Compliance with Rule 13(3) of the Customs, Central Excise Duties and Service Tax Draw Back (Amendment) Rules, 2006.
3. Violation of principles of natural justice in rejecting drawback claims.
4. Filing of supplementary claims after a significant time lapse.

Issue 1: Processing of drawback claims under a Public Notice

The judgment addresses the issue of whether the processing of drawback claims can be carried out under a Public Notice. The court notes that Rule 13 of the Customs, Central Excise Duties and Service Tax Draw Back (Amendment) Rules, 2006, requires that incomplete claims should be returned to the claimant with a defect memo for rectification. In this case, the court finds that the defect memo was not issued to the petitioner, leading to a violation of natural justice principles. The court refers to a similar case in the Bombay High Court where it was emphasized that efficiency should not override fundamental principles of natural justice.

Issue 2: Compliance with Rule 13(3) of the Customs Rules

The court highlights that the failure to issue a defect memo to the petitioner, as required by Rule 13(3) of the Customs Rules, has resulted in the petitioner being unable to rectify any defects in the drawback claims. This lack of compliance has hindered the timely disposal of the claims and violated the principles of natural justice. The court emphasizes the importance of notifying the assessee of any defects in the claim to ensure a fair process.

Issue 3: Violation of principles of natural justice in rejecting drawback claims

The judgment delves into the rejection of the petitioner's representation dated 05.11.2004, which led to subsequent proceedings. The court points out that the rejection was flawed, as the petitioner should have been given an opportunity to rectify any defects in the claims. The court criticizes the reliance on a Public Notice for rejecting the claims, stating that the petitioner should not be denied the benefit of drawback based solely on such a notice, especially when all other requirements were met.

Issue 4: Filing of supplementary claims after a significant time lapse

The court acknowledges the argument that filing supplementary claims after a significant time lapse may not have a legal basis. However, it notes that the petitioner had been actively pursuing the matter and raising concerns about the violation of natural justice since the beginning. Despite the time lapse, the court finds in favor of the petitioner, emphasizing the importance of upholding principles of natural justice.

In conclusion, the court allows the Writ Petition, directing the sanction and payment of rebate for the transactions denied under the impugned order within a specified time frame. The judgment underscores the significance of adhering to procedural requirements, notifying claimants of defects, and upholding principles of natural justice in administrative processes.