1 WP NO.2395 OF 2006 lgc IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WTI PETITION NO.2395 OF 2006 1 Hindustan Lever Limited ] a Company registered under ] The Companies Act, 1956 and ] Having its registered office at 165/166, ] Backbay Reclamation, ] Bombay – 400 020 ] ] 2 Shri M K Sharma of Mumbai ] Indian Inhabitant, and a Shareholder ] of the Petitioner No.1, residing at 192 ] Centrum Towers, Barket Ali Road, ] Near Wadala Fly Over, ] Wadala (East), Mumbai – 400 037 ]... Petitioners. Versus 1 Union of India ] through its office at ] Aykar Bhavan, New Marine Lines ] Mumbai-400 020 ] ] 2 Dr.M Subramanyam, ] Deputy Secretary to the Government ] of India, Ministry of Finance ] Department of Revenue ] Jeevandeep Building, Parliament St. ] New Delhi – 110001 ]... Respondents. Mr R G Sheth i/by M/s.R G Sheth & Co. for the Petitioners. Mr P S Jetly for the Respondents. CORAM : V C DAGA AND R M SAVANT, JJ. Reserved on : 07th September 2010. Pronounced on :- 06th October 2010 2 WP NO.2395 OF 2006 JUDGMENT [PER R M SAVANT, J] 1 By the above Petition, filed under Article 226 of the Constitution of India, the Petitioners take exception to the order dated 30.9.2005 passed by the Respondent No.2 above-named by which order the applications filed by the Petitioners for fixation of brand rate of draw-back for export of tea were rejected and the letters dated 19.01.1987 and 20.01.1987 which were the revocation letters issued in respect of brand rate letters No.(Bom.-305) dated 4.4.86 and brand rate letter (Cal-57) dated 22.7.86 were confirmed and resultantly recovery of the draw back amount with appropriate interest was ordered. 2 The factual matrix involved in the above Petition can be stated thus :- The Petitioners are inter alia engged in the activity of manufacture and export of various goods. The said activity of export is carried out by the Petitioners in its capacity as a trading house where under the Petitioners obtain duty paid goods and subject the said goods to process of manufacture as understood in excise law and then export it to various countries. The Petitioners at the relevant time, were in the activity of export of tea which was classifiable under TI-3 of the first Schedule to the Central Excises and Salt Act, 1944 (the Excise Act for brevities sake). Under the scheme of levy of excise, Tea was required to bear duty of excise first at the garden stage and then at the packing stage after it was blended and packed. The Petitioner obtained Tea from gardens which was blended, packed and exported. The Central Government under Rule 12A of the Central Excise Rules was empowered to grant a rebate when finished goods were exported. Such rebate was in respect of duties of excise paid on raw materials used in the manufacture of such finished goods. In exercise of powers 3 WP NO.2395 OF 2006 conferred by the said Rule 12A, the Central Government issued Notification No.166/81 dated 23.9.1981 directing that rebate of duty of excise @ 0.40 per kg. shall be allowed in respect of tea falling under TI-3 which was used in the manufacture of blended tea if it is exported out of India. The said notification was amended by Notification No. 193/03 dated 23.7.1983 whereby instead of a rebate of 0.40 per kg. the rebate was allowed of the whole of duty of excise paid on tea at the garden stage. By Notification No.9/85 dated 1.2.1985 the Central Government rescinded the above Notification No. 166/81. 3 In addition to power to grant rebate under Rule 12A, the Central Government is empowered under Section 75 of the Customs Act, 1962 and Section 37 of the Excise Act to grant draw back. In exercise of these powers the Central Government had framed, at the relevant time, the Customs and Central Excise Duties Drawback Rules, 1971. The machinery to grant said drawback was provided under the said Drawback Rules. Thus, either the Central Government grants the rebate under Rule 12A in respect of duties of excise paid on raw materials used in the manufacture of finished goods which are exported or allows a drawback in respect of such duty which is paid on raw materials. The underlying objective is that in respect of export of finished goods no excise duty will be recovered in respect of raw materials used in the manufacture of such finished goods and in case such duty is recovered, the same shall be refunded as drawback. In view of the withdrawal of Notification No.166/81 by Notification No.9/85, the Petitioner on 31.5.1985 submitted an application for drawback to the Collector of Customs and Central Excise, Pune for fixation of drawback rate in respect of export of tea effected by the Petitioners. By the said application, the Petitioners claimed drawback in respect of duty paid at the garden 4 WP NO.2395 OF 2006 stage and various packings