2024 (12) TMI 478 - HC - Customs

Duty drawback denial overturned as revenue authorities cannot reassess goods classification during refund processing under Section 50

The Madras HC allowed a writ petition challenging denial of duty drawback rate. Revenue authorities wrongfully denied higher drawback rate claiming ... Challenge to rate of duty drawback sanctioned to the petitioner on the ground that the bills of entries filed by the petitioner is not specific - wrongful claiming of higher rate of duty drawback by claiming classification in respect of the shipping bills under the heading “4203 05” instead of “4203 06” - HELD THAT:- The law regarding the assessment of bill of entry / shipping bills was settled. Refund can be claimed or denied only if the assessment is countermanded in the manner known to law. This view has been taken by the Hon'ble Supreme Court of India in the case of PRIYA BLUE INDUSTRIES LTD. VERSUS COMMISSIONER OF CUSTOMS (PREVENTIVE) [2004 (9) TMI 105 - SUPREME COURT] which view has now been affirmed by the Hon'ble Supreme Court in the case of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [2019 (9) TMI 802 - SUPREME COURT (LB)], where the Apex Court has observed 'While processing a refund application, reassessment is not permitted nor conditions of exemption can be adjudicated. Reassessment is permitted only under Sections 17(3), (4) and (5) of the amended provisions. Similar was the position prior to the amendment. It will virtually amount to an order of assessment or reassessment in case the Assistant Commissioner or Deputy Commissioner of Customs while dealing with refund application is permitted to adjudicate upon the entire issue which cannot be done in the ken of the refund provisions under Section 27.' Thus, without altering the classification in the shipping bills filed under Section 50, the drawback sanctioned to the petitioner cannot be denied by invoking Section 28 of the Act of 1962. It has been held by the Hon'ble Supreme Court that when the law mandates a particular thing to be done in a particular manner, then it has to be done in that manner. Thus, being the settled position of law, there is no legal basis to sustain the impugned order. The writ petition, accordingly, stands allowed. Issues:Challenge to impugned order under Section 129 DD of the Customs Act, 1962 regarding duty drawback classification.Detailed Analysis:1. The petitioner contested an order questioning the rate of duty drawback sanctioned based on the classification in shipping bills. The dispute arose from the classification of goods under headings '4203 05' and '4203 06' of the Customs and Central Exercise Duties Drawback Rules, 2017. The impugned order affirmed previous decisions related to the drawback issue.2. The petitioner claimed that the impugned order was erroneous and highlighted the provisions of the Customs Act, 1962, and the Rules of 2017. The respondent argued that the petitioner misled the Department by providing a generic declaration in shipping bills, resulting in excess duty drawback.3. The Court examined the arguments presented by both parties, along with the relevant provisions of the Act and Rules. It considered the show-cause notice, previous orders, and the impugned order issued under Section 129 DD of the Act.4. The judgment emphasized the importance of correct classification in shipping bills under Section 50 of the Act. It cited Section 17 of the Act, which allows the proper officer to verify and re-assess duty leviable on goods if self-assessment is found incorrect.5. The Court clarified that any deviation from the declaration in shipping bills must follow the procedures outlined in Section 17(4) and (5) of the Act. It referenced legal precedents, including the Supreme Court rulings in cases involving customs duty assessments and refund claims.6. Based on established legal principles and the requirement for proper classification in shipping bills, the Court concluded that the impugned order lacked a legal basis. It ruled in favor of the petitioner, allowing the writ petition and closing the case without costs.This detailed analysis outlines the key aspects of the judgment, including the dispute over duty drawback classification, legal provisions governing assessments, and the Court's decision based on established legal principles and precedents.