Gujarat High Court

M/S Jbs Exports vs Union Of India on 3 April, 2025

Author: Bhargav D. Karia

Bench: Bhargav D. Karia

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                         C/SCA/3825/2023                                      CAV JUDGMENT DATED: 03/04/2025

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                                                                            Reserved On   : 05/12/2024
                                                                            Pronounced On : 03/04/2025

                                    IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                                      R/SPECIAL CIVIL APPLICATION NO. 3825 of 2023

                                                         With
                                      R/SPECIAL CIVIL APPLICATION NO. 3827 of 2023
                                                         With
                                      R/SPECIAL CIVIL APPLICATION NO. 3833 of 2023
                                                         With
                                      R/SPECIAL CIVIL APPLICATION NO. 3856 of 2023
                                                         With
                                      R/SPECIAL CIVIL APPLICATION NO. 3859 of 2023

                      FOR APPROVAL AND SIGNATURE:


                      HONOURABLE MR. JUSTICE BHARGAV D. KARIA

                      and
                      HONOURABLE MR.JUSTICE D.N.RAY

                      ==========================================================

                                   Approved for Reporting                     Yes            No
                                                                                             ✓
                      ==========================================================
                                                     M/S JBS EXPORTS & ANR.
                                                              Versus
                                                      UNION OF INDIA & ANR.
                      ==========================================================
                      Appearance:
                      MR HARSHADRAY A DAVE(3461) for the Petitioner(s) No. 1,2
                      MR CB GUPTA(1685), MR SIDDHARTH DAVE WITH MR CHIRAYU MEHTA
                      for the Respondent(s) No. 1,2
                      ==========================================================

                         CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
                               and
                               HONOURABLE MR.JUSTICE D.N.RAY


                                                           CAV JUDGMENT

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(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)

1. Heard learned advocate Mr.

Harshadray A. Dave for the petitioners,

learned advocate Mr. C.B. Gupta,

learned Senior Standing Counsel Mr.

Siddharth Dave and learned Senior

Standing Counsel Mr. Chirayu Mehta for

the respondents.

2. Rule returnable forthwith. Learned

advocate Mr. C.B. Gupta and learned

Senior Standing Counsel Mr. Siddharth

Dave and learned Senior Standing

Counsel Mr. Chirayu Mehta waives

service of notice of rule on behalf of

the respondents.

3. By these petitions under Article

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226 of the Constitution of India, the

petitioners have challenged the show

cause notices issued by respondent no.2

Joint Commissioner, Customs, Mundra,

Kutch. The show cause notices were

issued in the year 2016.

4. The petitioner is engaged in the

business of export of nut, bolts,

washer, hand tools etc. falling under

Chapter Heading 7318, 8205, 3926 of the

Customs Tariff Act, 1975. The

petitioner is exporting the said goods

to Dubai, UAE.

5. Respondent no.2 based upon the

intelligence seized the containers of

the petitioner along with other

exporters on 20.01.2015 on the ground

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that the goods are under weighing and

are not properly classified. According

to respondent no.2, the goods were

required to be classified under Chapter

Heading 7308 and not under Chapter

heading 7318 and therefore, the same

was considered as mis-declared goods.

6. The petitioners preferred Special

Civil Application No.7305 of 2015

challenging the condition imposed by

respondent no.2 for provisional release

of the seized goods which was modified

by this Court requiring the petitioner

to give bond for value of the goods for

provisional release.

7. Respondent no.2 thereafter issued

the impugned show cause notices dated

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12.01.2016 in Special Civil Application

No.3827/2023, Special Civil Application

No.3833/2023 and Special Civil

Application No.3859/2023 and show cause

notice dated 20.12.2016 in Special

Civil Application No.3856/2023 and show

cause notice dated 29.11.2016 in

Special Civil Application No.3825/2023

on three grounds i.e. mis-declaration

of weight, mis-declaration of

classification and mis-declaration of

value of the goods sought to be

exported.

8. The petitioners have therefore,

preferred these petitions challenging

the show cause notices on the ground

that the same are without jurisdiction

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as no action was taken by the

respondents after issuance of the show

cause notices and show cause notices

therefore are deemed to have lapsed.