of the blended tea. The said application of the Petitioners was considered by the Respondent No.1 and the same was sent for verification by the Customs/Central Excise Department and after perusing the verification report the Respondent No.1 had allowed drawback at the rates which was conveyed to the Petitioners vide letter dated 4.4.1986 issued by the Respondent No.1. Thereafter Respondent No.1 issued a clarification to the effect that rate of drawback per one Metric Tonne shall be in respect of net weight of tea content. During the period February 1985 to November 1985, the Petitioners exported substantial quantities of tea and earned valuable foreign exchange to the tune of approximately Rs.10.20 crores. In view of the drawback rate fixed by the Respondent No.1, in terms of the Drawback Rules, the Petitioners were entitled to the drawback amount of Rs.47,72,525/- which was after scrutiny and verification, granted and paid to the Petitioners. 4 It appears that on 27.6.1986 the Petitioners made another application for fixation of rate of drawback in respect of tea exported. The Petitioners were in expectation that the said application would be considered in the same manner in which the earlier application was considered. However, whilst the said application was pending consideration, the Respondent No.1 issued a letter dated 19.1.1987 whereby it sought to retrospectively take away the right conferred on the Petitioners by rate letter dated 4.4.1986. Since the said action of the Respondent No.1 was, according to the petitioners, in violation of law, the Petitioners challenged the said action by way of filing Writ Petition No.992 of 1987 in this Court. This Court disposed of the said Petition by an order dated 24.4.1987. By which order the Respondents were restrained from enforcing orders incorporated in their communications dated 19.1.1987, 10.2.1987 and 13.3.1987 until the representation made by the Petitioners on 5 WP NO.2395 OF 2006 13.3.1987 was decided after a proper hearing and by a speaking order. 5 It seems that pursuant to the said order dated 24.4.1987, personal hearing was granted to the Petitioners on 2.11.1988. On the said date, the Petitioners sought time to submit written submission on 17.11.1988. Whilst the said proceedings were pending before Respondent No.1, the applications made by the Petitioners for fixation of brand rate numbering eight were rejected by the Respondents by communications/orders dated 27.8.87; 23.11.1987; 27.11.1987; 10.2.1988; 7.3.1988; 10.3.1988; 14.3.1988 and 28.3.1988. The said action again resulted in Petitioners filing Writ Petition No. 2611 of 1988 challenging the said communications/orders. The said Writ Petition was admitted, however, no interim reliefs were granted in the said Petition. The said Petition was finally heard and disposed of by judgment and order dated 11.3.2003 by which the Respondents were directed that the impugned communications be treated as show cause notices and the Respondents were directed to furnish to the Petitioners the material, if any, on which the reliance was placed by the Department. The Petitioners were granted eight weeks time to file their reply to the show cause notice. The Respondents were further directed to adjudicate the notices/communications after granting hearing to the Petitioners and to pass speaking orders on or before 31st August 2003. The Petitioners vide letter dated 6.8.2003 filed written submissions in respect of the issue arising in the said Writ Petition No.2611 of 1987. In terms of the said order dated 11.3.2003, the Respondents were to adjudicate the show cause notices by 30.8.2003. However, since the Respondents could not comply with the time limit stipulated by this Court, the Respondents had filed Notice of Motion No.110 of 2004 for seeking extension of time to comply with the directions as contained in the order dated 11.3.2003. In the said Notice of Motion, an order came to be passed by 6 WP NO.2395 OF 2006 the Division Bench of this Court on 15.3.2004 directing the Respondents to pass an order within six weeks from the date of the said order i.e. 15.3.2004 and accordingly the said Notice of Motion came to be disposed of. Though the original order dated 11.3.2003 mandated hearing to be granted to the Petitioners, the officer on Special Duty (Drawback) of the Respondents purported to pass an order on 15.4.2004 without affording a personal hearing to the Petitioners. This resulted in the Petitioners filing Writ Petition No.548 of 2005 challenging the said ex-parte order dated 15.4.2004 and the letter dated 12.8.2004 inter alia on the grounds mentioned in the said Petition. The said Writ Petition came to be disposed of by order dated 19.4.2005, by which order, the order dated 15.4.2004 came to be set aside and