Court quashes denial of duty draw back as arbitrary & discriminatory. Upholds constitutional principles.

The court ruled in favor of the petitioners, quashing the orders denying duty draw back. It found the denial without reason to be arbitrary and unjustified, constituting a violation of Article 14 of the Constitution of India. The differential treatment in granting draw back was deemed discriminatory and arbitrary. The court emphasized the importance of upholding constitutional principles and held that the petitioners had met all necessary conditions for duty draw back, leading to the decision in their favor.

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Issues:
Challenge to denial of duty draw back without reason, Discrimination in granting draw back, Policy decision on duty draw back, Arbitrary and discriminatory action, Violation of Article 14 of the Constitution of India.

Analysis:

1. Challenge to denial of duty draw back without reason:
The petitioners challenged the action of the respondents for declining to grant duty draw back without providing any reason. The denial was considered arbitrary and unjustified. The petitioners argued that the refusal without assigning any reason was wholly arbitrary, and they were not given a fair opportunity to understand the basis of the decision.

2. Discrimination in granting draw back:
The petitioners contended that while some exporters were granted duty draw back based on a policy decision by the Government, they were discriminated against without any valid justification. The court noted that four out of five exporters were allowed to convert white shipping bills into draw back shipping bills and avail duty draw back, except for the petitioners. This differential treatment was deemed discriminatory and arbitrary.

3. Policy decision on duty draw back:
The Government had made a policy decision in March 1979 to allow duty draw back on Castor Oil Medicinal B.P. at 2% F.O.B. value. However, this decision was not published, leading to a lack of awareness among exporters. The petitioners, upon learning about this policy decision in 1985, sought to avail duty draw back for their exports during the relevant period.

4. Arbitrary and discriminatory action:
The court found that the respondents' decision to deny duty draw back to the petitioners while granting it to other exporters was arbitrary and discriminatory. The lack of valid reasons for treating the petitioners differently from similarly situated exporters was a clear violation of Article 14 of the Constitution of India. The respondents failed to establish any cogent reasons for their actions.

5. Violation of Article 14 of the Constitution of India:
The judgment emphasized that the denial of duty draw back to the petitioners, despite meeting all required conditions and recommendations from the Collector of Customs, was a violation of Article 14 of the Constitution of India. The court held that the petitioners had complied with all necessary conditions for the grant of duty draw back, and there was no justifiable reason to treat them differently from other exporters.

In conclusion, the court ruled in favor of the petitioners, quashing and setting aside the orders denying duty draw back. The judgment highlighted the arbitrary and discriminatory nature of the respondents' actions and emphasized the importance of upholding constitutional principles, particularly Article 14.

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