AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (5) TMI 30
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.... rejects the duty drawback amount of Rs. 2,24,93,070/- which was claimed by the appellant and disbursed under 198 shipping bills to the exporter under the provisions of rule 16A of the 1995 Drawback Rules. The order also confiscates the goods with an option to redeem the same by payment of redemption fine and also imposes penalty on the appellant under section 114(i)/(iii) and section 114AA of the Customs Act. 2. Customs Appeal No. 85883 of 2025 has been filed by Ashfaq Anwar Nursumar to assail that portion of the order dated 15.11.2023 passed by the Commissioner that imposes penalty upon him under section 114(i)/(iii) and section 114AA of the Customs Act. 3. The appellant is a partnership firm engaged in the export of Garments. Ashfaq Anwar Nursumar is a partner in the said firm. During the period January, 2012 to December, 2016, the appellant undertook exports of garments, mainly to Nigeria, through 699 shipping bills. The said exports were undertaken under claim for duty drawback at the All Industry Rate notified by the Government for garments in terms of section 75 of the Customs Act read with rule 3 of the 1995 Drawback Rules. 4. The consignments were assessed by the ....
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....appellant and the appellant makes payment to such local suppliers. 7. A show cause notice dated 14.12.2022 was issued to the appellant, calling upon the appellant to show cause as to why the duty drawback of Rs. 773.86 lakhs paid to the appellant on goods exported during January, 2012 to December, 2016, should not be recovered from the appellant under rule 16 of the 1995 Drawback Rules on the ground that against such export goods no duty/tax appears to have been paid on procurement of goods and on the ground that the market value of the goods exported appeared to be lower than claimed drawback amount. Further, out of the said drawback of Rs. 773.86 lakhs, drawback of Rs. 2,24,93,070/- pertaining to 198 shipping bills was also liable to be recovered on the ground of non-realization of foreign exchange. 8. The show cause notice also called upon Ashfaq Anwar Nursumar to show cause as to why penalty should not be imposed upon him under section 114(i)/(iii) and section 114AA of the Customs Act. 9. The appellant filed a reply to the show cause notice and contested the allegations made therein. The appellant also submitted that the demand raised under rule 16 or rule 16A of the 1....
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....s, 1995 is as per scheme of the statute. In the instant case, forgery has come to light. It is a matter of fact that fraud vitiates everything, as discussed supra. This infact dismisses all the arguments of the noticees. *****" (emphasis supplied) 13. Shri J.C. Patel, learned counsel for the appellant assisted by Shamita Patel submitted that the Commissioner committed an illegality in holding that rule 16 of the 1995 Drawback Rules would be applicable. Elaborating this submission, learned counsel submitted that the 1995 Drawback Rules ceased to operate on the commencement of the 2017 Drawback Rules i.e. 01.10.2017 and there is no saving clause under rule 20(2) of the 2017 Drawback Rules relating to proceedings under rule 16 of the 1995 Drawback Rules for recovery or drawback paid in respect of goods exported before the commencement of the 2017 Drawback Rules. Learned counsel also pointed out that section 159A of the Customs Act will also not save proceedings under rule 16 of the 1995 Drawback Rules because the said section would apply only when if there is no different intention from the repealing provisions contained in rule 20(2) of the 2017 Rules. Learned counsel also subm....
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....ails to repay the amount it shall be recovered in the manner laid down in sub-section (1) of section 142 of the Customs Act, 1962 (52 if 1962)." 19. The relevant portion of rule 16A of the 1995 Drawback Rules is reproduced below: "16A. Recovery of amount of Drawback where export proceeds not realised. - (1) Where an amount of drawback has been paid to an exporter or a person authorised by him (hereinafter referred to as the claimant) but the sale proceeds in respect of such export goods have not been realised by or on behalf of the exporter in India within the period allowed under [the Foreign Exchange Regulation Act, 1999 (42 of 1999)] [Substituted by G.S.R. 781 (E), dated 6th December, 1995 (w.e.f. 6th December, 1995).] including any extension of such period, such drawback shall be recovered in the manner specified below. *****" 20. With effect from 01.10.2017, the 2017 Drawback Rules came into effect. Rule 20 of the 2017 Drawback Rules deals with repeal and saving. In view of the provisions of sub-rule (1) of rule 20, the 1995 Drawback Rules ceased to exist. Rule 20 is reproduced below: "20. Repeal and saving. - (1) From the commencement....
