2019 (7) TMI 220 - HC - Customs

Court upholds show-cause notice on drawback claim post-GST era, awaits clarification

The court declined to quash the show-cause notice (SCN) challenging a drawback claim for exported goods post-GST era, citing the discretionary nature of ... Duty Drawback - manufacturer and exporter of leather footwear - It is petitioner's case that writ petitioner is entitled to drawback as notified under Customs and Central Excise Duties Drawback Rules, 1995 till 30.06.2018 and under the Customs and Central Excise Duties Drawback Rules 2017 on and from 01.07.2017 - HELD THAT:- Impugned show-cause notice being SCN dated 24.01.2019 is not quashed, but is kept in abeyance for a period of eight weeks from the date of receipt of a copy of this order. Within the said period of eight weeks, the third respondent Board shall issue a clarification particularly with reference to the issue raised by the writ petitioner pertaining to applicability of said Circular i.e., Circular No.83/2003 in the post GST regime i.e., post 01.07.2017. Depending on the clarification, the impugned SCN will either get revived and carried to its logical end or dropped obviously post eight weeks. Petition disposed off. Issues:Challenge to show-cause notice under Customs and Central Excise Duties Drawback Rules, 1995 and 2017 post-GST era.Analysis:The case involved a challenge to a show-cause notice (SCN) dated 14.02.2019 issued by the first respondent to a petitioner, a manufacturer and exporter of leather footwear, regarding the drawback claim for exported goods. The petitioner contended that the circular issued by the third respondent Board, Circular No.83/2003-Customs dated 18.09.2003, was not clear on its applicability post-GST era from 01.07.2017. The first respondent argued that the circular was not applicable due to the absence of central excise duty on leather goods, and the exporter could claim credit for GST paid on processing rawhides. The court considered the rare and exceptional circumstances under which interference in writ jurisdiction for quashing SCNs is permissible, citing the Kunisetty Satyanarayana case, which emphasized the discretionary nature of writ jurisdiction in such matters.The court referred to the principles laid down by the Hon'ble Supreme Court regarding interference in writ jurisdiction concerning challenges to SCNs. It highlighted that writ jurisdiction should be exercised for quashing SCNs only in rare and exceptional cases, such as when the SCN is issued without jurisdiction, reopens a well-settled legal position, prejudges the issue, or is issued due to malafides. The court refrained from interfering with the impugned SCN in this case as it did not fall under any of the rare exceptions mentioned. However, the Assistant Solicitor General assured that the third respondent Board would issue a clarification regarding the circular, which would resolve the controversy and alleviate the petitioner's concerns.In light of the above, the court decided not to quash the impugned SCN but kept it in abeyance for eight weeks from the date of the order. Within this period, the third respondent Board was directed to issue a clarification on the applicability of the circular post-GST era as raised by the petitioner. Depending on the clarification provided, the SCN would either be revived and pursued to its conclusion or dropped after the specified period. The court disposed of the writ petition with these directions, without imposing any costs, and closed the connected miscellaneous petition.