Stovec Industries Ltd. vs Union of India

H.B. Antani, J.—Rule. Mr. P.S. Champaneri, learned Assistant Solicitor General and Mr. Y.N. Kavani, learned advocate waive service of rule on behalf of respondents No. 1 and 2 respectively. As the respondents have appeared pursuant to notice dated 14-10-2010 for final disposal, this matter is taken up for final hearing today.

The present petition preferred under Article 226 of the Constitution of India is filed by the petitioner-Company which is engaged, in the business of textile machinery and spares, with the following prayers:

(A) That your Lordships may be pleased to issue a Writ of Mandamus or a Writ of Certiorari or any other appropriate writ, direction or order, quashing and setting aside decision of the second respondent conveyed vide 0/0 No. 9/Joint Commr./2010 dated 10-3-2010 (Annexure "P") with consequential benefits of drawback in the petitioners'' favour for the goods exported under Shipping Bill No. 1115741 dated 28-6-2004.

(B) That Your Lordships may be pleased to issue a writ of Mandamus or a Writ in the nature of Mandamus or any other appropriate writ, direction or order, directing the respondents, their servants and agents to fix drawback rate by deciding the petitioners'' application dated 26-11-2004 for fixation of drawback rate for the goods exported under Shipping Bill No. 1115741 dated 28-6-2004 with con-sequential benefits of grant of drawback with interest at appropriate rates that may be fixed by this Hon''ble Court.

(C) Pending hearing and final disposal of the present petition, Your Lordships may be pleased to direct the respondents, their servants and agents to decide drawback rate for the goods exported by the petitioner company vide Shipping Bill No. 1115741 dated 28-6-2004 and to grant appropriate drawback amount on the conditions that may be deemed fit by this Hon''ble Court.

Facts of the case concisely stated, are as under:

The petitioner is engaged in the business of manufacture of textile machineries and spares and has a factory for that purpose. Some of the machineries and spares manufactured by the petitioner Company are also exported to foreign countries. The Central Government has made Customs and Central Excise Drawback Rules, 1975 vide Notification No. 37/95-Cus & C.E., dated 26-5-1995 for allowing drawback. For this purpose, a schedule is also published by the Central Government from time to time thereby fixing rates of drawback for various goods, which are commonly known as "all industry rate". Drawback on the specified rates is allowed to all exporters irrespective of actual quantum and excisable material used in the manufacture of the concerned exported goods. For various goods, however, such rates are not fixed by the Central Government and therefore the manufacturers or exporters of such goods have to make an application in the prescribed form for fixation of the rate of drawback in such cases. Rule 6 of the above Rules provides for the procedure for fixation of rate of drawback when no rate has been determined by the Government. The petitioner Company manufactured one Rotary Screen Printing Machine and exported the same with certain spares and accessories, vide Shipping Bill No. 1101951 dated 15-3-2004 from Inland Container Depot, Sabarmati, Ahmedabad. The petitioner Company was also required to make an application in the prescribed form for fixation of rate of drawback for the above goods exported under the aforesaid shipping bill. The petitioner Company, vide their letter dated 1-9-2004 requested the respondents to return the original duty paying documents such as bills of entry and invoices etc. which were submitted to the respondents along with the claim for the first machine exported earlier. Ultimately, the 2nd respondent determined the rate of drawback for the above goods and communicated it to the petitioner, vide letter bearing F.No. ICD/CCE-1/03/04-05 dated 11-10-2004. There being no specific rate of drawback fixed for these goods, the petitioner Company was required to get fixed specific rate for the goods exported under the above referred shipping bill also. The petitioner Company completed the formalities and submitted the same to the respondents. The petitioners were subsequently informed that there was delay in filing the above application because Rule 6 of the Drawback Rules provided for maximum period of 90 days for making an application from the date of export. In view of this oral view expressed by the authorities, the petitioner Company wrote a letter dated 29-11-2004 to the respondents. Thereafter, the 4th respondent sent a letter bearing F. No. ICD/CCE-1/10/04-05 dated 15-12-2004 informing the petitioner Company that their application was rejected since the delay in filing the application for fixation of brand rate was made beyond the period of limitation, i.e. 90 days from the date of export. As the petitioner''s claim for drawback was rejected, the petitioner filed Special Civil Application No. 5401 of 2005 before this Court. The said petition was disposed of by a Division Bench of this Court as the petitioner sought permission to withdraw the petition in the light of the averments made in the affidavit-in-reply filed on behalf of the respondents for making an appropriate application/representation before the Central Government seeking relaxation of the period of limitation. Accordingly, the petitioner filed a detailed application/representation before the 1st respondent for relaxation in time limit for filing the drawback claim. Ultimately, the Technical Officer (DBK) in the office of the 1st respondent sent a communication dated 24-7-2006 bearing F. No. 609/221/2005-DBK informing the petitioner that it was not possible to accede to the petitioner''s request because the reasons given for condoning the delay in filing the drawback claim were not found to be valid for invoking Rule 17 of the Drawback Rules. The petitioner was, therefore, constrained to file Special Civil Application No. 19367 of 2006 before this Court. In the said writ petition, a Division Bench of this Court vide order dated 25-7-2007 [2008 (221) E.L.T. 328 (Guj.)] issued the following directions :