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....e committed under or in violation of any rule, regulation, notification or order so amended, repealed, superseded or rescinded; or (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed as if the rule, regulation, notification or order, as the case may be, had not been amended, repealed, superseded or rescinded." 22. The show cause notice that was issued to the appellant, called upon the appellant to show cause why the drawback amount of Rs. 773.86 lakhs claimed by the appellant should not be rejected as the market value of the export goods appeared to be lower than the claimed drawback amount and why it should not be recovered from the appellant under rule 16 of the 1995 Drawback Rules. 23. The appellant contended that rule 16 of the 1995 Drawback Rules could not be resorted to in cases where show cause notices were issued after 01.10.2017 as rule 20(2) of the 2017 Drawback Rules does not save rule ....
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.... appeal, revision or other proceedings under this Act as if the said Act had been in force on the date on which such application, appeal, revision or other proceedings were made or preferred. Notwithstanding anything to the contrary contained in any judgement, decree or order of any court or other authority, where no review, revision or corrective action could be initiated or finalized in respect of any assessment, order, proceeding under the said Act prior to or after 1st April, 2003, because of judgement or decree of any court or Tribunal and the said assessment or order passed under the said Act had attained finality, the limitation of five years as specified under section 40 of the said Act shall be deemed to be eight years;" (emphasis supplied) 29. The observations made by the Supreme Court on section 61(2) of the 2003 Act are: 8. We have considered the respective submissions. A simple repeal of an Act leaves no room for expression of a contrary opinion. However, if the repeal is followed by a fresh enactment on the same subject, the applicability of the General Clauses Act would undoubtedly require an examination of the language in the new enactment to....
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.... Rules, resort could have been taken by the department on the provisions of rule 16 of the 1995 Drawback Rules for claiming re-payment of the drawback amount. 34. The 2017 Drawback Rules came into force on 01.10.2017. Rule 20(1) of the 2017 Drawback Rules which deals with "repeal and saving" provides in sub-clause (1) that from the commencement of the 2017 Rules, the 1995 Drawback Rules shall cease to operate. However, the provisions of rule 20(2) will have to be examined because it provides that notwithstanding such cessation, three provisions of the 1995 Drawback Rules would apply. These three situations mentioned in rule 20(2) do not deal with rule 16 of the 1995 Drawback Rules. 35. The next issue that arises for consideration is whether the provisions of section 159A of the Customs Act would revive rule 16 of the 1995 Drawback Rules. 36. A perusal of section 159A of the Customs Act shows that if any rule is repealed, then unless a different intention appears, such repeal shall not affect the previous operation of any rule. 37. It has, therefore, to be seen whether a different intention appears from the provisions of rule 20 of the 2017 Drawback Rules. As noticed abo....
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.... Section 159A of 1962 Act becomes inapplicable. Had there been intention to save all rights and liabilities arising from Drawback Rules, 1995, the Government would not have inserted Rule 20(2) in Drawback Rules, 2017 saving only few rights/acts. Had there not been Rule 20(2) in Drawback Rules, 2017 as is in present form and manner, Section 159A of 1962 Act would have come into play and saved all the rights and liabilities arising out of Drawback Rules, 1995. Contention of counsel for DRI that investigation was pending on the date of repeal of Drawback Rules, 1995 so claim of Petitioner was pending thus Rule 20(2)(b) of Drawback Rules, 2017 saves their action is absolutely misconceived because it is conceded position that no drawback claim was pending even at the time of initiation of investigation in 2012 rather DRI initiated investigation qua drawback released prior to December' 2012. It is clear from the bare reading of Rule 20(2)(b) of Drawback Rules, 2017 that it saves any claim which is pending with respect to goods exported prior to 1.10.2017 and in the present case no claim was pending on 1.10.2017." (emphasis supplied) 40. It would be seen from a perusal of t....