Malvika Apparels vs Commissioner of Customs

Issue notice. Ms. Sonia Sharma, Sr. Standing Counsel accepts notice on behalf of respondent.

The following substantial question of law arises for consideration:-

Did the Tribunal fall into error in declining to restore the appeal dismissed on 1-11-2006 [2007 (208) E.L.T. 151 (Tri. - Del.)] for noncompliance of the previous conditional stay of pre-deposit order?

With the consent of the parties, the appeal was taken up and heard finally for disposal.

The appellant exported ready-made garments under 29 shipping bills sometime in the year 1999 in terms of the duty drawback scheme and received drawback of Rs. 17,97,768/-. This was under the scheme which permitted it to drawback the duty, provided the export proceeds were received within the prescribed time i.e. within a time period of six months. The appellant had apparently exported the goods on this score there is no dispute. The amount to be received by the appellant was not remitted to it within the time prescribed. The RBI in respect of some of the exports extended the time of remittance till 31-8-2002. In these circumstances, the respondent issued a show cause notice dated 31-12-2003 demanding why the drawback which the petitioner had previously enjoyed ought not to be withdrawn. It is not again in dispute that between April, 2005 and June, 2006 the appellant received its export proceeds from its foreign purchaser. The appellant had filed its reply in response to the show cause notice dated 31-12-2003, wherein it was pointed out that the RBI was requested to seek further extension of time to fulfill the EOUC commitments. The RBI''s clearance, unfortunately, was not forthcoming. In this background of the facts, the Commissioner made his order on 9-11-2005 directing the recovery of the amount i.e. Rs. 17,97,768/- along with interest.

The appellant approached the CESTAT on 1-6-2006. It also applied for suspension of the requirement of pre-depositing the disputed amount. The Tribunal on 13-11-2006 directed the appellant to deposit Rs. 4 lakhs as a condition for hearing its appeal and report compliance on 2-1-2007. On the later date since the appellant was unable to comply with the directions, the appeal was dismissed.

It is stated by the appellant that on 24-1-2013 its banker Oriental Bank of Commerce, disclosed that the RBI had conveyed its "no objection" under FEMA to regularize 28 bills and the drawback of Rs. 14,66,014/- was thus regularized by the RBI. In these circumstances, the appellant sought for restoration of its appeal on 4-6-2013 to the CESTAT. By the impugned order, the CESTAT has declined the relief stating that the condition imposed by its previous order were not complied with, which resulted in a valid dismissal order and that the appellant had approached the CESTAT after an inordinate delay.

Learned counsel for the appellant besides reiterating the grounds urged in support of the appeal, submitted that the inability of the appellant to comply with the condition prescribed was, under the circumstances, entirely beyond its control. Learned counsel pointedly drew attention to the disclosure made to the adjudicating authority that the remittances were received at the stage when the show cause notice was pending and no order has been made. Counsel also relied upon the decision of the Bombay High Court in Sanjay Parasrampuria Vs. Commissioner of Customs (Export), . It was also argued that the appellate authority can, in the interest of justice, exercise its discretion and restore the appeal wherever it feels that the justice of the case so requires.

The learned counsel for the revenue submitted that this Court ought not to interfere and argued that no substantial question arises for consideration. She places reliance on the decision in Commissioner of Customs Vs. Lindt Exports, . It was argued that in such circumstances when the order of the CESTAT attains finality under various provisions of the Customs Act, this Court ought not to interfere with such consequences. Learned counsel also relied upon Section 129B.

As is evident from the above narration, there is no dispute about the appellant''s substantial compliance requirement of having to export the goods in terms of the notification. However, the show cause notice was on account of fact that the remittances from the foreign purchaser were not received in time.

Post facto approval to the appellant to receive the amount, was concededly given much later in 2013. Immediately on becoming aware of the same, an application was moved before the Tribunal to have the appeal restored. It is evident that the receipt of remittances and more importantly the extension of time were factors entirely beyond the appellant''s control. Undoubtedly, the order dated 2-1-2007 passed by the Tribunal achieved finality; at the same time we are of the opinion that in the facts of the case the Tribunal did not cease to have any discretion in the matter and having taken into account these facts could have restored the appeal given that the post facto approval in respect of almost 90% of the amount in question was received in 2013. We are also of the opinion that Lindt Export (supra) is not an authority for the blanket order that in every case where the order achieved finality the Tribunal is bereft of jurisdiction. We also note that in that case the assessee/appellant had approached this Court feeling aggrieved by the CESTAT order after its appeal met with no success. The assessee carried the matter to Supreme Court, which had rejected its claim. Furthermore, the order was premised upon entirely different set of circumstances - the adjudicating authority in that case has held that the claim itself was bogus. In view of the above discussion, we are of the opinion that the substantial question of law has to be answered in favour of the appellant and against the Revenue. Consequently, the order of 19-8-2013 of CESTAT in Appeal No. C/387/2006 CU(DB) is hereby set aside. The said appeal is directed to be restored to the file of the Tribunal which shall dispose of the same on merits and after hearing the parties. The appeal is allowed in the above terms. The parties shall appear before the Registrar, CESTAT for further directions for hearing of the appeal on 26-2-2014.