the Respondents were directed to pass a speaking order and time for passing speaking order was further extended by eight weeks. In terms of the said order dated 19.4.2005, the Respondents fixed hearing on 21.7.2005 on which day the Petitioner appeared through their advocate and solicitor before the 2nd Respondent on 21.7.2005 and made detailed submissions in the matter both on jurisdiction as well as on merits which were contained in the written submission dated 19.7.2005. The Respondents again filed a Notice of Motion No.396 of 2005 in writ Petition No.548 of 2005 for seeking extension of time till 31.8.2005 for complying the order of this Court dated 19.4.2005. By order passed in the said Motion, this Court granted further extension of time by six weeks to the Respondents as a last chance. The Petitioners, after the said order dated 23.8.2005, received a notice dated 24.8.2005 for fresh personal hearing on 31.8.2005. From the point of view of the present Petition it is relevant to note that the said notice refers to the order passed in Writ Petition No.548 of 2005 and grant of personal hearing to the Petitioners. Pursuant to the said notice of hearing, the Petitioners through their advocates and solicitors appeared before the second Respondent on 7 WP NO.2395 OF 2006 31.8.2005 and requested that the written submissions dated 19.7.2005 be treated as their submissions in the matter. The Respondents ultimately passed an order dated 30.9.2005 which was received by the Petitioners on 5.10.2005. By the said order, which is impugned in the present Petition, the Respondents rejected the applications of the Petitioners for fixation of brand rate of drawback for export of tea and confirmed the rejection letters dated. 27.8.1087; 23.11.1987; 27.11.1987; 10.2.1988; 7.3.1988; 10.3.1988 and 14.3.1988. As indicated above, it is the said order which is impugned in the present Petition. 6 It is required to be noted that the Respondents in terms of the order passed in Writ Petition No.2611 of 1988 were enjoined to dispose of the issue arising out of the said Writ Petition. The issue before the Respondents in terms of the order dated 11th March, 2005, never pertained to Writ Petition No.992 of 1987 and the order dated 24.4.1987 passed therein. In fact, till the said Writ Petition No.2611 of 1988, no effective steps were taken by the Respondents to comply with the said order dated 24.4.1987 passed in Writ Petition No.992 of 1987. It is further required to be noted that though the detailed submissions were filed by the Petitioners vide their letter dated 17.11.1988 in respect of the issue arising out of Writ Petition No.992 of 1987, no order was passed by the Respondents on the said issue. It was only after the said Writ Petition No.2611 of 1988 came to be disposed of by order dated 113.2003 that Petitioners received a communication dated 4.7.2003 from the Respondents by which communication the Petitioners were asked to file a further reply in connection with the issue arising out of Writ Petition No.992 of 1987 in order to decide the matter at the earliest. The Petitioners had objected to the said communication by their letter inter alia pointing out to the Respondents that proceeding with the issue in Writ Petition No. 8 WP NO.2395 OF 2006 992 of 1987 at such a belated stage would be contrary to the principles of natural justice and would also involve contempt of court on the part of the authorities. 7 Though the aforesaid conspectus of facts disclose that the hearing was only to be in respect of issues arising out of Writ Petition No.2611 of 1988 it is required to be noted that by the impugned order dated 20.9.2005 the issues in Writ Petition No. 992 of 1987 were also dealt with and by the impugned order revocation letters dated 19.1.1987 and 20.1.1987 issued in respect of brand rate letters No.(Bom.-305) dated 4.4.86 and brand rate letter (Cal-57) dated 22.7.86 were confirmed and accordingly recovery of the drawback amount with appropriate interest was ordered. It is further required to be noted that though no findings have been recorded in respect of the issues arising out of Writ Petition No.992 of 1987 in the operative part of the order directions as mentioned herein above have been issued in the operative part. 8 On behalf of the Respondents affidavit in reply has been filed by Mr.Agarwal, Assistant Commissioner of Customs dealing with the claims of and contentions raised in the present Petition to which affidavit in rejoinder has been filed by one Dilip Save on behalf of the Petitioners. 9 We have heard the learned counsel Mr. R G Sheth for the Petitioners and learned counsel Mr. P S Jetly for the Respondents. 