TaxTMI 
TaxTMI 
2017 (5) TMI 498
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....on the premise that the petitioners completed these exports prior to 14­3­1997. 3. On account of subsequent developments and noted after the writ petition was filed, by the amended prayers, the petitioners seek a writ of certiorari or any other appropriate writ, order or direction calling for the records pertaining to the Orders dated 22­9­1998 and 30­12­1998, Annexures "M" & "K" respectively to the petition and on a scrutiny as to their legality and validity, to quash and set aside the same. 4. The petitioners are then praying for a direction to the respondents to pay to them a sum of Rs. 2,53,34,229/­ as per the particulars of claim at Annexure­N to the writ petition, with further interest at the rate of 24% per annum. 5. The petitioners have pointed out in the petition as to how they are aggrieved and dissatisfied with the action of the respondents who are the Union of India and the Officers exercising powers under the Customs Act, 1962 (for short "the Act"). 6. The petitioners are a Company duly registered under the Indian Companies Act, 1956 and are exporters of certain chemicals and natural essential oils. They are recognised as a T....
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....s published. The petitioners state that when their applications in respect of exports in terms of the aforesaid scheme and prior to the said date were being processed, this Public Notice No.34/97 came to be issued. That is why the petitioners were not granted the benefit. The petitioners rely upon a communication whereby the application for supplementary credit was rejected. 10. The petitioners then state that there was a follow­up with the Department. In the sense that the matter was referred to respondent No.2. The petitioners were awaiting response from this respondent. They addressed a communication and calling upon the said respondent to comply with the requisitions contained therein. 11. There is also reliance placed on a policy circular by the petitioners. 12. It is stated that during the pendency of this writ petition and when the inaction of the respondents was brought to this Court's notice, at the hearing of this petition for admission on 8­2­1999, the counsel for the respondents pointed out to the Court that the petitioners have made a representation to the Central Board of Excise and Customs (for short "CBEC") on 17­12­1998 which is pen....
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.... for payment of customs duty can therefore be safely equated with money. The money was not released or paid in terms of the entitlement of the petitioners. That was delayed. The wrongful deprivation of this money, therefore, should attract interest. That is how after the writ petition was filed, post filing developments, the surviving claim is now only of interest. 16. An affidavit in reply has been filed to this petition prior amendment and post­amendment. We are concerned with the affidavit of the respondents post­amendment to the petition. 17. It has been pointed out by the Assistant Commissioner of Customs, in his affidavit in reply filed on behalf of respondent Nos.4 to 6 that the earlier order was passed in accordance with law; the order passed on 30­12­1998 was challenged by way of an appeal being Appeal No.355 of 1999. The Commissioner (Appeals) rejected the appeal on 31­3­1999. A further appeal was preferred before the Customs, Excise and Gold (Control) Appellate Tribunal, West Regional Bench at Mumbai and the Tribunal allowed it. The Tribunal held that the petitioners are entitled to avail of the credit in the Pass Book on the basis of Pub....
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....of Rs. 12,49,825/­ and after passing of the order by the Tribunal, the balance credit of Rs. 7,91,557/­ was given. The earlier credit is dated 11­4­1997 and the balance is dated 28­6­1999. Thus, the credit has been subsequently given by the respondents to the petitioners by effecting entries in the Pass Book of the petitioners. It is in these circumstances that the petitioners have filed an additional affidavit explaining as to how the Pass Book of the petitioners contained details of the credits given under the Scheme and the amounts used by the petitioners towards the payment of the customs duty utilised from the aforesaid credits. It is in these circumstances that the petitioners submit that their claim for interest is based on the statutory provisions. 22. As already detailed above, this is a surviving claim. 23. Mr. Sridharan, learned Senior Counsel appearing on behalf of the petitioners, after referring to the background facts, would submit that the Customs Notification No.104/95, dated 30­5­1995 r/w the Export Import Policy 1992­1997, issued by the Central Government under Section 5 of the Foreign Trade Development Regulation Act, 19....
