Madras High Court
The Commissioner Of Customs ... vs M/S.K.H.Exports India Pvt Ltd on 30 March, 2022
W.A.Nos.771, 773 & 774 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 30.03.2022
CORAM
THE HONOURABLE MR. JUSTICE R. MAHADEVAN
and
THE HONOURABLE MR. JUSTICE J.SATHYA NARAYANA PRASAD
Writ Appeal Nos. 771, 773 & 774 of 2022
and
CMP Nos. 5405, 5407, 5398, 5399 and 5388 of 2022
---
1.The Commissioner of Customs (Exports)
O/o The Commissioner of Customs (Exports)
No.33, Customs House
Rajaji Salai
Chennai 600 001.
2. The Assistant Commissioner of Customs (Exports)
No.33, Customs House
Rajaji Salai
Chennai 600 001.
3. Central Board of Indirect Taxes and Customs
(Drawback Division)
Ministry of Finance, Department of Revenue
New Delhi .. Appellants in all appeals
Versus
M/s.K.H.Exports India Pvt Ltd
K.H.Centre
15/2, College Road
Nungambakkam,Chennai – 600 006
Rep by its Managing Director
M.Abdul Wahab .. Respondent in all appeals
https://www.mhc.tn.gov.in/judis
W.A.Nos.771, 773 & 774 of 2022
Writ Appeals filed under Clause 15 of Letters Patent against the
common order dated 25.06.2021 passed by this Court in W.P. Nos. 9853,
9858 & 9859 of 2020.
For Appellants : Mrs. Hema Muralikrishnan
Senior Panel Counsel
For Respondent : Mr.C.Manishankar, Senior Counsel
for Mr.K.Krishnamurthy
COMMON JUDGMENT
[Judgment of the Court was made by R.MAHADEVAN, J.)
These Writ Appeals are directed against the common order dated
25.06.2021 passed in W.P. Nos. 9853, 9858 & 9859 of 2020 filed by the
respondent / assessee.
2. For the purpose of disposal of these appeals, certain facts are
required to be appreciated and they are narrated below.
3. The respondent was running a unit in Special Economic Zone
(SEZ). During the course of such business, they made a request on 15.02.2007
to the Development Commissioner, Madras Export Processing Zone for
issuance of No Objection certificate for exit from the EOU Scheme and enter
into Export Promotion of Capital Goods Scheme (EPCG). Upon scrutiny of
such request, the Development Commissioner passed an order dated
10.04.2007 according in-principle approval to the respondent. Based on the
same, by a communication dated 13.04.2007 of the respondent, their intention
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W.A.Nos.771, 773 & 774 of 2022
to switch-over from EOU to EPCG Scheme from 01.07.2007 onwards was
conveyed to the Assistant Commissioner of Central Excise to enable them to
dispose of the existing stocks and raw materials in respect of which no duty
had been paid. According to the respondent, even in the communication dated
13.04.2007, they have quantified the estimated duty liability based on which
the second appellant herein has granted permission to de-bond on 25.06.2007.
Subsequently, an import export licence under the EPCG Scheme was issued on
10.07.2007 to the respondent. On 06.12.2007 a certificate was issued
confirming that there was 'nil' demand and all duties were paid by the
respondent on de-bonding.
4. On 19.12.2007, the respondent sought conversion of EOU bills
into drawback shipping bills. The respondent also addressed the
Commissioner of Customs, Sea Ports as well as the Commissioner of Customs
(Airport) seeking conversion of EOU shipping bills into drawback shipping
bills. On 27.12.2007, the second appellant sent a reply stating that the raw
materials, consumables and capital goods that had been lying in bond had been
de-bonded and stood discharged. Thereafter, an application for EPCG
authorisation has also been made to the Joint Director of Foreign Trade. On
scrutiny of the said application, a final exit order was passed by the
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Development Commissioner on 01.01.2008. On 22.07.2008, the respondent
made a representation to the Secretary (Revenue) reiterating their request for
conversion of EOU shipping bills to drawback shipping bills for the goods
exported by them during the period from 21.04.2007 to 06.12.2007 enclosing
all the relevant details followed by a reminder on 10.10.2008. Such
representation made by the respondent was rejected by the Commissioner of
Customs (Exports) on 16.10.2008. At the same time, by order dated
20.11.2008, the Commissioner of Customs (Airport) sanctioned the claim of
the respondent by quantifying the customs drawback and central excise
drawback to be refunded. After passing such an order dated 20.11.2008, the
Commissioner of Customs (Airport) passed an order dated 31.07.2009 seeking
refund of duty draw back on the ground that it was erroneously ordered to be
refunded to the respondent. In the meantime, the third appellant herein also
passed an order dated 05.05.2009 stating that the request for allowing duty
drawback on consignments exported prior to issuance of No Due Certificate by
customs and central excise authorities, is not maintainable and cannot be
acceded to. Challenging the orders dated 05.05.2009 and 31.07.2009, the
respondent filed WP Nos. 3261 to 3264 of 2010.
