Delhi High Court
Shivam (Uz) International vs Commissioner Of Customs And Anr. on 27 January, 2014
Author: S.Ravindra Bhat
$~13 & 14
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Decided on: 27.01.2014
+ W.P.(C) 1886/2013, C.M. APPL. 3597/2013
MAALVIKA IMPEX (INDIA) ..... Petitioner
Versus
COMMISSIONER OF CUSTOMS AND ANR.
..... Respondents
+ W.P.(C) 1887/2013, C.M. APPL. 3598/2013
SHIVAM (UZ) INTERNATIONAL ..... Petitioner
Versus
COMMISSIONER OF CUSTOMS AND ANR.
..... Respondents
Through : Sh. Navneet Panwar, Advocate,
for appellants (13 and 14).
Sh. Kamal Nijhawan, Sr. Standing Counsel
with Sh. Sumit Gaur and Ms. Dinesh Patel,
Advocates (13 and 14).
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE R.V. EASWAR
MR. JUSTICE S.RAVINDRA BHAT (OPEN COURT)
%
1. The petitioners seek an order quashing and setting-aside
of the order of the Joint Secretary, Department of Revenue,
Govt. of India dated 13.08.2012.
W.P.(C) 1886/13 & W.P.(C) 1887/13 Page 1
2. The facts of this case are that the petitioners are merchant
exporters of readymade garments. During the course of
assessment proceedings, they relied upon Circular No.
54/2001-Cus dated 19.10.2001 and Circular No.16/2009-Cus
dated 25.05.2009, which according to them enabled the
setting-off of the duty element in respect of the inputs
purchased from the open market. In the assessment proceedings
as well as the revision which led to the impugned order, the
contentions urged by the petitioners were turned down. It
consequently has approached this Court for setting-aside of that
order.
3. The respondents' position is that the impugned order
does not require any interference. The respondents rely upon
the same Circular No. 16/2009-Cus and highlight para no. 7 to
submit that the relief is qualified in that offsetting is permitted
subject to fulfilment of certain conditions. It is emphasized that
in this case, the petitioner did not fulfil those conditions. The
respondents also rely upon an investigation report to suggest
that the writ petitioners did not satisfy the concerned authority
that in fact the inputs were duty-paid. The respondents state
that the Circular of 2009 is prospective.
4. The petitioners have in these proceedings relied upon a
decision of this Court - Commissioner of Customs (Export) v.
Kultar Export 2013 (288) ELT 187 (Del). The Court had then
examined the very same issue, i.e. the permissibility of benefit
of duty element in the cost of inputs of such merchant
W.P.(C) 1886/13 & W.P.(C) 1887/13 Page 2
exporters. The Court had considered the relevant Circulars
dated 64/1998 dated 01.09.1998; 54/2001-Cus dated
19.10.2001 as well as another Circular No. 08/2003 over and
above Circular No.16/2009-Cus. In that case, this Court had
affirmed the decision of Tribunal which had inter alia held as
follows:
"8. The Tribunal proceeded to over-rule the
Commissioner's argument and held as follows :-
"12. On a careful reading of paras 1 and 6 as
also from item 4 of Annexure-I and items 4 and 5
of Annexure-II of Circular 54/2001-Cus. it is clear
that this circular and certificates as per this
Circular are not applicable for merchant exporters
who buy goods from open market and we have no
difficulty in concluding that this circular is not
applicable to merchant exporters who procure
goods from the open market and the Appellant was
not required to give such certificates. So the very
basis of on which SCN is issued is not sound.
13. The only issue to be examined is whether the
demand is to be sustained in view of para(iv) of
Circular 17/97-Cus. and para (vi) of Circular
64/98 though these are not relied upon in SCN. As
per these circulars the Appellant should not have
been given the impugned drawback. There was no
question of taking any declarations. The only
relevant information was that the Appellant was a
merchant exporter, which was always known to the
department. As may be seen from para 1 (iv) of
Circular 17/97-Cus. and para 1 (vi) of Circular
64/98-Cus. there was no question of taking any
declaration from merchant exporters who buy
goods from the open market as in the case of this
W.P.(C) 1886/13 & W.P.(C) 1887/13 Page 3
Appellant but the drawback was supposed to be
restricted to the customs portion only. However
Revenue chose to grant drawback for excise
portion also and after lapse of five years to one
year, the drawback amounts granted on various
shipping bills have been demanded to be paid
back. There is also an argument that this
Appellant is being singled out for such treatment.
This argument is relevant not in the sense whether
a wrong can be corrected in the hands of one when
others go scot free but in the context that there was
a bona fide relief because of the circulars from
2001 onwards that they were eligible for the
impugned drawback.
14. We are not inclined to confirm such huge
liability for past periods based on Circulars which
were in the knowledge of the department and
which were not implemented. We would like to rely
more on the legal provisions. The only legal
provision relied upon is Rule 3 of the drawback
Rules. We agree with the interpretation to this
Rule given by the Board in Circular 16/2009-Cus.
The argument that this interpretation is applicable
from date of issue of Circular 16/2009-Cus. Is
repugnant to logic because the Rule has remained
the same except for amendment on 13-7-2006, to
take care of incidence and rebate of Service Tax.
So we are not inclined to rely on the word
"henceforth" used in para 7 of this circular and
uphold this demand."
5. Having regard to the above, this Court is of the opinion
that the petitioners too are entitled to the same relief as per the
decision in Kultar Export (supra).
6. The impugned order, disallowing Central Excise portion
W.P.(C) 1886/13 & W.P.(C) 1887/13 Page 4
of the drawback, in terms of the adjudicating authority and
revisional order is hereby set aside. The writ petitions and
pending applications are allowed in the above terms.
S. RAVINDRA BHAT
(JUDGE)
R.V. EASWAR
(JUDGE)
JANUARY 27, 2014
W.P.(C) 1886/13 & W.P.(C) 1887/13 Page 5
