TaxTMI 
TaxTMI 
2003 (9) TMI 93
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....r, the said Crankshaft, was found to be defective and the foreign supplier agreed to take back the machine and substitute it by a new one. The Petitioners on obtaining necessary permission from R.B.I., re-exported the said machine on 18th July, 1987. The new machine supplied in lieu of the defective machine arrived at Bombay sometime in January, 1988. On 25th January, 1988 the Petitioners filed a bill of entry and cleared the said replaced Crankshaft machine on payment of duty of Rs. 2,37,637/-. 3.On l0th June, 1988, the Petitioners made an application under Section 27 of the Customs Act seeking refund of duty of Rs. 2,27,871/- paid at the time of first clearance. By a letter dated 15th November, 1988, the Assistant Collector of Customs (Refund Department) informed the Petitioners that the claim for refund of duty under Section 27 was not admissible and advised the Petitioners to approach the Drawback Department for refund. Accordingly, the Petitioners filed their claim on 5th July, 1989 seeking duty drawback under Section 74 of the Customs Act. The Petitioners furnished all the relevant documents called for by the adjudicating authority. Thereafter, by an order-in-original date....
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.... the petitioners submitted that once the imported machine on being found to be defective was re-exported with the approval of R.B.I. The duty paid on the said machines ought to have been refunded by the Customs authorities and the Respondents were not justified in holding that the refund claim filed under Section 27 of the Customs Act was not admissible. 6.Mr. Sanklecha submitted that in any event the claim for drawback of duty could not be rejected on the ground that the PMV of the re-exported machinery has not been determined. He submitted that on the shipping bill, at the time of re-export, the petitioners had declared the market value at Rs. 1,10,000/- and if the duty of Rs. 2,27,871/- paid on the said Crankshaft at the time of import is taken into account, the market value of re-exported crankshaft would be much more than the drawback claimed and in that view of the matter, the duty drawback ought to have been granted to the petitioners. It was submitted that the drawback claimed by a party is to be on the basis of replacement value and not on this basis of export value. Mr. Sanklecha, submitted that the Government of India was in error in denying the benefit of drawback on....
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.... up the prescribed column which require the exporter to set out the prevailing market of the goods to be exported and the customs authorities were bound to verify the declaration of market value made on the drawback shipping bill. In the free shipping there being no such column there was no determination of prevailing market value. Section 76 of the Customs Act provides that the duty drawback shall not be allowed if the market value of the export goods is less than the amount of the drawback due thereon. In the present case, admittedly, the market value of the defective machinery exported was not determined. Therefore, in the absence of determination of PMV as set out in Section 76 of the Customs Act, duty drawback could not be granted to the Petitioners. 10.The contention of Mr. Sanklecha that in the free shipping bill the petitioners had mentioned the price of the machinery at Rs. 1,10,000/- and if the duty paid on that machinery at the time of import is taken into account, the market value would be much more than the drawback claimed and therefore the Petitioners were entitled for drawback cannot be accepted because, in the present case, admittedly the machinery exported was ....
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....at case, X-ray machine was imported and certain components of that X-ray machine were found to be defective which needed replacement and the entire X-ray machine was not defective. Moreover, in that case, the Customs authorities on re-export of certain components of X-ray machine had granted drawback but at a lesser rate. In that context it was held by the learned Single Judge of the Calcutta High Court that the petitioners therein are entitled to higher amount of duty drawback. Thus the above decision of the Calcutta is distinguishable on facts of the present case. Apart from that, in the light of the decision of the Apex Court in the case of Om Prakash Bhatia (supra), the findings given in the decision of the Calcutta High Court that the value of replacement parts for charge of import duty should be treated as value for calculating export drawback cannot be accepted. The market price referred to in Section 76 of the Customs Act is with reference to the market price in India and not the replacement value. 13.The contention of the Petitioners that Section 76 of the Customs Act is arbitrary and unreasonable on the ground that it does not lay down any guidelines to determine the m....