5. By a common order dated 25.10.2018 passed in WP Nos. 3261 to
3264 of 2010, the learned Judge set aside the communication dated 05.05.2009
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W.A.Nos.771, 773 & 774 of 2022
of the third appellant and directed the Board to decide the matter afresh after
issuing notice to the respondent and receiving their reply. As regards the
communication dated 31.07.2009 of the Commissioner of Customs (Airport),
the learned Judge directed the authority to consider the reply of the respondent
and decide the matter independently without being influenced by the directions
of the Board.
6. Pursuant to the order dated 25.10.2018 passed in WP Nos. 3261
to 3264 of 2010, the Board, after hearing the respondent, passed an order
dated 09.08.2019 rejecting the request of the respondent seeking duty draw
back. The respondent submitted a representation dated 06.09.2019 for
identical relief and the same was also rejected on 02.03.2020. Aggrieved over
the said orders dated 09.08.2019 and 02.03.2020, the respondent filed
WP.Nos.9853 and 9858 of 2020. Besides this, they also filed WP.9859 of
2020 seeking a direction to the appellants to grant drawback to the respondent
in respect of 207 shipping bills amounting to Rs.5,86,23,750/-. By a common
order dated 25.06.2021, all the three writ petitions were disposed of by setting
aside the orders impugned therein. Aggrieved over the same, the appellants /
department have come up with these writ appeals.
7. Mrs. Hema Muralikrishnan, learned Senior Panel Counsel
appearing for the appellants submitted that the Commissioner of Customs
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W.A.Nos.771, 773 & 774 of 2022
(Airport) and the Commissioner of Customs (Seaport) being independent quasi
– judicial authorities, are expected to act independently and render their views
with regard to the merits of the case, in accordance with the provisions of law
and therefore, the learned Judge ought not to have directed both the authorities
to decide the entitlement of the respondent to get draw back duty, with a
further direction to maintain uniformity in approach in exercise of their
discretion. It is also submitted that what was under challenge before the
learned Judge was only the communications of the Board; the competent
authority to consider the claim of the respondent is the Central Board of
Indirect Taxes and Customs (Drawback Division), third appellant herein; and
hence, the learned Judge ought to have directed the third appellant to pass
appropriate orders.
8. On the other hand, Mr. Manishankar, learned Senior counsel
appearing for the respondent submitted that the respondent is entitled to duty
drawback inasmuch as they have switched over from EOU to EPCG scheme
after obtaining in-principle approval from the Development Commissioner on
10.04.2007. On the basis of the application submitted by the respondent for
EPCG authorisation, a final exit order was passed by the Development
Commissioner on 01.01.2008. By referring to the communication dated
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02.03.2009, the learned Senior counsel submitted that a conflicting view was
taken by the Chennai Commissionerate, while rejecting the request of the
respondent, whereas Air Cargo Commissioner allowed the claim of the
respondent to get duty drawback and even the Joint Secretary (Drawback)
expressed that it would be unfair to reject the claim of the respondent after
collecting the duty. Thus, the entitlement of the respondent for conversion is
not in dispute and it is in accordance with Rule 12 of the Customs and Central
Excise Duties and Service Tax Drawback Rules. After pointing out the same,
the learned Judge concluded that the discretion exercised by the Assistant
Commissioner of Customs (Export) Tuticorin has attained finality and is not
under review. Therefore, while disposing of the writ petitions, the learned
Judge rightly issued directions to both the authorities to consider the claim of
the respondent and the same need not be interfered with by this court.
10. We have heard the counsel on either side and perused the
materials placed on record.
11. In the above backdrop, this court is of the view that there is no
necessity to appreciate the factual matrix of the case in detail. Admittedly, two
different authorities had taken different views as regards the claim of the
respondent seeking duty draw back. Therefore, the learned Judge, while
disposing of the writ petitions, directed both the authorities to take a uniform
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and consistent approach in deciding the respondent's claim. For better
appreciation, the relevant paragraphs of the order of the learned Judge are
extracted below:
“18. The aforesaid provision deals with the declarations
to be made on shipping bills specifying the nature of the export
transaction. In the present case, all shipping bills between
April and end December, 2007 were free shipping bills for the
reason that the petitioner had yet to receive the final order of
exit. In any event, the proviso to Rule 12 states that the
Commissioner of Customs, if satisfied that the exporter or
authorised agent has failed to comply with Rule 12 for reasons
beyond its control, might well exempt the exporter/authorised
agent from the rigour of the clause. According to the
petitioner, had the authorities taken it upon themselves to issue
the final exit order well in time, then the petitioner would have
ensured compliance with provisions of Rule 12 and there
would have been no necessity to file free shipping bills as
against EPCG bills.