... we condone the delay in filing application under rule 17 of the Drawback Rules 1995 and set aside the impugned communicated dated 24th July 2006 and direct the Authorities to pass appropriate order on the drawback application under rule 6 of the Customs and Central Excise Duties Drawback Rules, 1995, on merits in accordance with law.

After the aforesaid order was passed, the matter was remanded and came up for hearing before the Joint Commissioner, Central Excise (BRU), Ahmedabad who ultimately passed an order on 10-3-2010. It is thus observed in paragraph 7 of the said order :

The applicant pleaded for fixation of the Drawback under Rule 7 of the Drawback Rules. The Hon''ble High Court specifically ordered for determination of the Drawback under Rule 6 on merits in accordance with law. The applicant pleaded for fixation under Rule 7 on 4-7-2008. The plea on consideration as a fresh application is hit by time limitation as the goods were exported on 28-6-2004. The applicant also pleaded for determination of Brand rate on the analogy of the O.I.O. No. 15/Addl. Commr./2007 dated 29-10-2007. On perusal of the order, it is noticed that the mistake committed in quoting the correct Rule in the application was condoned by the adjudicating authority and fixed the Brand rate on the ground of identicality of the manner of determination of Brand rate both under Rule 6 and 7 of the Drawback Rules. The adjudicating authority also observed that Brand rate under Rule 6 could not be fixed for the product as All Industry Rate [A.I.R] was fixed to the product exported. The product exported was Rotary Screen Printing Machine-RD-8/MD/1851/8-8 which is identical to the product ex-Ported on 28-6-2004 in respect of which fixation of the Brand Rate is sought for now. The O.I.O. ibid relied upon the application is not applicable as precedent to the present case as the facts in the present case are different from those in the relief upon O.I.O. The present application is entertained as per the directions of the Hon''ble High Court of Gujarat. The directions are very specific. They do not give room for deviation. As the direction is to dispose of the application under Rule 6 of the Drawback Rules, I do not consider the plea by the applicant to fix the Brand rate under Rule 7 is in accordance with the Drawback Rules. The plea is also hit by time limitation. The application is liable for rejection.

After making the aforesaid observation in paragraph 7, the application dated 26-11-2004 filed by the petitioner Company seeking fixation of Brand rate under Rule 6 of the Drawback Rules for Rotary Printing Machine exported under Shipping Bill No. 1115741 dated 28-6-2004 was rejected in exercise of powers conferred upon the said office under Rule 6 of the Drawback Rules.

It has been specifically mentioned in paragraph 7 of the order that the application is entertained as per direction of this Court, and it has been specifically stated in the order that the directions are very specific and they do not give room for deviation/ as the direction is to dispose of the application under Rule 6 of the Drawback Rules. For this reason, the said officer has not considered the plea of the petitioner to fix the Brand rate under Rule 7 of the Drawback Rules. It is also stated in the order that the plea is also hit by time limitation.

It thus appears that inspite of a specific plea of the petitioner to fix the Brand rate under Rule 7 of the Drawback Rules, the said officer has not considered the same because the direction of the High Court in order dated 25-7-2007 passed in Special Civil Application NO. 19367 of 2006 was to fix the Brand rate under Rule 6 of the Drawback Rules.