SUBMISSIONS FOR THE PETITIONER

9. Learned advocate Mr. Harshadrai

Dave submitted that as per the

provisions of section 28(1)(a) read

with section 28(9)(a) of the Customs

Act, 1962 (For short "the Act"), the

show cause notice is required to be

adjudicated within a period of six

months whereas the impugned show cause

notices are issued in the year 2016 and

the same were pending for adjudication

till the petitioners preferred these

petitions in the year 2023 and

therefore, the respondents cannot

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adjudicate upon such show cause notices

after a period of seven years.

10. It was submitted that the impugned

show cause notices are issued without

jurisdiction as the respondent no.2

exercised the powers in excess of the

jurisdiction vested in him. It was

further submitted that approaching

respondent no.2 in compliance of the

show cause notice after a period of

seven years would not be an efficacious

alternative remedy as the action taken

by respondent no.2 constitute an abuse

of process of law. It was therefore,

submitted that in such circumstances,

the petitioners have preferred these

petitions under Article 226 of the

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Constitution of India.

11. Learned advocate Mr. Dave placed

reliance upon the following decisions

in support of his submissions:

1) State of H.P. and others v.

Gujarat Ambuja Cement Ltd and

others reported in AIR 2005 SC

3936.

2) Union of India and anr. v. Vicco

Laboratories reported in AIR 2007

SC (Supp) 1225.

3) Dhampur Sugar Mills Ltd. v.

State of UP and others reported in

(2007) 8 SCC 338.

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4) M/s. Godrej Sara Lee Ltd. v.

The Excise and Taxation Officer cum

Assession Authority reported in

(2023) 384 ELT 8 (SC)

12. It was further submitted that

the shipping bills in question were

finally assessed, and the petitioners

were granted the benefit of duty

drawback and the goods in question have

already been exported out of India and

have reached their respective

destination. It was further pointed out

that duty drawback for the entire

period from 1st January 2011 to 30th

September, 2016 was already paid to the

petitioners and Bank Realisation

Certificates have been issued upon

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realization of the consideration in

foreign exchange declared in the

shipping bills. It was also pointed out

that no appeal challenging the final

assessment of the shipping bills is

preferred by the respondents and appeal

period has already lapsed.

13. It was submitted that the

impugned show cause notices are liable

to be quashed as the same are not

adjudicated upon by the authority from

2016 till 2023, more particularly, when

the impugned notices are for goods

exported by the petitioners from

01.01.2011 to 30.09.2016 and therefore,

show cause notices in some cases is

composite show cause notice of six

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years. It was therefore, submitted that

the impugned show cause notices are

without jurisdiction as the

classification of the goods exported by

the petitioners are already adjudicated

by final assessment of the shipping

bills which has attained finality.

14. Learned advocate Mr. Dave submitted

that co-noticee by a detailed reply to

the show cause notice has also pressed

reliance up on binding precedents with

respect to the classification of the

goods and despite such replies,

respondent no.2 instead of dropping the

proceedings has sought the presence of

the petitioners for personal hearing

which clearly shows mala fide intention

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of respondent no.2.

15. Learned advocate Mr. Dave submitted

that when this Court directed

respondent no.2 to produce the original

file concerning the impugned show cause

notices, it was revealed that the show

cause notices in question were placed

under "Call Book" by respondent no.2

which was never intimated to the

petitioners. It was pointed out that

even respondent no.2 never submitted

before this Court that the impugned

show cause notices were placed under

"Call Book" nor any averment was made

in the two affidavits in reply filed by

the respondents. It was therefore,

submitted that there was breach of

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principles of natural justice on

failure of the respondent authority in

not informing/intimating the petitioner

about placing the impugned show cause

notices in the Call Book. In support of

his submission, reliance was placed on

the following decisions:

1) Union of India v. ATA Freight

Line(I) Pvt Ltd reported in (2023)

6 Centax 153 (SC).

2) ATA Freight Line(I) Pvt Ltd v.

Union of India reported in (2022) 1

Centax 32 (Bom).

3) Commissioner GST and Central

Excise v. Shree Baba Exports

reported in (2023) 3 Centax

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279(SC).

                                       4)       Shree            Baba              Exports                      v.

                                       Commissioner,                         GST           &            C.Ex.



                                       ELT 53 (P&H).


                                       5)       ICICI Home Finance Company Ltd.

                                       v.        Union       of        India            reported                in

(2024) 20 Centax 390 (Bom).