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.... within three months, then, interest would be payable after the expiry of that period. Mr. Sridharan has invited our attention to Section 27 of the Act and he has outlined the difference between the refund of duties of customs paid and drawback to urge that these are essentially of the same character. If customs duties paid on inputs used in goods exported is called drawback, then, in exercise of the powers conferred by Section 75, the Central Government has enacted the Customs and Central Excise Duties Drawback Rules, 1995. After inviting our attention to these Rules, it is submitted that the amount is credited in terms of para 54 of the Policy and proviso (iii)(a) and (b) of the Customs Notification No.104/95, then, that partakes the character of drawback. It is in these circumstances that he would submit that the contention of the Revenue that drawback is paid in cash and credit is not paid in cash and hence credit is not drawback, is entirely incorrect. In that regard, he relied upon an extract from the work of Kanga and Palkhivala's "Law and Practice of Income Tax", Eight Edition, at page 210. It is contended that the rationale underlying payment of interest under Section ....
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.... by this Court, would suffice. 30. In support of all these contentions, the petitioners relied upon Sections 27 and 27­A of the Act. They relied upon the copy of the General Exemption No.84C of the Customs Tariff of India 1997­98, as in operation on 1­3­1997. They have also relied on the Customs and Central Excise Duties Drawback Rules, 1995. The petitioners have also pointed out as to how the claim of interest was recognised by this Court and in that regard the attention of this Court is invited to the Judgment in the case of Shri Balaji Automobiles Vs. Union of India, reported in 2002 (140) E.L.T. 367 (Bom.), that is for awarding interest on delayed refund. 31. Mr. Rao, appearing on behalf of the respondents, on the other hand, submitted that the petitioners have filed claims between December, 1996 to February, 1997 in the prescribed format for credit in accordance with Public Notice No.150/95, dated 21­9­1995. The Customs Department granted credit based on the amended Notification No.24/97, dated 6­3­1997. There was a bona fide dispute raised by the Customs Department that the amendment was made on 6­3­1997 and that would apply even ....
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....t Policy, that is referred to as the Pass Book. The importer has been permitted credit entries of the amounts equal to basic customs duties on the inputs used in the products exported by the importer as verified by an Assistant Commissioner of Customs; provided that credit shall not be allowed by the designated authority in respect of goods exported under a claim for drawback or in discharge of export obligation against a licence issued under Duty Exemption Scheme contained in Chapter VI of the Export and Import Policy where export was from a port other than the port of jurisdiction of the designated authority. The said Pass Book is produced before the designated authority for debit of the duties leviable on the goods but for exemption contained therein. A proviso is inserted to condition No.3 which contemplates that exemption from duty shall not be admissible if there is insufficient credit in the said Pass Book for debiting the duty leviable on the goods but for this exemption. The said Pass Book shall be valid for credits by the designated authority for two years from the date of issue thereof and any credit in the said Pass Book, if not utilised within three years from the date....
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....or to this period, namely, November and December, 1996 and January and February, 1997 would not be governed by this amended regime. The petitioners referred to several representations made to the concerned Department to first grant credits on time, and secondly, had the grant of credit been processed on time, there would not have been any issue of the applicability of the amended regime. The representations point out as to how the Departments have also understood the issue and problems raised by the petitioners. 37. The petitioners, therefore, requested that the Board should direct the Customs to apply Notification No.104/95 as applicable and admitted by them and grant a supplementary credit at the earliest. 38. Then, the petitioners relied upon Policy Circular No.52, dated 18­11­1998. The petitioners were first informed on 1­2­1999 that their request contained in the representation to the Board dated 17­12­1998 was examined and rejected. 39. We need not refer to the orders passed by the authorities for the simple reason that after the matter was directed to be re­examined by the Board, the Board has made an order. The Board's order, dated 3....
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....stoms Notification No.104/95 read with Notification No.155/95 and Board's Circular No.62/95. Sd/­ (Sukumar Shankar)" A bare perusal of this order would indicate that the Board re­examined the representation of the petitioners. The dispute was about the method of valuation of inputs used in the exported goods under the Pass Book Scheme in respect of exports made during November, 1996 to February, 1997. The facts of the case and the practice followed was rechecked. Prior to 6­3­1997, the parameters of valuation laid down in Notification No.104/95, dated 30­5­1995 r/w Notification No.155/95, dated 27­10­1995 and the Board's Circular No.62/95, dated 7­6­1995 were applicable. They provide that for the purpose of allowing credit, the value of input shall be comparable with the international prices of such inputs. Thus, the value may be determined on the basis of normal price of inputs prevalent in the international market for import at Mumbai as on the date of exports of the export product. 41. In view of this, it was not proper to apply the method of valuation prescribed in Notification No.24/97 which was issued on 6­3­....
