2022 (9) TMI 958 - HC - Customs

Maintainability of petitioner's appeal - statutory pre-deposit has not been remitted as required, in terms of Section 129E of the Customs Act, 1962 - Duty Drawback claim - scope of the terms 'rebate of duty' and 'duty' - HELD THAT - There is no merit in the distinction that is sought to be made by the petitioner between the concepts of duty and drawback since what the petitioner/assessee is permitted to draw-back is the duty paid by it on certain inputs, subject to the satisfaction of certain conditions - the benefit of drawback is granted if the assessee in question satisfies the condition imposed, including receipt of the sales proceeds within a stipulated period. The argument that there is a distinction between 'rebate of duty' and 'duty' and that, legally and functionally the two expressions refer to two different concepts is also misconceived as a rebate is nothing but a refund of duty and the nature of both remains the same. In fact, in Circular No.993/17/20140CS dated 05.01.2015, the Central Board of Excise Customs, New Delhi has clarified the position that drawback is a refund of duty on goods exported. In fine, the rejection of the petitioner's appeal for want of compliance with the condition under Section 129E is well founded. Petition dismissed.

Summary

Issues:
Challenge to appellate authority's order for non-maintenance of statutory pre-deposit under Section 129E of the Customs Act, 1962. Claim of duty drawback for textile garments export. Non-receipt of bank realisation certificates. Non-compliance with conditions leading to recovery of duty drawback and penalty. Appeal without remitting pre-deposit. Interpretation of Section 129E regarding deposit requirement. Distinction between duty and drawback. Definition of duty under Section 2(15) of the Act. Definition of drawback under Customs, Central Excise Duties and Service Tax Drawback Rules, 1995. Merit of petitioner's distinction between duty and drawback. Benefit of drawback subject to conditions. Circular clarifying drawback as a refund of duty on exported goods.

Analysis:
The judgment concerns the challenge to an appellate authority's order due to the petitioner's failure to remit the statutory pre-deposit under Section 129E of the Customs Act, 1962. The petitioner, engaged in textile garments production and export, claimed duty drawback for various shipping bills. However, the drawback was sought to be recovered along with penalty due to non-compliance with conditions, including non-receipt of bank realisation certificates for some transactions. The order-in-original directed full duty drawback recovery with penalty as the petitioner did not respond to show cause notice or personal hearing. The subsequent appeal was rejected for non-remittance of pre-deposit, leading to the present challenge.

The petitioner argued that the distinction between duty and drawback exempts drawback from Section 129E's deposit requirement. The counsel contended that drawback encompasses customs, central excise duty, and service tax, extending beyond the term 'duty' in Section 129E. In contrast, the respondents asserted that duty, as defined under Section 2(15) of the Act, includes drawback, rejecting the petitioner's argument. The court concurred with the respondents, emphasizing that drawback is a refund of duty paid on inputs, subject to specific conditions, and the distinction between 'rebate of duty' and 'duty' is legally unfounded.

Furthermore, the court referenced the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995, defining drawback as a rebate of duty or tax on imported or excisable materials used in manufacturing exported goods. The judgment highlighted that the benefit of drawback is contingent upon meeting imposed conditions, such as timely receipt of sales proceeds. Citing a circular clarifying drawback as a refund of duty on exported goods, the court dismissed the writ petition, upholding the rejection of the appeal for non-compliance with Section 129E. The detailed analysis underscores the court's rationale in interpreting the statutory provisions and dismissing the petitioner's contentions regarding the deposit requirement and the distinction between duty and drawback.