16. Learned advocate Mr. Dave referred

to and relied upon Rule 16 of the

Custom, Central Excise Duties and

Service Tax Drawback Rules, 1995 (For

short "the Drawback Rules") for the

goods exported during the period from

01.01.2011 to 30.09.2016 as respondent

no.2 has issued the impugned show cause

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notices to demand differential duty

drawbacks under the said Rule. It was

submitted that though the Rule 16 of

the Drawback Rules is silent as to the

period during which the show cause

notice can be issued by the authority,

however, in similar issue, this Court

in case of Pratibha Syntex Limited v.

Union of India and others (judgment

dated 04.07.2022 rendered in Special

Civil Application No.2039 of 2004) has

held that the period for issuance of

show cause notice under Rule 16 would

be three years from the date of duty

drawback being paid. It was therefore,

submitted that the impugned show cause

notices and subsequent proceedings

initiated by respondent no.2 are beyond

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the period of limitation prescribed by

this Court. The decision of this Court

was followed in various other decisions

and the SLP filed against such decision

including the review petition preferred

by the respondents have been rejected

by Hon'ble Supreme Court.

17. Learned advocate Mr. Dave further

submitted that as per section 128 of

the Customs Act, any person including

the department if aggrieved by the

final assessment must file an appeal

before the stipulated time frame and if

no appeal is filed, assessment would

attain finality and cannot be reopened.

It was submitted that shipping bills

relating to the period covered by the

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impugned show cause notices are already

finally assessed by the Proper Officer

and duty drawback was paid based on

such assessment and no appeal was filed

against the final assessment and period

of filing appeal has also lapsed and

therefore, in such circumstances,

action of respondent no.2 in reopening

such final assessment without any

challenge in appeal is therefore,

beyond the jurisdiction and the

impugned show cause notices are

required to be quashed and set aside.

18. In support of his submission,

reliance was placed on the following

decisions:

1) ITC Limited v. Commissioner of

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Central Excise, Kolkatta IV

reported in (2019) 17 SCC 46.

2) Gargip International v. Union of

India (judgment dated 12.06.2017

rendered in Special Civil

Application No. 17255 of 2016).

3) M/s. S.J.S. International V.

Union of India (judgment dated

9.12.2021 in Special Civil

Application No.20484 of 2019)

19. Learned advocate Mr. Dave

submitted that respondent no.2 has

acted in excess of the powers vested in

it due to failure to follow the binding

precedent.

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20. Reliance was placed on the

decision of Hon'ble Supreme Court in

case of Union of India v. Kamlakshi

Finance Corporation Ltd reported in

1991 (9) TMI 72(SC), wherein Hon'ble

Supreme Court has held as under:

"It cannot be too vehemently emphasised that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities; The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not "acceptable" to the department -

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in itself an objectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws."

21. It was therefore, submitted that

respondent no.2 has failed to follow

the binding precedent of appellate

authority, revisional authority and

this Court wherein it is already held

that classification of such goods

sought to be exported by the petitioner

and other exporters would be item

specific and not as per end use and

classification made by the exporters in

Chapter Heading No.7318 was held to be

proper. It was submitted that despite

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such binding decisions, the respondents

have continued to issue the show cause

notices to reopen the assessment on the

ground of classification and as such,

the show cause notices are without

jurisdiction. Reliance was placed on

the following decisions:

1) M/s.S.J.S International

(Special Civil Application No.20484

of 2019).

2) Gargip International v. Union of

India (Special Civil Application

No.17255 of 2016).

3) Vinod Electropating Works(order

dated 19th November, 2015 of

Appellate Commissioner).

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4) Vinod Electropating Works,

(order dated 1st /3rd February, 2022

of revisional authority).

5) Hind Steels, Additional

Commissioner (Export) order dated

20.03.2014.

6) Vinod Electroplating Works,

Additional Commissioner (Export)

Order dated 20.03.2014.

22. With regard to the allegation of

over valuation of the goods exported by

the petitioners leveled in the show

cause notices, it was submitted that

once the value declared in the shipping

bills has been realized and Bank

Realization Certificates are available,

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respondent no.2 could not have made

such allegation. Reliance was placed on

the decision of Hon'ble Supreme Court

in case of Commissioner of Customs,

Mumbai v. Vishal Exports Overseas Ltd

reported in (2007) 9 SCC 168.

23. It was further submitted that

respondent no.2 has failed to apply the

circular No.1053/02/2017-CX issued by

the Central Board of Indirect Taxes

which clearly stipulates that long

standing assessment practice cannot be

changed merely by issuing show cause

notice, but the issue ought to have

been referred to the Board for

consideration. Reliance was placed on

the decision of Hon'ble Apex Court in

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case of Paper Products Ltd. v.