19. Reliance is also placed on the Handbook of
procedure to state that the petitioner has been diligent in
adhering to the procedures stipulated in the matter of exit from
one scheme and availment of another. Appendix 14-I-L of the
Hand book sets out guidelines for the exit of EOU/EHTP/STP
units and there is no violation alleged of any of the prescribed
guidelines.
20. Though Rule 12 (1) clearly vests discretion in the
Commissioner to grant exemption by way of duty drawback
even in respect of free shipping bills, such discretion must be
extended by way of a reasoned speaking order.
21. In my considered view, neither of the impugned
orders dated 09.08.2019 and 02.03.2020 satisfy this
requirement.
22. Very relevantly, such discretion has been exercised
by the authorities at Tuticorin and by the Commissioner
Airport, though pursuant to the impugned order, the latter
order is now under re-consideration. The discretion originally
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exercised by Assistant Commissioner of Customs (Export),
Tuticorin has attained finality and is not under review.
23. The Customs Act, 1962 is a central enactment and
there must thus, be uniformity in the exercise of discretion by
officers in different stations. If an officer in a particular station
has thought it fit to accept an assessee's claim in an identical
circumstance, then any variation from this point of view only
be after a process of detailed reasoning to justify the
difference in stand.
24. I am of the considered view that the dichotomy in the
stand adopted by the different authorities as well as the fact
that there is no reasoning to support the conclusion in the
impugned order, is fatal to the respondents' case.
25. The impugned orders are set aside. The order of stay
granted in W.P.No.9853 of 2020, challenging the show cause
notice issued by the Commissioner, Sea Port is vacated.
Proceedings shall be taken/continued afresh, the petitioner
heard in both matters and detailed orders be passed on the
petitioners' claim to exemption by both the authorities. It is
expected that the orders passed will reflect due application of
mind to all submissions of the petitioner and that a consistent
and unified approach will be taken by the Commissionerates.
Let this exercise be completed within a period of sixteen weeks
from today. These writ petitions are disposed in the aforesaid
terms. No costs. Connected Miscellaneous Petitions are
closed.”
12. Though the learned senior panel counsel appearing for the
appellants submitted that the two different authorities have exercised their
respective discretions under the Act and the same have nothing to do with the
consideration of the claim of the respondent, the same cannot be countenanced
by this court, as it is eminently desirable that there should be an uniformity of
construction by the authorities in applying the relevant provisions of the Act
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and policy.
13. Therefore, in order to give quietus to the issue involved herein and
meet the ends of justice, we direct that the application of the respondent
seeking duty drawback, be placed before an independent officer in the rank of
Chief Commissioner, within a period of two weeks from the date of receipt of a
copy of this order. The said officer shall re-visit the issue relating to the
eligibility of the respondent and decide the same, on merits and in accordance
with law, after affording opportunity of hearing to them. The respondent is also
permitted to submit all the documentary evidence in support of their claim to
the officer concerned within a period of two weeks upon intimation. The officer
concerned shall complete the entire exercise of passing the appropriate orders,
without being influenced by the observations, if any, made by the third
appellant-Board, within a period of six weeks thereafter.
14. All the Writ Appeals are disposed of accordingly. No costs.
Consequently, connected miscellaneous petitions are closed.
[R.M.D.,J.] [J.S.N.P.,J.]
30.03.2022
gba/rsh
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W.A.Nos.771, 773 & 774 of 2022
Index:Yes/no
Internet:Yes/No
To
1.The Commissioner of Customs (Exports)
O/o The Commissioner of Customs (Exports)
No.33, Customs House
Rajaji Salai
Chennai 600 001.
2. The Assistant Commissioner of Customs (Exports)
No.33, Customs House
Rajaji Salai
Chennai 600 001.
3. Central Board of Indirect Taxes and Customs
(Drawback Division)
Ministry of Finance, Department of Revenue
New Delhi
https://www.mhc.tn.gov.in/judis
W.A.Nos.771, 773 & 774 of 2022
R. MAHADEVAN, J
and
J.SATHYA NARAYANA PRASAD, J
gba/rsh
WA Nos. 771, 773 & 774/2022
30-03-2022
https://www.mhc.tn.gov.in/judis
