Delhi High Court: In a case wherein, the petitioner approached the Court to seek issuance of an appropriate writ to command the respondents to release the drawback claim of Rs. 2,15,48,344 with applicable interest to the petitioner, the Division Bench of Yashwant Varma* and Dharmesh Sharma, JJ., directed the respondents to release the petitioner’s drawback benefits as claimed with due expedition and held the respondents liable to pay the interest computed as per Section 75-A of the Custom Act, 1962 (‘CA Act’) and accordingly allowed the petition.
In the instant case, AJ Gold and Silver Refinery, the petitioner was a precious metal refining firm, for which purpose, it imported gold dore bars.
The Central Board of Excise and Customs issued a circular whereby, the conversion of free shipping bills from one scheme to another scheme, subject to certain conditions were permitted. Thereafter, the petitioner in compliance with the Reserve Bank of India (‘RBI’) circular dated 14-8-2013, exported 20% of the gold dore bars which had been imported in the form of gold jewellery. However, the petitioner failed to submit duty drawback shipping bills, which were required to claim drawback benefits.
Therefore, the petitioner approached the respondent requesting to amend the free shipping bills as per Section 149 of the Customs Act, 1962 (‘CA Act’). On 27-2-2015, the permission to amend the shipping bills and treat them as duty drawback shipping bills was granted to the petitioner.
Accordingly, the petitioner submitted the relevant documents for disbursal of drawback claims. However, despite various requests made by the petitioner to claim drawback benefits, such requests were not acceded. On 4-9-2012, the respondent issued a memorandum, and asserted that during import of gold dore bars, the petitioner did not pay basic custom duty and only paid an additional duty under Section 3 of the Customs Tariffs Act, 1975 (‘CT Act’) thus, the petitioner would not be entitled to drawback benefits. The petitioner responded to the memorandum and also participated in a personal hearing. However, since no action was taken, the petitioner filed the present writ petition.
Analysis, Law, and Decision
The Court analysed the Section 12 of the CA Act which specifies the duties payable on imported goods and Section 3 of the CT Act and opined that the importer was obliged to pay an additional duty equivalent to the excise duty for the time being leviable on a like article if produced or manufactured in India.
The Court opined that mere fact that an additional duty was equated to the excise duty did not change the character of that duty as being other than that which was imposed on import of articles in India. The Court further relied on Hyderabad Industries Ltd. v. Union of India, (1995) 5 SCC 338 wherein it was held that “while Section 3 of the CT Act may constitute a charging section distinct and separate from Section 12 of the CA Act, it continues to remain in the genre of a customs duty.”
The Court disagreed with the respondents contention that the levy of additional duty would not qualify as duty and noted that Rule 2(a) of the Customs and Central Excise Duties Drawback Rules, 1995 (‘Drawback Rules’) while defining drawback provided that the drawback would be allowed on goods that are manufactured in India are exported and concept of drawback was the rebate of duty or tax charged on imported material. Thus, the Court opined that it was not possible to state that the duty levied under Section 3 of the CT Act did not fall within the ambit of duty or tax.
The Court opined that as per Rule 3 of the Drawback Rules, an exporter was entitled to claim drawback on the export of goods at the rates determined by the Government of India. The Drawback Rules, used the words ‘duty’ and ‘tax’ without confining the words to the CA Act or the Central Excise Act, 1944. Thus, the Court concluded that as long as goods had suffered a ‘tax’ or ‘duty’ at the time of import, the drawback claim at the export would be available.
The Court opined that the Condition 23 of the Notification dated 14-8-2013 did not deprive the petitioner’s right to seek drawback benefits since it was restricted to the goods exported in discharge of an export obligation as per Foreign Trade Policy. The Court further opined that once the petitioner had paid the duties under Section 3 of CT Act, it could not be contended that the goods were imported duty free.
The Court noted that the free shipping bills were amended on 27-2-2015, thereafter, on 6-5-2015, the petitioner applied for release of drawback benefits. Further, as per Section 75A of the CA Act, interest became payable upon the expiry of one month from the date of application seeking drawback application till the time payment was ultimately affected. Thus, the Court opined that in the present case, the respondents were liable to pay interest which would commence from the expiry of the period of one month from 6-5-2015 till the time amount was paid.
Accordingly, the Court allowed the petition and directed the respondents to release the petitioner’s drawback benefits as claimed with due expedition and held the respondents liable to pay the interest computed as per Section 75A of the CA Act.
[AJ Gold and Silver Refinery v. Assistant Commissioner of Customs, 2023 SCC OnLine Del 5728, decided on 15-9-2023]
*Judgment authored by- Justice Yashwant Varma
Advocates who appeared in this case :
For the Petitioner: Kishor Kunal and Ankita Prakash, Advocate;
For the Respondents: R. Ramachandran, Standing Counsel