TaxTMI 
TaxTMI 
2010 (2) TMI 334
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....erating from the EOUs to enable them to compete at the international level. Goods manufactured by the petitioner, the raw material whereof is sourced from the Domestic Tariff Area ('DTA') are eligible to the benefit of duty drawback. The petitioner claims that it is entitled for refund/rebate of the amount corresponding to the duties both customs and excise suffered or leviable on the inputs that go into the manufacture of the exported products. In particular, the petitioner relies upon 6.12(a) of the Exim Policy which provides that "supplies from the DTA to EOU will be regarded as "deemed exports" and the DTA supplier shall be eligible for the relevant entitlements under Chapter 8 of the Policy besides discharge of export obligation, if any, on the supplier. Further, notwithstanding the above, the EOU units shall, on production of a suitable disclaimer from the DTA supplier, "be eligible for obtaining the entitlements specified in Chapter 8 of the Policy". The said clause further provides that for the purpose of claiming the deemed export duty drawback, the EOU shall get Brand Rates fixed by the Development Commissioner, wherever All Industry Rates of Drawback are not available. ....
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.... the custom tariff irrespective of whether the seeds were sourced from actual import by paying import duty or the same were sourced from the domestic market." The petitioners claimed that they have already been granted deemed export drawback by DGFT on high speed diesel ('HSD') on the basis of customs duties leviable as per Custom Tariff Manual on Free on Board ('FOB') value of fuel. They sought similar grant of export duty drawback in respect of the sesame seeds. 7. On the basis of the petitioners representation the Development Commissioner vide letter dated 4th October, 2004 fixed the brand rate and the amount of duty drawback at Rs. 168.12 lakhs for the period 1st October, 2001 to 31st March, 2002 (as against a sum of Rs. 439.80 lakhs) which is claimed by the petitioner. Likewise for the period 1st April, 2001 to 30th September, 2001 the duty drawback was fixed at Rs. 61.89 lakhs. For the period of April, 2002 to September, 2002 at Rs. 39,76,077, October, 2002 to March, 2003 Rs. 90,06,466/- and April, 2004 to September, 2004 at Rs. 24,97,129/-. The above amounts were paid to the petitioner. Since the above settlements were less than what was claimed the petitioner it made a r....
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....e year 1st April, 2003 to 30th September, 2003 and 1st October, 2003 to 31st March, 2004 were inadmissible. It was in the above circumstances that the present petition has been filed. 10. On 8th November, 2006 while directing notice to issue Respondents an interim order was passed restraining the Respondents from taking steps to recover the amount demonstrated in the aforementioned letters. 11. In the counter affidavit filed by the Respondents, while it is not denied that the petitioner is an EOU and an exporter of sesame seeds and that the petitioner procured its raw material from the DTA suppliers it is pointed out that the petitioner had been claiming duty drawback by producing disclaimers from the DTA suppliers. The petitioner had not provided proof of incidence of duty suffered on the said goods procured from the DTA suppliers and "had been representing all the while that as the raw material supplied by the DTA suppliers was imported by it, the goods must have suffered customs duty as shown in the customs tariff". It is stated that the brand rates of duly drawback on the petitioner's application were fixed and the amounts were disbursed to the petitioner because the Peti....
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....s knowledge "there is no import of sesame seeds into the State of Gujarat as the State has abundant product of sesame seeds locally grown." 13. In the rejoinder affidavit of the petitioner it is inter alia sought to be contended that a criminal case filed by M/s. Amee Traders against the petitioner was settled by them in the court of the Judicial Magistrate at Rajkot. Further both M/s. Chandarana Brothers and M/s. Amee Traders are owned by one and the same person. It is alleged that the affidavits and documents have been procured from him by Respondents 3 and 4 "by exercise of undue influence or misrepresentation in order to justify their illegal actions." Several factors are pointed out to demonstrate that the said affidavits are per se false and contrary to the factual position. It is then pointed out that when brand rate drawback could be fixed for HSD by relying on the invoice value of the goods supplied and the cess chargeable, there was no difficulty in fixing the brand rate for the sesame seeds which can be considered as 'deemed export.' It is stated that in view of the payments already received by the petitioner, its banker SBI had assessed the commercial and fiscal viab....