Commissioner of Central Excise reported

in 1999(8) TMI 70(SC) wherein it is

held by Hon'ble Supreme Court that the

departmental circulars are binding on

the revenue authority.

24. Reliance was also placed on the

decision of Hon'ble Supreme Court in

case of Collector of C.Ex. Vadodara v.

Dhiren Chemical Industries reported in

2001 (12) TMI 3 (SC), wherein it is

held that there are circulars which

have been issued by the Central Board

of Excise and Customs which place a

different interpretation and such

interpretation will be binding upon the

Revenue. It was therefore, submitted

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that the respondent authorities have

failed to follow the binding precedent

and legal norms and therefore, the

impugned show cause notices are without

jurisdiction and only remedy available

to the petitioners is to prefer these

petitions under Article 226 of the

Constitution of India.

SUBMISSIONS FOR THE RESPONDETS

25. Per contra, learned advocates for

the respondents submitted that in these

petitions, intelligence was gathered by

the Directorate of Revenue Intelligence

(DRI), Ahmedabad Zonal Unit that

various Jalandhar, Ludhiana and Delhi

based exporters were exporting the

goods from Mundra port claiming higher

duty drawback by way of

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misclassification, short shipment and

over valuation. It was submitted that

"scaffolding items" falling under

Customs Tariff Head (CTH) 7308 were

wrongly classified under CTH 7318 and

8205 where duty drawback rate was

higher and overvaluation was done to

claim higher incentives.

26. It was therefore, submitted that

after inquiry being initiated against

the petitioner and during the

investigation the goods were seized on

reasonable belief that the same were

liable for confiscation. It was

submitted that merely because the goods

were provisionally released, it cannot

be said that show cause notices cannot

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be issued if during the investigation

it is revealed that there is short

shipment, mis-classification and over

valuation of exported goods. It was

therefore, submitted that the impugned

show cause notices are issued for

recovery of fraudulently availed excess

duty drawback by the petitioners under

Rule 16 of the Drawback Rules read with

section 75 of the Customs Act. It was

submitted that though relied upon

documents and evidence have been

provided to the petitioners to

represent their case before the

adjudicating authority, the petitioners

have not complied with the impugned

show cause notices.

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27. It was submitted that as per

Circular No.24/2011 dated 31.05.2011

issued by the Central Board of Excise

and Customs at the relevant time,

Proper Officer can issue the show cause

notice in cases involving collusion,

willful misstatement or suppression of

facts without any time limit and

therefore, the impugned show cause

notices issued by respondent no.2 being

a proper officer cannot be said to be

barred by limitation.

28. It was submitted that though

respondent no.2 has given opportunity

of personal hearing to the petitioners

no one appeared for personal hearing

and in view of stay grated by this

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Court vide order dated 27.03.2023,

respondent no.2 could not proceed with

adjudication as the matter is pending

before this Court. It was therefore,

submitted that respondent no.2 may be

permitted to complete the adjudication

and if the petitioners are aggrieved by

the outcome of the show cause notices,

alternative efficacious remedy by

preferring an appeal is also available

in which the petitioners may raise all

the issues which are raised in these

petitions. It was also submitted that

the petitioners are entitled to raise

all the issues during adjudication of

show cause notices.

29. Learned advocate for the

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respondents referred to the provision

of section 75 of the Customs Act, 1962

which provides for duty drawback on

imported materials used in the

manufacture of goods which are

exported. It was submitted that Rule 16

of the Drawback Rules empowers

respondent no.2 for recovery of

erroneous or excess payment of drawback

and interest and merely because the

shipping bills are self-assessed, it

cannot be said that the same are

finally assessed and respondent no.2

can take recourse to Rule 16 where it

is found on verification, examination

or testing of the goods or otherwise

that self-assessment is not done

correctly and reassessment of the duty

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leviable on such goods is permissible.

30. It was therefore, submitted that in

facts of the case when DRI has found

during the investigation that the

petitioners were making exports

claiming higher duty drawback by way of

misclassification, short shipment and

over valuation by describing the

exported goods with generic description

as "Nuts and Bolts", "Plastic Caps",

"Washers", "Clamps" etc. by

classifying under CTH Tariff Item No.