Learned advocate submitted that the order dated 10-3-2010 passed by the Joint Commissioner, Central Excise [BRU], Ahmedabad requires to be quashed and set aside, and the petition deserves to be allowed.

Learned advocate Mr. Ravani, placing reliance on the affidavit in reply filed on Behalf of the respondent submitted that the impugned order passed by the Joint Commissioner, Central Excise [BRU], Ahmedabad is in original and the said order is an appealable order as an appeal would lie before the Commissioner (Appeals) within 60 days from the date of the order and therefore the present petition filed directly before the High Court challenging the said order is not maintainable. He further submitted that the appeal is already time barred. He therefore submitted that the petition does not call for any interference and deserves to be dismissed.

We have heard learned advocates appearing in this matter at length and in great detail. We have also considered the averments made in the petition as well as the affidavit in reply filed on behalf of the respondent.

The impugned order dated 10-3-2010 passed by the Joint Commissioner, Central Excise [BRU], Ahmedabad has been passed as per the directions given by this Court in order dated 25-7-2007 passed in Special Civil Application No. 19367 of 2006 [2008 (221) E.L.T. 328 (Guj.)]. In the said order, this Court had directed the authorities to dispose of the application under Rule 6 of the Drawback Rules whereas the same ought to have been under Rule 7 of the Drawback Rules. However, inspite of specific plea made on behalf of the petitioner before the said officer, the order came to be passed observing that the directions in the order are very specific and they do not give room for deviation, as the direction is to dispose of the application under Rule 6 of the Drawback Rules.

In a similar case where the petitioner had made an application under rule 6 instead of rule 7 of the Rules, which came to be decided vide Order-in-Original No. 15/Addl. Commr./2007 dated 29-10-2007, a copy whereof is annexed as Annexure ''Q'' to the petition, the Additional Commissioner had held as follows :

(vii). Further, there is no material change in the format and the declarations in respect of the application filed under the provisions of Rule 6 or Rule 7 of the Drawback Rules, 1995 except mentioning the Rule against column No. 10 in the application. The details of consumption and also the details of duty payment in respect of duty paid inputs remain the same in both the situation. I therefore condone the bona fide mistake of the assessee and consider the application under Rule 7 instead of Rule 6 of the Customs & Central Excise Duties Drawback Rules, 1995. xxx

The aforesaid order had also been cited before the respondent No. 2. However, the respondent No. 2 has sought to take shelter behind a very hyper technical plea, namely that in the present case he was deciding the application pursuant to directions given by the High Court to dispose of the application under Rule 6 of the Rules and as such could not consider the plea to fix the Brand rate under Rule 7 in accordance with the Drawback Rules. The respondent No. 2 has also raised another specious plea to the effect that the plea is hit by limitation. On both counts the respondent No. 2 was not justified in not entertaining the request of the petitioner to consider the application as one under rule 7 of the Rules. As recorded by the Additional Commissioner in the case cited hereinabove, there is no substantial difference in the format of the application whether under rule 6 or rule 7 of the Rules. As such, merely because the petitioner had inadvertently made the application under rule 6 of the Rules which consequently was reflected in the order made by the High Court, was not a valid ground for the respondent No. 2 not to entertain the application as one under rule 7 of the Rules. As regards the plea being hit by limitation, the High Court in writ petition had already condoned the delay caused in filing the application. In the circumstances, merely because there was a change in nomenclature, inasmuch as instead of treating the application as one under rule 6, the respondent No. 2 was required to consider the same under rule 7 of the Rules, the same would not attract the bar of limitation as the application is the same. It is only being treated as having been filed under a different provision. The impugned order of the Joint Commissioner, therefore, cannot be sustained.

In the peculiar facts and circumstances of this case narrated hereinabove, this petition is allowed. Hence the following order:

The impugned order dated 10-3-2010 passed by the respondent No. 2, Joint Commissioner, Central Excise [BRU], Ahmedabad is quashed and set aside. The matter is remanded to the respondent No. 2 who shall decide the application made by the petitioner for fixation of drawback rate for the goods exported by the petitioner vide Shipping Bill dated 28-6-2004 afresh and grant consequential benefits, by treating the same as an application under rule 7 instead of rule 6 of the Customs and Central Excise Duties Drawback Rules, 1995, without raising the question of limitation.

Rule made absolute accordingly. No order as to costs.