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.... a deeming event where there is no requirement of any actual incidence of duty having been suffered, there is no requirement for the DTA suppliers to actually import the goods. According to the learned counsel for the Petitioner the rationale for the deeming construction is to place the EOU at par with international competitors for the same and similar item or product so that it is given import price parity with such foreign goods. Reliance is placed on the letter dated 29th July, 2004 written by the NSEZ to the Joint Secretary, Ministry of Commerce and Industry supporting the stand of the petitioner that "even if the sesame seeds is not imported the price on which they have effected purchases are based on the import price parity and includes all duties such as customs duty etc." therefore "the presumption can be drawn that sesame seeds (being oilseeds) supplied to the applicants would have import price parity. Therefore customs duty as applicable under Customs Tariff could be allowed through duty drawback." As regards affidavits of DTA suppliers which have been placed on record by the Respondents it is stated that these are false and have been procured by the Respondents. It is su....
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....on the judgment in State of UP v. Delhi Cloth Mills - (1991) 1 SCC 454. It is submitted that sesame seeds being a marketable produce procured locally may not possibly have suffered excise duty. Since affidavits of the very traders from whom the petitioner is stated to have procured the sesame seeds have confirmed that these were not imported, there was no question of the sesame seeds having suffered customs duty. He also refers that at no point in time the petitioner could satisfy the Respondents that the sesame seeds in question suffered any incidence of duty and since this was the basic requirement, there was no question of the petitioner being permitted deemed export duty drawback. 19. Given the scope of judicial review by this Court in exercise of its jurisdiction under Article 226 of the Constitution, the issue that arises for consideration is whether the action of the Respondents in seeking to withdraw the benefit of deemed export duty drawback granted to the petitioner and demand its refund was just, fair and reasonable. The decision of the Respondents should have been based on some relevant material based on which it decided to withdraw the benefit of deemed export duty ....
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....aration : "DECLARATION We, Sesame Foods Private Limited, 807. Ansal Bhawan, 16, Kasturba Gandhi Marg, New Delhi-110001 confirm that : 1. We have received the confirmation for prices charged by the DTA suppliers for Sesame seeds as per their letter dated 5th and 9th July (copy enclosed.) 2. The suppliers have confirmed that the incidence of all levies, Customs duties, cess etc. as applicable at the time of purchase have been duly considered in the prices charged by them. Only the local taxes as applicable are reflected separately in the invoices. 3. We herein confirm that to the best of our knowledge and belief the prices charged by the DTA suppliers in the invoices raised to us have been arrived at after including the incidence of all levies, Customs duties, Cess etc." (emphasis supplied) 23. There can be no manner of doubt that the petitioner was leading the Respondents to believe that the DTA suppliers had imported sesame seeds and had paid customs duties which had thereafter been built into their price. The petitioner stuck to this stand even in ....
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....titioner cannot be permitted to shift its stand about the requirement of the law to suit its convenience. If it maintained before the Respondents, and the documents referred to show that it in fact did, that the goods in question were imported, it has to make good that case. Clearly the Respondents were led to believe that the goods were in fact imported. After being unable to make good this claim despite numerous opportunities, it is not open to the petitioner to seek to change the very basis of its claim. The Respondents admitted the claim of the petitioner on the basis that the sesame seeds in question were not in fact imported. If this is factually correct then the very basis for entertaining the claims of the petitioners goes. 27. There is considerable merit in the submission of the Respondents about the very concept of a duty drawback. It is posited on the goods having suffered some incidence of indirect tax, either excise or customs duty. The following observations of the Supreme Court in State of U.P. v. Delhi Cloth Mills (supra) are relevant (SCC @ p. 468) : "Drawback means the repayment of duties or taxes previously charged on commodities, from which they are reliev....
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....d in law to claim deemed export duty drawback they cannot prevent the Respondents from taking corrective steps to recover the amounts wrongly released to the petitioner. Notwithstanding that the petitioner may subsequently have made arrangements with its banker and financial institutions, the illegality in releasing the deemed export duty drawback to the Petitioner cannot be justified or condoned. 30. There is no merit in the submission that the Respondents are trying to apply the FTP retrospectively to the petitioner's transaction and, therefore, the impugned orders are not legally sustainable. As already noticed hereinbefore the very factual basis to sustain the claim of the petitioner on the basis of the clauses in the Exim Policy, is non-existence. A very serious question mark has been put on the disclaimer certificate produced by the Petitioner. The petitioner has been unable to show that the disclaimer certificates which they have produced are in fact reliable and genuine documents. After claiming that the sesame seeds in question were imported, the petitioner has been unable to make good that claim. 31. After the arguments concluded, Mr. Sanjay Jain, learned Senior cou....