7318 , 3923, 3926, 8205 etc. but during

the investigation, such goods were

found to be parts of equipment for

scaffolding used for construction work.

It was submitted that as per the report

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of the Chartered Engineer, it was found

that after investigation of the samples

of the goods that these were parts of

scaffolding items, and such fact is

accepted by the partner of the

petitioners in statement recorded by

the officer of DRI.

31. It was therefore, submitted that

the issues raised by the petitioners

can also be considered by the

adjudicating authority during

adjudication process.

32. In support of his submission,

reliance was placed on the decision of

Calcutta High Court in case of M M

Exports v. Zonal Director General of

Foreign Trade reported in 2001 (133)

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ELT 558 (Cal.) wherein it is held that

officer of the Customs Department is

competent authority for assessment and

reassessment of the value of goods. It

was therefore, prayed that no

interference may be made in these

petitions and respondent no.2 may be

permitted to adjudicate the show cause

notices in accordance with law. It was

further submitted that reliance placed

by the petitioners on various decisions

are based upon the facts which are

different and present case cannot be

compared with other consignments not

covered by investigation by DRI as show

cause notices in the present case have

been issued after following findings of

the investigation. It was therefore,

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submitted that no period of limitation

would apply in view of Rule 16 of the

Drawback Rules and the petitioners may

be subjected to the adjudication

process before respondent no.2 in

respect of show cause notices.

DISCUSSION AND FINDINGS:

33. Having heard the learned advocates

for the respective parties and

considering the facts of the case,

following undisputed facts emerge from

the materials placed on record.

(i) On the basis of intelligence

gathered by DRI, searches were

carried out at the office premises

of M/s. D.K. Logistics, Gandhidham

and office premises of M/s. Mak

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Container Line, Jalandhar and

inquiry was also initiated against

the petitioners and examination of

export goods covered under various

shipping bills was also undertaken.

(ii) After search and investigation

and on examination of imported

goods, it was found that same were

mis-declared in terms of quantity

and classification and therefore,

the same were seized by seizure

memo dated 20.1.2015 by DRI.

(iii) Thereafter, respondent no.2 on

receipt of No Objection Letter

dated 27.01.2015 from DRI for

provisional release of the seized

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good, permitted the same to be

provisionally released on execution

of bond of 100% FOB value of goods

along with 25% security in form of

bank guarantee.

(iv) However, the petitioner

approached CESTAT Ahmedabad who

vide order dated 1.05.2015 ordered

for release of goods on furnishing

bond of 100% of value. Accordingly,

goods were released by the customs

authority.

(v) Thereafter impugned show cause

notices were issued by respondent

no.2 based upon the statements

recorded during the course of

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investigation by DRI and report

submitted by Chartered Engineer

after examination of samples drawn

under Panchnama dated 11.02.2015 by

DRI calling upon the petitioners as

to why duty drawback sanctioned

should not be recovered as the

goods in question were

misclassified under CTH 7318

instead of CTH 7308 and for under

valuation and under weighment of

the exported goods.

(vi) After issuance of the show cause

notices, it appears that same were

kept in "Call Book" which fact is

found out from the original file

placed before this Court produced

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during the course of hearing on

5.12.2024.

34. In view of above facts, the main

ground of challenge of the petitioners

to the impugned show cause notices, is

that the show cause notices are without

jurisdiction as the same are not

adjudicated for more than seven years

and approaching respondent no.2 for

adjudication of the show cause notices

would not be an efficacious remedy for

the petitioners as respondent no.2 has

no jurisdiction to issue the show cause

notices in the facts of the case, more

particularly, when such show cause

notices are time barred and respondent

no.2 has failed to take into

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consideration the binding precedent.

35. This Court in case of M/s. SJS

International (supra) in similar facts

after considering similar contentions

raised by the petitioners and the

respondents in the said case, examined

Rule 16 of the Drawback Rules as under:

"7.4 Apt would be to refer to Rule 16 of the Drawback Rules, at this stage, which speaks of repayment of erroneous or excess payment of drawback and interest.

"Rule 16. Repayment of erroneous or excess payment of drawback and interest. -

Where an amount of drawback and interest, if any, has been paid erroneously or the amount so paid is in excess of what the claimant is entitled to, the claimant shall, on demand by a proper officer of Customs repay the amount so paid erroneously or in excess, as the case may be, and where the claimant fails

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to repay the amount it shall be recovered in the manner laid down in sub-section (1) of section 142 of the Customs Act, 1962."