10 The principal contention of the learned counsel for the Petitioners was that the issues involved in Writ Petition No.992 of 1987 were totally different and dis- similar to the issues involved in Writ Petition No.2611 of 1988, and therefore, the said 9 WP NO.2395 OF 2006 two issues could never have been clubbed together and decided. The learned counsel for the Petitioners submitted that in so far as Writ Petition No.992 of 1987 is concerned the same involved the challenge to the retrospective withdrawal of the drawback granted to the Petitioners, whereas in so far as Writ Petition No.2611 of 1988 is concerned, the same was as regards rejection of the Petitioners’ applications for fixation of brand rate. The learned counsel for the Petitioners further submitted that the impugned order passed is also in breach of the principles of natural justice inasmuch as the issues relating to Writ Petition No.992 of 1987 were included in the hearing which was as regards the issues in Writ Petition No.2611 of 1988, could never been decided without there being any reference to the same in the body of the impugned order except in the operative part. The learned counsel for the Petitioners submitted that there has been considerable delay in adjudicating the issues involved in Writ Petition No.992 of 1987. The said Writ Petition was decided by an order dated 24.4.1987 and the Petitioners were heard for the first time on 22nd November 1988 by the concerned officer of the Respondents, however, no order was passed. Thereafter the issue involved in the said Writ Petition was admittedly taken up for hearing which had commenced purusant to the order passed in Writ Petition No.2611 of 1988 and the extension of time that was granted to the Respondents to comply with the same. The learned counsel for the Petitioners submitted that the hearing which was held, ought to have been held in respect of the issues arising out of Writ Petition No.2611 of 1988 as the applications for extension of time were only in respect of the issues arising out of the said Writ Petition and never was there any mention of the issues arising in Writ Petition No.992 of 1987. He further submitted that the Respondents in deciding the issues arising out of Writ Petition No.992 of 1987 have thereby violated the principles of natural justice as no hearing was granted to the Petitioners in respect of the issues 10 WP NO.2395 OF 2006 arising out of the said Writ Petition No.992 of 1987. 11 Per contra, it is submitted by the learned counsel for the Respondents Mr.Jetly that the issues involved in Writ Petition No.992 of 1987 and the issues involved in Writ Petition No.2611 of 1988 are two sides of the same coin. The learned counsel for the Respondents submitted that the issues in Writ Petition No.992 of 1987 though pertaining to revocation of the drawback granted to the Petitioners with retrospective effect are related to the issues in Writ Petition No.2611 of 1988 inasmuch as the said Writ Petition is concerned, the issue is as regards rejection of the Petitioners’ applications for fixation of brand rate. He therefore submitted that underlying issue in both the Writ Petitions was therefore relating to fixation of brand rate regarding eligibility of drawback of excise duty paid on garden tea. The learned counsel for the Respondents submitted that the issue was therefore over-lapping as it pertained to applications for fixation of brand rate on drawback of tea exported by the Petitioners. The learned counsel for the Respondents submitted that the allegation of breach of principles of natural justice is totally unwarranted that the Petitioners were heard in respect of issues pertain to the applications for fixation of brand rate on drawback on export of tea and the written submissions filed by the Petitioners were also considered. Lastly he submitted in contending that the issues in Writ Petition No. 992 of 1987 and the issues in Writ Petition No.2611 of 1988 are different, the Petitioners are merely taking a technical plea rather than addressing the issues on merits. 12 Having heard the learned counsel for the parties, we now proceed to deal with the challenge raised in the Petition. 