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TMI Blog2011 (5) TMI 718X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of Companies Act and is engaged in the business of manufacturing and export of finished leather products. In the course of its business, the Company exported leather shoes/boots under ten drawback shipping bills on different dates i.e. 18-10-2000, 13-10-2000, 21-10-2000, 1-11-2000, 31-10-2000, 8-11-2000, 15-11-2000, 17-11-2000, 30-11-2000 and 11-12-2000 from ICD, JRY Kanpur and in its export business transaction, a duty drawback of ₹ 44,38,625/- was paid to the petitioner. As the exporter-Company failed to submit proof of realization of export proceeds in the form of Bank Realization Certificate [in short referred to as 'BR Certificate'], a notice dated 9-7-2001 was issued by the Deputy Commissioner (Customs), ICD, JRY, Kanpur, requiring him to show cause as to why drawback Rs. 44,38,625/- be not recovered from the petitioner in view of the provisions of Rule 16A of the Customs and Central Excise Duties Drawback Rules, 1995 and proviso to Section 75(1) of the Customs Act, 1962. 3. Petitioner-Company replied to the aforesaid show cause notice and furnished 'BR Certificate' against Shipping Bill No. 25 dated 13-10-2000. Regarding other Shipping Bills, it was informed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies in breach of the relevant provisions/Circulars proceeded to order for recovery of the aforesaid amount. The appellate authority as also the Revisional Authority were swayed away with absolutely irrelevant provisions/Circulars and ignored the relevant facts and the law in vogue making the impugned orders unsustainable in the eyes of law. 7. It has also been argued that the Commissioner (Appeals) had wrongly interpreted Rule 16A of the 1995 Rules and wrongly observed that if the Department comes to know from any other source or from asking from Exporter itself that export proceeds are not realized, the Department can very well proceed for recovery of drawback even in absence of Export Outstanding Statement. Before the appellate authority, it was vehemently argued that the proceedings can be initiated by the Department only on receipt of relevant information from Reserve Bank of India but the appellate authority overlooked the aforesaid contention and observed that in Rule 16A, the word "only" has nowhere been used in the aforesaid Rule. Therefore, the customs authorities can very well initiate proceedings of recovery of drawback even in absence of Export Outstanding Stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that customs officials derive authority to issue show cause notice and authority to initiate proceedings for recovery of Customs Duties Drawback on receipt of relevant information from RBI, it has been contended that the customs officials are bound by the statutory legal duty to issue 'show cause notice' immediately after six months in case of non-realization of sale proceeds. The receipt of information from RBI is only an official communication from RBI regarding non-application of sale proceeds which fact had already come to notice, as no evidence of realization had been produced and accordingly in terms of provisions of the statutes, show cause notice was issued. It was also added that the scheme of 'Duty Drawback' is governed by the provisions of Customs Act, 1962 and the Rules framed thereunder which clearly provide that drawback should be recovered, if sale proceeds have not been realized. There is no stipulation under the provisions of the Customs Act, 1962 or Rules framed thereunder that Reserve Bank of India or State Bank of India can allow any person to retain export incentives, like 'Duty Drawback'. 12. On behalf of the aforesaid respondents, it has next been cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Reserve Bank of India for writing off of the export bills without surrendering the export incentives/duty drawback. The matter was examined in light of paragraph 2.25.3 of Handbook of Procedures (Volume 1) issued by the Director General of Foreign Trade read with Exim Policy Circular No. 12/2002-07 dated 1-11-2002 and only thereafter the letter dated 25-5-2004 was issued to the AD Bank advising therein that the aforesaid twelve bills may be written off without surrendering the export incentives/duty drawback, which is well in consonance with the Circular No. 22 dated 24-9-2003 issued by the Reserve Bank of India as in terms of the said circular, the authorized dealers are allowed to write off export bills on production of documentary proof of ECGC on getting confirmation claim in respect of outstanding bills. 16. On the basis of the arguments so advanced by the Counsel for the parties, the primary question to be decided by this Court is whether the customs authorities are competent to issue show cause notice to a exporter for production of evidence for realization of exports proceeds on its own or only on receiving the relevant information from Reserve Bank of India. 