7.5 It is quite clear from the said Rule that any amount of drawback and interest when paid erroneously or is paid in excess of the entitlement of the claimant, on demand by a proper officer of the Customs, the claimant is required to repay the amount paid erroneously or in excess. Rule 16 of the Drawback Rules provides for recovery of an amount of drawback and interest paid erroneously or in excess of what the claimant is entitled to, on demand by a proper officer of the customs the same shall need to be repaid. And, where he fails to repay the amount, it is permitted to be recovered in the manner provided under Sub-section (1) of Section 142 of the Act. It is quite clear from Rule 16 of the Drawback Rules that what all it provides for is the recovery of excess drawback paid erroneously, but choses not to prescribe the time limit. The question which has come up for consideration as to whether in absence of any period of limitation provided under Rule 16 of the Drawback Rules, any

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reasonable time period could be read into the said Rule. It also provides for statutory mechanism of recovery under Section 142 of the Act."

36. This Court applying the decision

in case of SCA No. 2039 of 2004 and

allied matters held as under:

"9.2 The matter came up before this Court, where it firstly directed the review before the Revisional Authority and thereafter once again, when the petitioner approached before this Court, the Court held thus:

xxxx

9.3 This decision has also been followed in case of PADMINI EXPORTS & 1 vs UNION OF INDIA & 2 in Special Civil Application No.17812 of 2003.

9.4 It is apt to note that these are binding precedents from 2012. The authority concerned ought to have followed the same when the same have attained finality.

9.5 In Special Civil Application No.14917 of 2013 to 14921 of 2013 this Court (Coram: Justice M.R.Shah, as His

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Lordship then was & Justice Sonia Gokani) in case of E I DUPONT INDIA PRIVATE LIMITED & 1 vs UNION OF INDIA & 3 had noticed the case of Commissioner of Central Excise and Customs vs. NBM Industries, reported in 2013(29) STR (208) Gujarat wherein it had been held that on inputs used in manufacturing of goods cleared by DTA units to 100% Export Oriented Unit (EOU), refund of CENVAT credit is available and the same cannot be denied on the ground that the case was of deemed export. It was insisted that the refund would be granted only in case of physical export. This Court disapproved non following of a binding decision and despite the direction of this Court, the respondent had rejected the refund claims of the claimant on the ground that the decision of NBM Industries (supra) is the case of another assessee and not in the case of claimant and each one must fight its own battle and must succeed or fail in such proceedings.

It also had relied on the decision of the Madras High Court reported in 2007(211) ELT 23 (Madras) which was against the assessee.

9.6 This Court taking note of various decisions had directed that the action of the rejection of refund claim cannot be sustained and deserve to be quashed and set aside. While parting, the Court in very strong words disapproved the arbitrary act on the

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part of the lower adjudicating authority and in ignoring the binding precedents. Apt would be to refer to those words:

"[6.0] In view of the above and for the reasons stated above and the decision of this Court in the case of NBM Industries (Supra), the impugned orders passed by the respondent No.4 rejecting the refund claims of the petitioner cannot be sustained and they deserve to be quashed and set aside and are accordingly quashed and set aside and the respondents - adjudicating authorities are hereby directed to sanction the respective refund claims of the claimant after following the law laid down by this Court in the case of NBM Industries (Supra) and pass fresh orders within a period of two months from the date of the receipt of the present order and to make the actual payment within a period of four weeks thereafter and also grant consequential reliefs which may be available to the petitioners under the relevant provision of the rules more particularly Rule 5 of the Rules.

[6.1] Before parting with the present order, we are constrained to strongly disapprove such arbitrary act on the part of the lower adjudicating authority and/or

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lower authorities in ignoring the binding decisions/orders passed by the higher appellate authorities/courts. Time and again the Hon'ble Supreme Court as well as various High Courts and this Court have disapproved such conduct/act on the part of the lower authorities in ignoring the binding decisions/orders passed by the higher appellate authorities/courts. Still it appears that message has not reached the concerned authorities. In the recent decision in the case of Claris Lifesciences Ltd. (Supra) in para 26 this Court has observed as under:

"26. Despite such clear and specific directions and authoritative pronouncements, act of issuance of show cause notice by the Deputy Commissioner is wholly impermissible and unpalatable and deserves to be quashed and struck down with a specific note of strong disapproval. The respondents simply could not have exercised the powers contained under the statute in such arbitrary exercise and in complete disregard to the pronouncement of this Court particularly reminding the Revenue authorities of the binding effect of decision of

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Tribunal on the identical question of law. This not only led to multiplicity of proceedings but also speaks of disregard to the direction of this Court rendered in the earlier petition of this very petitioner. Resultantly, petition stands allowed. Both the show cause notices dated 21.8.2012 and 22.1.2013 are quashed and struck down."