11 WP NO.2395 OF 2006 13 In the context of the challenge of the Petitioners, in our view, it would be gainful to reproduce the directions as contained in the operative part of the order dated 24th April 1987 passed in Writ Petition No.992 of 1987. The same reads thus :- “Respondents restrained from enforcing orders incorporated in their communications dated 19.1.1987, 10.2.1987 and 13.3.1987 until the representation made by petitioner No.1 on March 13, 1987 is decided after a proper hearing and by a speaking order. Rule in the above terms made absolute, with costs.” There is no dispute that the said Writ Petition was filed against the action of the Respondents in retrospectively withdrawing duty drawback granted to the Petitioners. Pursuant to the said order, hearing before the officer was fixed on 2.11.1988. However, the matter thereafter was never heard by the concerned officer of the Respondents. Whilst the said proceedings relating to the consideration of the issues arising in Writ Petition No.992 of 1987 were pending, the Petitioners were faced with eight communications whose dates have been mentioned in the earlier part of this Judgment. By the said communications the Petitioners applications for fixation of brand rate were rejected by the Respondents. This, as mentioned above, was resulted in Petitioners filing Writ Petition No.2611 of 1988. It appears that the said Writ Petition was admitted by this Court, however, no interim reliefs were granted. The said Writ Petition ultimately came to be disposed of in terms of the Minutes of Order dated 11.3.2003. By the said order, the impugned communications were to be treated as show cause notices in respect of the various periods covered by each of the said communications. The Respondents were also directed to furnish such material as would be sought to be relied upon by the Respondents. The Petitioners were directed 12 WP NO.2395 OF 2006 to file their written explanation to the show cause notices within eight weeks and the Respondents were directed to adjudicate upon the said show cause notices/communications after granting hearing to the Petitioners and to pass a speaking order on or before 31.8.2003. The said order dated 11.3.2003 reads thus :- “Parties to Petition have prepared minutes of order under Joint Signature. The same is taken on record and marked `X’ for identification. Petition stands disposed of in terms of minutes of order handed in and marked `X”. Rule made absolute as per minutes. No order as to costs.” The said Minutes of Order dated 11.3.2003 read thus :- “1 The impugned communications/orders dated 27.8.1987, 23.11.1987, 27.11.1987, 10.02.1988, 07.03.1988, 10.03.1988, 14.03.1988 and 28.03.1988 (Exhibits I, L, L-1 to L-5 and P to the Petition respectively) to be treated as Show Cause Notices in respect of the various periods covered by each of these communications. 2 Within 4 weeks hereof the Respondents to furnish to the Petitioners such material, if any, as may be sought to be relied upon by the Respondents. 3 The Petitioners to file their written explanation to the aforesaid Show Cause Notices within 8 weeks hereof. 4 The Respondents to adjudicate the aforesaid notices/communications after granting a hearing to the Petitioners and to pass a speaking order on or before 31st August, 2003. 5 Petition disposed of with no order as to costs.” Hence in so far as Writ Petition No.2611 of 1988 is concerned, the subject matter was the rejection of the applications of the Petitioners for fixation of brand rate contract. This was in contradistinction to the subject matter of Writ Petition No.992 of 1987 wherein retrospectively withdrawal of the drawback granted to the Petitioners 13 WP NO.2395 OF 2006 was under challenge. Since the Respondents, for some reasons, could not comply with the directions of adjudicating upon the said show cause notices, which were the subject matter of Writ Petition No.2611 of 1988 within the time stipulated in the order dated 11.3.2003, the Respondents had prayed for extension of time by filing Notice of Motion No.110 of 2004 which motion was allowed by this Court by order dated 15.3.2004 and period of six weeks was granted from 15.3.2004 for compliance of the order dated 11.3.2003 passed in Writ Petition No.2611 of 1988. Thereafter it appears that an order came to be passed on 15.4.2004, by the authorities which came to be challenged by the Petitioners by filing Writ Petition No.548 of 2005. The said Writ Petition came to be disposed of by setting aside the order dated 15.4.2004 as also the letter impugned in the said order dated 12.8.2004 and the Respondent No.2 therein was directed to give fresh personal hearing within eight weeks from the said date and pass an order in terms of the Minutes of Order dated 11.3.2003 passed in the said Writ Petition No.2611 of 1988. After the order dated 19.4.2005, which came to be passed in Writ Petition No.548 of 2005, the Petitioners received communication dated 13.7.2005 from the Respondent No.1 in its Ministry of Finance. What is relevant to note from the point of view of the present Petition is that in the said communication subject matter was the order passed in Writ Petition No.548 of 2005 and the Petitioners were asked to remain present before the concerned officer on 21.7.2005 at 11 A.M. The Petitioners accordingly by their communication dated 19.7.2005 replied the said communication and in the said communication the Petitioners have referred to Writ Petition No.548 of 2005 and