TaxTMI 
TaxTMI 
TaxTMI 
2018 (2) TMI 1271
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....e Directorate of Revenue (DRI) initiated an investigation against the petitioner and concluded that he had misdeclared the value of the goods and that the goods actually exported were spurious or junk and that the petitioner had accordingly wrongly availed the benefit of duty drawback. Based on this opinion, the DRI issued a notice dated 31.03.2015 under rule 16 of the Duties Drawback Rules, calling upon the petitioner to show cause why the declared value should not be rejected and the goods not be held liable to confiscation. The petitioner was also called upon to show cause why the drawback of about Rs. 60 lakhs should not be disallowed and recovered from him. The adjudicating authority by an order dated 21.03.2007 confirmed the demand of drawback of about Rs. 60 lakhs and imposed a penalty of Rs. 13 lakhs. The petitioner filed an appeal before the Customs Excise & Service Tax Appellate Tribunal. During the pendency of the appeal, the Tribunal had, by an order dated 20.05.2009, declined the petitioner's application for waiver of the requirement of pre-deposit to hear the appeal on merits. The petitioner challenged this order by filing Civil Writ Petition No.19427 of 2009. A Divi....
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....he refund of Rs. 15 lakhs against the demand under the other proceedings demanding an amount of Rs. 13 lakhs towards drawback and imposing a penalty of Rs. 3.13 crores in respect whereof the petitioner's appeal was pending before the Tribunal. The respondents also invoked the bank guarantee in the sum of Rs. 15 lakhs towards this demand. 6. Mr. Jagmohan Bansal, the learned counsel appearing on behalf of the petitioner, submitted that the respondents are not entitled to adjust the refund of Rs. 15 lakhs and/or to invoke the guarantee in the sum of Rs. 15 lakhs in respect of the separate claim of Rs. 13 lakhs towards duty drawback and Rs. 3.13 crores towards penalty. In this regard, he relied upon a notification dated 16.09.2014 issued by the Central Board of Excise and Customs which inter alia provides as under:- "4. Recovery of the Amounts during the Pendency of Appeal: 4.1 Vide Circular No.967/1/2013 dated 1st January, 2013, Board has issued detailed instructions with regard to recovery of the amounts due to the Government during the pendency of stay applications or appeals with the appellate authority. This Circular would not apply to cases where appeal is filed after the e....
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.... Act, 1962. Section 142 of the Customs Act reads as under:- "SECTION 142. Recovery of sums due to Government. - (1) Where any sum payable by any person under this Act including the amount required to be paid to the credit of the Central Government under section 28B is not paid, - (a) the proper officer may deduct or may require any other officer of customs to deduct the amount so payable from any money owing to such person which may be under the control of the proper officer or such other officer of customs; or (b) the Assistant Commissioner of Customs or Deputy Commissioner of Customs may recover or may require any other officer of customs to recover the amount so payable by detaining and selling any goods belonging to such person which are under the control of the Assistant Commissioner of Customs or Deputy Commissioner of Customs or such other officer of customs; or (c) if the amount cannot be recovered from such person in the manner provided in clause (a) or clause (b) - (i) the Assistant Commissioner of Customs or Deputy Commissioner of Customs may prepare a certificate signed by him specifying the amount due from such person and send it to the Collector of th....
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....be under the control of the officer. The refund is an amount under the control of an officer of the customs. Section 142, therefore, clearly entitles the proper officer to deduct or require any other officer of the customs to deduct the refund due to the petitioner towards the claims of Rs. 13 lakhs plus Rs. 3.13 crores which are the subject matter of the other proceedings. The appeal is pending in respect thereof but the amount has, as on date, been adjudicated to be payable by the petitioner. This statutory right cannot be negated or diluted by the Board. If the word "shall" in paragraph 4.4 of the circular is not read as "may" and paragraph 4 of the circular is construed to be a mandatory provision barring absolutely the right of recovery/adjustment, it would be contrary to section 142. Had we not construed the word "shall" as "may", we would have readily struck down paragraph 4.2 of the circular as being contrary to section 142 and, therefore, illegal. In our view, however, the word "shall" must be read as "may". The validity of the circular is accordingly upheld subject, however, to the word "shall" therein being read as "may". 10. If paragraph 4 of the circular is construed ....