It appears that still the message has not reached the concerned authorities in following the binding decisions of the higher appellate authorities and/or courts solely on the ground that the same is in the case of another assessee. Such a conduct is also required to be viewed from another angle. This would not only amount to disregarding the direction of the court rendered in earlier petitions but would also lead to multiplicity of proceedings. When the courts are overburdened and are accused of arrears, it is the duty of the concerned authorities to avoid multiplicity of proceedings and lessen the burden of the courts.

Being a part of the justice delivery system. All efforts should be made by the authorities/quasi judicial authorities and judicial authorities to see that there is no

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multiplicity of proceedings and to pass the orders considering the binding decisions. It would also avoid unnecessary harassment to the parties as well as the unnecessary expenditure.

[6.2] As observed hereinabove despite clear and unequivocal message by the pronouncement of the decisions by the Hon'ble Supreme Court as well as this Court, the message has not reached to the concerned authorities, we direct respondent No.2 - Central Board Excise and Customs, New Delhi to issue a detailed circular to all the adjudicating authorities considering the observations made by this Court in the present judgment and order as well as the law laid down by the Hon'ble Supreme Court in various decisions referred to in the present judgment and order, within a period of 30 days from the date of receipt of the present order so that such eventuality may not happen again and again."

10. In the instant case, the grievance on the part of the petitioners is that the Order-in-Original does not recognize the issue of limitation although the same being the settled law. Here the petitioners have exported the articles from Mundra Port

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and had claimed that drawback and benefit under the Focus Product Scheme (FPS). The allegation has been that it had indulged in misuse of drawback scheme and FPS and other exports incentives by way of making export of scaffolding items falling under CTH No.7308 by placing under CTH Nos.731816000, 39235010, 39269099 and 82057000 with the allegation of export of less quantity of goods than what was declared and over valuing of the export products. After the proper officer had allowed the export to be made, the DRI has initiated the action.

11. Admittedly, the export of goods covered under shipping Bill Nos.6982047 and 6982039 both dated 01.01.2015 and export goods covered under shipping Bill Nos.6998694 and 6997757 both dated 02.01.2015 had been seized carrying out the panchnama dated 08.01.2015. The DRI had allegedly noticed the shortage of 3205 Kg and 2990 Kg than what had been declared in the shipping bills. The goods were detained pending the inquiry and were handed over for safe custody. After the seizure of the goods as per Section 110 of the Customs Act, the DRI, Ahmedabad wrote a letter to the Joint/Additional Commissioner of Customs for giving 'No Objection' for provisional release of seized goods.

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11.1 On execution of bond of 100% FOB value of goods along with 25% security in the form of Bank Guarantee, the same had been permitted.

11.2 The petitioners had challenged this provisional release by approaching the CESTAT, which vide order dated 01.05.2015 released the seized goods on furnishing the bond of 100% value and accordingly, goods were provisionally released for the exports by the custom authority.

12. This Court notices the detailed Order-in-Original adjudicating the SCN against which there is already a channel of appeal provided and thereafter, if the party is still aggrieved, the revisional authority can also be approached by the litigating party. However, here previously SCN of dated 12.01.2016 in relation to the seized goods was already issued and yet, another SCN is issued, the revenue has not challenged what has been held favoring the petitioner and the petitioner has challenged it on the ground of breach of principles of natural justice as well as on substantive issues.

13. The petitioner has approached this Court as the actions have been taken of issuance of the SCN in relation to the search made on 10.01.2015, the SCN has been issued on 09.02.2018. It is

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thus clear that for the export which had been made in the years 2011 to 2015 and for the shipping Bills of 01.01.2015 for which the duty drawback had been given to the petitioner in the year 2016, this action has been initiated before expiry of a period of three years so far as some bills are concerned. As held by this Court in case of PRATIBHA SYNTEX LIMITED vs. UNION OF INDIA & OTHERS, Rule 16 of the Drawback Rules though does not provide for the period of limitation, the reasonable period of limitation has to be read into the same and the SCN issued before expiry of a period of three years from the date of payment of the drawback to the petitioner cannot provide a reason for the Court to hold that the same as time barred.

