2023 (12) TMI 695 - HC - Customs

Duty drawback jurisdiction and recovery dispute: tribunal may adjudicate both payment entitlement and recovery; revision permitted after condoned delay.

Chapter X of the Customs Act encompasses both entitlement to duty drawback and its recovery; hence adjudication on payment claims and revenue recovery ... Jurisdiction of tribunal to entertain appeal related to duty drawback - Validity of Notice U/S 128A(3) of the Customs Act, 1962 - recovery of Duty Drawback erroneously sanctioned and paid to the Firm alongwith interest - HELD THAT:- Chapter X of the Customs Act not only deals with the eligibility as to Drawback but also contains the provision for its recovery in case the Drawback has been paid erroneously. In our view, even though proviso (c) of Section 129A(1) of the Customs Act mentions the word “payment”, the same would also include the recovery of the Drawback. This is because whether it is the claim for payment or the claim of the Revenue for recovery, both would include an adjudication on merits, that is, the eligibility and entitlement of the assessee for the Duty Drawback on the exports made by it. It would be erroneous to accept that the entitlement of the Firm claiming payment of Drawback cannot be considered by the learned CESTAT, but the Revenue’s demand for recovery of the erroneously paid Duty Drawback, can be considered by learned CESTAT. This would lead to a situation where if the Drawback is not fully sanctioned by the Revenue, and the Revenue later claims the refund of the partly paid Drawback, the assessee resisting the Revenue’s claim for recovery of the part Drawback would have to appeal before the learned CESTAT, but claim payment of the remaining part of the Drawback before another authority. There is merit in the contention that the Revenue’s appeal is grossly delayed. However, the principal controversy sought to be raised is regarding the jurisdiction of the learned CESTAT to entertain the Firm’s appeal. Although, Revenue had not filed an appeal against the order dated 02.11.2018 within the stipulated time, the concerned authority has taken the steps for reviewing the consequential steps taken pursuant to the said order which is impugned in the said appeal. The issue whether the said order is valid is also sought to be raised in defence to the relief sought by the Firm in the present writ petition. In view of above, this Court considers it apposite to condone the delay in filing the appeal. In the peculiar facts of this case where the Revenue originally had not taken any objection on the appeal being heard by the learned CESTAT, and had also, following the order of the learned CESTAT, sanctioned refund of the Drawback, the Firm should not be left remediless - opportunity granted to the Firm to prefer a revision, under Section 129DD of the Customs Act, against the order dated 14.05.2018 passed by the Commissioner (Appeals). Petition disposed off. Issues Involved:1. Validity of the Demand-cum-Show Cause Notice (SCN) dated 15.07.2020.2. Jurisdiction of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) to adjudicate on matters relating to Duty Drawback.3. Legality of the refund order dated 10.02.2020.4. Whether the subsequent proceedings on the same issue are barred by the doctrine of res judicata and limitation.Summary:1. Validity of the Demand-cum-Show Cause Notice (SCN) dated 15.07.2020:The Firm challenged the SCN dated 15.07.2020 issued by the Commissioner of Customs (Exports) demanding recovery of Duty Drawback amounting to Rs. 54,72,204/-, claiming it was erroneously sanctioned. The Firm argued that a second SCN on the same subject matter is invalid, citing the doctrine of res judicata and limitation. The Court noted that the SCN was issued based on the premise that the CESTAT order, which led to the refund, was passed without jurisdiction.2. Jurisdiction of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) to adjudicate on matters relating to Duty Drawback:The Court examined whether the CESTAT had jurisdiction under Section 129A of the Customs Act to entertain appeals related to Duty Drawback. The Court concluded that the CESTAT did not have jurisdiction to decide appeals relating to payment of Drawback as provided in Chapter X of the Customs Act. The Court disagreed with the Firm's contention that the appeal was related to the penalty and not the Drawback itself, stating that both payment and recovery of Drawback fall under the jurisdictional bar of Section 129A(1)(c).3. Legality of the refund order dated 10.02.2020:The Court held that the refund order dated 10.02.2020, issued pursuant to the CESTAT's order, was void since the CESTAT lacked jurisdiction. Consequently, the refund granted based on a non est order was rightly demanded back by the Revenue. The Court emphasized that the invalidity of an order passed without jurisdiction can be set up at any stage and in any proceedings.4. Whether the subsequent proceedings on the same issue are barred by the doctrine of res judicata and limitation:The Court observed that the issue of limitation regarding the SCN dated 24.08.2015 had been decided in favor of the Revenue by the Commissioner (Appeals) and had not been adjudicated by the revision authority under Section 129DD of the Customs Act. The Court granted the Firm an opportunity to file a revision petition against the order dated 14.05.2018 passed by the Commissioner (Appeals) within two months, which shall not be dismissed on the ground of limitation and shall be entertained on merits by the Central Government.Conclusion:The writ petition was disposed of with the Court setting aside the CESTAT's order dated 02.11.2018 and answering in the negative the question of whether the CESTAT can pass a judgment in respect of a case falling under proviso (c) of Section 129A(1)(b) of the Customs Act. The Firm was granted an opportunity to seek revision under Section 129DD of the Customs Act.