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....aid to that claimant in addition to the amount of drawback, interest at the rate fixed under section 27­A from the date after the expiry of the said period of one month till the date of payment of such drawback. (2) Where any drawback has been paid to the claimant erroneously or it becomes otherwise recoverable under this Act or the rules made thereunder, the claimant shall, within a period of two months from the date of demand, pay in addition to the said amount of drawback, interest at the rate fixed under section 28­AA and the amount of interest shall be calculated for the period beginning from the date of payment of such drawback to the claimant till the date of recovery of such drawback." 47. Where any drawback payable to a claimant under Section 74 or Section 75 is not paid within a period of one month from the date of filing of the claim for payment of such drawback, there will be paid to that claimant in addition to the amount of drawback, interest at the rate fixed under Section 27­A from the date of expiry of the said period of one month till the date of payment of such drawback. 48. The petitioners rely on the rules in that behalf. 49. In the comp....
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....mstances may, by Notification in the Official Gazette, fix. The Central Government can make rules for the above purpose and by sub­section (3) of Section 74 that has been taken care of. By sub­section (4) of Section 74, it is clarified that the goods shall be deemed to have been entered for export on the date with reference to which the rate of duty is calculated under Section 16; in the case of goods assessed to duty provisionally under Section 18, the date of payment of the provisional duty shall be deemed to be the date of payment of duty. 53. By Section 75, drawback on imported materials used in the manufacture of goods which are exported is taken care of. Therefore, we have two categories of drawbacks, the first being allowable on re­export of duty paid goods and the second being drawback on imported materials used in the manufacture of goods which are exported. The petitioners' claim refers to the second category, falling in Section 75. The Section 75 reads as under:­ "75. Drawback on imported materials used in the manufacture of goods which are exported.­ (1) Where it appears to the Central Government that in respect of goods of any class or ....
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....nufactured, processed or on which any operation has been carried out in India and exported outside India, then, the Central Government may, by notification in the Official Gazette, declare that so much of the material as is contained in the goods exported shall, for the purpose of sub­section (1), be deemed to be imported material. (2) The Central Government may make rules for the purpose of carrying out the provisions of subsection (1) and, in particular, such rules may provide­ (a) for the payment of drawback equal to the amount of duty actually paid on the imported materials used in the manufacture or processing of the goods or carrying out any operation on the goods or as is specified in the rules as the average amount of duty paid on the materials of that class or description used in the manufacture or processing of export goods or carrying out any operation on export goods of that class or description either by manufacturers generally or by persons processing or carrying on any operation generally or by any particular manufacturer or particular person carrying on any process or other operation, and interest, if any, payable thereon; (aa) for specifying ....
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....s precisely what is claimed in the present case. 56. The petitioners have restricted their claim of interest to the amount of supplementary credit. They have found that an issue was raised and by the Revenue itself about whether the petitioners' claim for drawback can be considered in the light of the unamended provisions, or Notifications, or the amended one. 57. The petitioners were forced to come to this Court though the provisions were crystal clear. They were forced to even approach the Board because it was the respondents who made the statement before this Court that the matter would be examined by the Board. We have no doubt, therefore, that it is the respondents who took the stand that the petitioners are not entitled to such interest which is clearly referable to Section 75A. They were continuously of the opinion that the claim for drawback made by the petitioners, though styled as supplementary credit under the Pass Book Scheme, was not tenable until the matter went to the Board, but the Board did not issue a speaking order until this Court directed it to do so. It is entirely the respondents who have delayed the matter. Once the clarification came from the Boar....
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....Enterprises was a case arising out of the payment of interest on delayed refund. The issue was right to such interest conferred for the first time by insertion of Section 27­A of the Customs Act, 1962 and by Section 11BB of the Central Excise Act, 1944. These two sections were inserted in these two enactments by Finance Act, 1995 with effect from 26­5­1995. A writ petition filed praying for award of such interest for earlier period was therefore rightly not maintainable. The Hon'ble Supreme Court held that the claim arose not for enforcement of legal right available under any statute. That is how, applying Suganmal (supra) the writ petition, seeking relief of interest in respect of the amount deposited towards redemption charges under an adjudication order and which amount had been refunded after the said order was set aside, could not be maintained under Article 226 of the Constitution of India. That is how the allowing of such a writ petition by the High Court was faulted by the Hon'ble Supreme Court. That Judgment of the High Court was set aside. 64. This Judgment is, therefore, clearly distinguishable and once the statutory scheme has been duly referred a....