14. The petitioners have shown the procedure for export of goods. It is a detailed procedure to urge that the petitioners have exported the goods following the procedure upon the export permitted by the proper officer and the final shipping bills being generated, the petitioners were entitled to duty drawback as the shipping bills were filed through EDI system. Under the EDI system, once the final shipping bill is generated, the same becomes the final claim for the duty drawback according to the petitioner and the same needs to be paid within three working days as per

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the Circular No.25 of 2000 of the department.

15. We note that the show cause notice is issued by the authority for the shipping bills from the years 2011 to 2015. The list of shipping bills has been given & barring a very few shipping bills which have been submitted here duty drawback has been paid to the petitioner for numerous shipping bills from 2011 to 2014 long before and therefore, any show cause notice issued after a period of three years from the date when drawback came to be paid, cannot be sustained. This is also one serious breach deserving indulgence. In relation to most of the shipping bills, duty drawbacks have been paid where this decision would come to the rescue of the petitioner. And, where completion of 3 years is not happening for those payments of duty drawbacks made in the year 2016 there appears to be no breach of required time period. Assuming that for the some of the shipping bills for which the show cause notice has been issued, the decision of this Court for limitation will apply as the payment is of 2016 and the SCN is of 2018, period prescribed for payment is three days on presentation and delay on the part of the respondent also cannot take away the right of party.

16. As held above in case of those shipping bills as the show cause

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notice essentially cannot be issued beyond the period of three years of payment of the duty drawback, and that being a settled legal position, if not regarded, this Court needs to interfere. Again, the proper officer who assesses the shipping bills will be in a position to reopen the same provided that there is such a stage of reopening the shipping bill filed once are self assessed, that would attain finality upon the proper officer clearing the same. Had there been any discrepancy, the proper officer would not consider the self assessment final and would obviously assess the shipping bill before finalizing.

17. In the instant case, the shipping bills had been finally assessed and the assessment had attained finality. The aggrieved party having any issue on the classification would need to approach the appellate authority instead of reopening the assessment by issuing the show cause notice. The appeal appears to have become time barred as averred by the petitioners, the show cause notice is on account of the misclassification.

18. However, the Court needs to regard that the core issue raised in SCN is of classification which is concluded, and no challenge is made by the revenue. It has also questioned this after the export is already made and, even when the statutory provision

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permits the same, settled legal position would preclude such challenge when made beyond a specific time period. Additional reason is of the time stipulated for clearing the shipping bill which is of three days (3) and any late clearance also cannot furnish the reason to permit issuance of the SCN calculating from the date of payment of duty drawback. Even if, this angle is not dilated and left to the parties to argue before the concerned authority, at the best, for those bills where payment of duty drawback is within 3 years of the issuance of SCN, the adjudication can be permitted. This has not been at all considered in the order in original. Again, with no challenge having been made by the department to the decision of the proper officer where many of the aspects of the petitioners have been accepted and with non consideration of the decision of this Court as discussed at length, interference would be necessary.

19. The initiation of the action on the part of the DRI on an intelligence of is severally questioned when the proper officer has already held in favour of the assessee classifying the item of export under a different head. Reliance is placed also upon the case of M/S.CANNON INDIA PRIVATE LIMITED V/S. COMMISSIONER OF CUSTOMS, reported in 2021 AIR 1699 to urge that the DRI has no powers to initiate action

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against the petitioner. This surely is an additional and potent ground for the Court to regard the binding decision of the Apex Court and hold in favour of the petitioner.

19.1 Even without touching the ratio laid down in case of M/s.Cannon India Private Limited (supra) as this decision came recently, on non consideration of the ground of limitation also, interference is desirable.

20. Resultantly, this petition is allowed partly. The action of the respondent authority of issuance of the SCN dated 09.02.2018 is interfered with. The SCN in the present form is quashed and set aside with all consequential actions with a clarification that for the shipping bills not covered by the decision of PRATIBHA SYNTEX LIMITED (supra), the authority shall be permitted to proceed if allowed otherwise under the law."

37. We are therefore of the opinion

that the decision in case of M/s. SJS

International of this Court in similar

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facts would be squarely applicable to

the facts of the present case also.

38. However, in the facts of the

present case, there is one additional

factor that impugned show cause notices

were kept in "call book" which was