Swastik Oil Industries vs Union Of India (Uoi) And Ors.
2002 Latest Caselaw 1170 Bom

JUDGMENT

J.P. Devadhar, J.

1. In this group of three petitions, the petitioners have challenged the action of the respondents in declining to grant duty draw back on the exports effected by the petitioners principally on two grounds. First ground being that the denial of draw back without assigning any reason whatsoever is wholly arbitrary and secondly as per the policy decision taken by the Government, six exporters named in the petition who had exported similar goods have been granted draw back and the petitioners have been discriminated without any justification.

2. Since the issue raised in all these petitions are similar, they were heard together. For the sake of convenience, we have set out hereinbelow the facts in Writ Petition No. 3086 of 1988 and the decision in this petition will apply to the other two petitions.

3. The petitioners are engaged in the manufacture of Caster Oil Medicinal B. P. ('said goods' for short) and also export it. In the year 1977, Item 1204(b) was introduced to the schedule to the Customs and Central Excise Draw Back Rules 1971, wherein drugs, drugs intermediary and pharmaceuticals (liquids and drops) were made eligible for duty draw back. Caster Oil Medicinal B. P. was not specifically covered under the said Item 1204(b). However, some of the exporters of the said goods claimed duty draw back and the Government of India, after considering the issue decided to allow drawback on Caster Oil Medicinal B. P. under Sr. No. 1204(b) at 2% F.O.B. value vide Finance Ministry's file No. 601/1201/121/77-DBK dated 28th March, 1979. The said decision of the Government of India was not published.

4. During the period from 1st June 1977 to 19th September, 1980, the petitioners has also exported the said goods to several foreign countries from Bombay. Since the petitioners were not aware of the policy decision taken by the Government, the petitioners did not file the shipping Bills prescribed for the purposes of duty draw back but filed ordinary white shipping with the Customs authorities at Bombay. In the year 1985 the petitioners as well as other exporters came to know about the policy decision taken by the Government in March 1979 regarding grant of draw back on export of the said goods. Thereupon, the petitioners as well as other exporters applied to the concerned authorities to relax the provision of draw back Rules so as to convert white shipping Bills into Draw back shipping Bills and avail duty draw back on the goods already exported by them.

5. Then, the authorities called for factual report from the Collector of Customs, Bombay and the Collector of Customs on verification of the documents recommended the case of the petitioners for grant of duty draw back. Thereupon, the respondents in the case of (1) M/s Premji Haridas and Co., Bombay (2) M/s Mulji Devshi and Co., Bombay (3) M/s Jamnadas Madhavji and Co., Bombay (4) M/s Hindustan Lever Ltd., Bombay and (5) M/s Agrawal Industries, Hyderabad granted duty drawn, but in the case of the petitioners, the respondents declined to grant duty draw back for the exports effected during the period from 1st June 1977 to 19th September 1980 without assigning any reasons. Challenging these stereo type orders dated 6th February, 1986, 28th August, 1986, 3rd September, 1986 (Exhibit - 'C', 'F' and 'G' to the petition) the present petition has been filed.

6. When all these petitions were taken up for final hearing, learned Counsel, appearing on behalf of the respondents, tendered affidavit in reply dated 13th August, 2002 filed on behalf of the respondents by Shri S. G. Gawade, Deputy Commissioner of Customs. In para 5 of the said affidavit, it is stated that the Directorate of Drawback, looking into the administrative difficulties involved and the possibility of misuse of the relaxation, as a matter of policy decided not to grant any relaxation of converting free shipping bills into Draw back shipping bills in terms of the policy decision taken in 1985. Since no such policy decision was placed before us, the matter was adjourned to enable the respondents to produce the same before the Court. However, at the adjourned hearing, the Counsel for the Revenue on the basis of the instructions received by him from Shri Talathia, Technical Officer, Central Board of Excise and Customs submitted that in spite of best efforts, the revenue could not trace the relevant files including the policy decision taken in the year 1985 on the basis of which the petitioners were denied duty draw back.

7. Under the circumstances, we are constrained to decide the matter without any assistance from the revenue. However, the facts admitted by the revenue are that four exporters, out of the five set out hereinabove (except M/s Agrawal Industries, Hyderabad) were permitted to convert the white shipping Bills in to draw back shipping Bills and avail duty draw back. The petitioners have been denied the duty draw back on the basis of the policy decision of the Government which is not forthcoming. In the absence of any special circumstances, it was not open to the respondents to grant duty draw back to some exporters and deny the same to others, when all the exporters are similarly situated. The impugned action is clearly arbitraty and discriminatory. It cannot stand to the scrutiny of Article 14 of the Constitution of India, as such liable to be quashed and set aside. In spite of the opportunity granted, the respondents have not been able to establish any cogent reasons for denying the duty draw back to the petitioners. Admittedly, the draw back procedure has been evolved by the Government to promote export and from the letter dated 5th August, 1986 issued by the Basic Chemicals, Pharmaceuticals and Cosmetics Export Promotion Council (Exhibit - 'E' to the petition) it is clear that the petitioners had complied with all the conditions required for the grant of draw back and even the Collector of Customs, Bombay had recommended the case of the petitioners for grant of duty draw back. Under the circumstances, we see no reason to deny duty draw back to the petitioners. Neither in the orders impugned in the petition nor at the hearing of these petitions, the respondents have furnished any worthwhile reasons to treat the petitioners as class by themselves so as to decline the draw back to the petitioners. There is also no dispute as to the quantum of draw back claimed by the petitioners.

8. In the result all the three petitions succeed. The orders impugned in the petitions are quashed and set aside. Rule is made absolute in terms of prayer (b) of the petition. However, in the facts and circumstances of the case, there will be no order as to costs.