17.& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Customs or Deputy Commissioner of Customs to the claimant." [emphasis supplied] 18. The amended Rule 16A reads as under:- "16-A Recovery of Amount of Drawback Where export Proceeds Not Realized. - Where an amount of drawback has been paid to an exporter or a person authorised by him (hereinafter referred to as the claimant) but the sale proceeds in respect of such export goods have not been realised by o on behalf of the exporter in India within the period allowed under the Foreign Exchange Management Act, 1999 (42 of 1999), including any extension of such period, such drawback shall be recovered in the manner specified below : Provided that the time-limit referred to in this sub-rule shall not be applicable to the goods exported from the Domestic Tariff Area to a special economic zone. (2) If the exporter fails to produce evidence in respect of realisation of export proceeds within the period allowed under the Foreign Exchange Management Act, 1999, or any extension of the said period by the Reserve Bank of India, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellate and revisional authority that if the department comes to know from any other source that export proceeds are not realized, it can very well initiate proceedings for recovery of drawback even in the absence of XOS statement is wholly erroneous. Therefore, I cannot read the aforesaid provision in the manner sought to be read by the Counsel for the Union of India, for reading by adding certain words in the aforesaid manner does not appear to be the intention of the Legislature while enacting the aforesaid legislation, for otherwise the Legislature would have explicitly said so in the body of the main part of the Rule 16A as it stood prior to amendment. It may be noted that such words are missing in amended provision and there is no restrospectivity attached to it. 20. The provision of an Act is to be read in the manner as it exists in the statute book and it is a well settled principle in law that the court cannot read anything into a statutory provision which is plain and unambiguous. The language employed in a statute is determinative factor of legislative intent. If the language of the enactment is clear and unambiguous, it would not be proper for the courts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the time prescribed. It is also not disputed that the period of realization had been extended by the Reserve Bank of India initially till 27-7-2001 and ultimately till 1st August, 2004 by the Reserve Bank of India. On 9-7-2001, the Assistant Commissioner, Customs, Kanpur issued a show cause notice to the petitioner to show cause as to why duty drawback of Rs. 44,38,625/- may not be recovered from the petitioner under the provisions of Rule 16A of 1995 Rules. Thereafter various other notices were sent. Petitioner objected to said show cause notice on the ground that there was no occasion for the customs officials for issuing any show cause notice prior to 1-8-2004 i.e. the time extended by the Reserve Bank of India. Counsel for the Union of India, on one hand, stated that the show cause notice dated 9-7-2001 was issued in light of legal provisions of Section 75 of the Customs Act and Rule 16A of the 1995 Rules, and on the other hand, it has been stated that if the sale proceeds of exported goods, in respect of which drawback allowed/paid is not realized, within six months, the amount of drawback becomes recoverable subject to extension of time by the RBI. Undisputedly, the RBI ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircular No. 12/2002-2007 dated 1-11-2002. The relevant paragraph reads as under:- "Paragraph 2.25.3 of the Handbook of Procedures (Vol. 1) permits taking into account of such exports for the purpose of benefits under the Exim Policy where the exports have been completed but the payment has not been realised from the buyer provided the payment has been realised through ECGC cover. It has been decided to grant the benefits under para 2.25.3 of the Handbook of Procedures (Vol. 1) even for old cases. Hence exports made and payment realised through ECGC cover would be taken into account for benefits under the Exim Policy even if such exports were made and/or licences issued prior to 1-4-2002." 27. From the circular and Paragraph 2.25.3 of the Handbook, reproduced hereinabove, it is imminently clear that the authorized dealers are allowed to write off export bills on production of documentary proof of ECGC (Export Credit Guarantee Corporation of India) on getting confirmation claim in respect of outstanding bills. Thus the authorized dealers are vested with the power to write off export bills subject to the production of documentary evidence. The Circular which prohibits applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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