IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 3.12.2009 CORAM THE HONOURABLE MR.JUSTICE R.SUDHAKAR Writ Petition No.5871 of 2006 M/s.CPS Textiles (P) Ltd., represented by its Managing Director K.S.Venkatesh, Lakshmi Garden, Kangayam Road, Tirupur-641 604. ... Petitioner vs. 1.Joint Secretary, Government of India, Ministry of Finance, (Department of Revenue), 14, Hudco Vishala Buildings, B Wing, 6th Floor, Bhikaji Cama Place, New Delhi-110 066. 2.Commissioner of Customs (Appeals), Custom House, No.33, Rajaji Salai, Chennai-600 001. 3.Deputy Commissioner of Customs (Drawback), Air Cargo Complex, Meenambakkam, Chennai-600 027. 4.Commissioner of Customs, Air Cargo Complex, Meenambakkam, Chennai-600 027. ... Respondents Writ Petition is filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorarified Mandamus, calling for the records of the first respondent culminating in the order No.333-334/2005 dated 21.11.2005 and quashing the same and direct the third respondent to grant drawback to the petitioner company as claimed. https://hcservices.ecourts.gov.in/hcservices/ For Petitioner : Mr.Suresh Kumar For Respondents : Mr.Peter Gunasekaran, Central Government Standing Counsel ----- O R D E R The Writ Petition is filed praying to issue a Writ of Certiorarified Mandamus, calling for the records of the first respondent culminating in the order No.333-334/2005 dated 21.11.2005 and quashing the same and direct the third respondent to grant drawback to the petitioner company as claimed. 2. Writ Petitioner company is engaged in manufacture and export of Knitted Garments. According to the statement in the affidavit filed in support of the writ petition, petitioner company exported Poly Acrylic/Wool/Lycra Blended Knitted Garments under the cover of Shipping Bill No.2499666 dated 31.8.2002. After completion of the exports, petitioner company claimed drawback on the export of the goods. Third respondent sanctioned and granted the drawback in a sum of Rs.1,19,102/- as claimed. Thereafter, on 19.11.2003, the third respondent issued notice/letter stating that excess drawback was claimed and paid due to wrong classification and called upon the petitioner to repay the excess amount of Rs.1,00,142/- within fifteen days from the date of receipt of the notice/letter. Petitioner submitted a reply on 29.12.2003 to the said notice/letter. Thereafter, the Assistant Commissioner(Drawback)ACC in his proceedings F.No.TA/Genl./203064/2003-04/DBK-ACC dated 5.1.2004 gave the details as to how the excess amount is paid towards the drawback claim. According to the petitioner, the goods exported by the petitioner company are Poly Acrylic, Wool, Lycra Knitted Garments. As per the Drawback Shipping Bill, the export goods were classified under Serial No.61.09/61.01 of the Drawback Schedule 2002-2003 at the rate of 12% of the FOB value. 3. According to the Department, the goods exported are blended knitwear containing Poly Acrylic/Wool/Lycra with or without natural fibres and would merit classification under Serial No.60.07 entitled to drawback only at the rate of 12/- per kg. In view of the same, the excess drawback amount was claimed. An opportunity of personal hearing was granted. In the proceedings dated 5.1.2004, the details of the working sheet was also enclosed. Petitioner submitted a reply dated 19.1.2004 to the third respondent. The third respondent passed the Order-in- https://hcservices.ecourts.gov.in/hcservices/ Original No.263/2004 in F.No.TA-Genl./203064/2003-04-DBK ACC dated 19.5.2004. The third respondent came to the conclusion that the goods as exported by the petitioner would merit classification under Serial No.60.07 and is eligible for the drawback at Rs.12/- per kg only. For the reasons contained in the proceedings dated 5.1.2004, the third respondent confirmed the demand of Rs.1,00,142/- and passed the following order:- "In view of this I confirm the demand amount of Rs.1,00,142/- from the date of issue of demand notice. I also order the exporter to pay the applicable interest on the said amount on expiry of 60 days from the date of issue of demand notice till the date of payment of the said amount." 4. Aggrieved by the said order passed by the third respondent, the Deputy Commissioner (Drawback), petitioner filed an appeal to the second respondent, the Commissioner of Customs (Appeals). The second respondent upheld the finding of the third respondent on merits rejecting the petitioner's plea. The reasoning of the Commissioner of Customs(Appeals), the second respondent, based on the factual details of the drawback claim, will be useful for deciding the present issue and the relevant portion is set out hereunder:- "I have carefully gone through the records of the case and the submissions of the appellants. The short question before me to decide is whether the goods exported by the appellants are classifiable under heading 61.09/61.01 or 60.07 of the drawback schedule. The admitted fact of the case is that the appellants had exported garments described as 77% poly acrylic 19% wool 4% lycra Knitted T-Shirts with hood and 77% poly acrylic 19% wool 4% lycra knitted sweat shirts vide the Shipping Bill No.2499666/31.08.2004 and claimed duty drawback under heading 61.01/61.09 which was sanctioned to them as they claimed. It is clear from the description provided by the exporter themselves that these are knitted garments made up of blended yarns having 77% poly acrylic 19% wool and 4% lycra. In other words, the said exported garments were only blended knit wears. For appreciation of the classifications and description shown under heading No.60.07, 61.01 and 61.09 as given in the drawback schedule 2002-03, the same is reproduced below:- https://hcservices.ecourts.gov.in/hcservices/ SERIAL/ SUB SERIAL NO. DESCRIPTION OF GOODS RATE OF DRAWBACK ALLOCATION CUS. C.Ex. 60.07 Blended Knitwears containing wool/ Acrylic/Nylon/ Polyester fibre/ Viscose fibres/Linen/ Cotton with or without other natural fibres like Mohiar, Angora etc., when CENVAT facility has not been availed Rs.12.00 (Rupees twelve only) per kg. All Central Excise 61.01 Knitted Shirts/ Blouses/T-Shirts/ Tops, all sorts, when CENVAT facility has not been availed. 12% (twelve percent only) of f.o.b. value subject to a maximum of Rs.40.00 (Rupees forty only) per piece 4.55% 7.5% 61.09 All other knitwears and articles of hosiery made of cotton/polyster/ cellulosic yarn or knitted fabric when CENVAT facility has not been availed. 11.5% (eleven point five per cent only) of f.o.b. Value subject to a maximum of Rs.35.00 (Rupees thirty five only) per piece. 4% 7.5% It is abundantly lucid from the heading description depicted supra that the Sl.No.60.07 specifically covers blended knitwears. Per Contra, the Sl.No.61.01 of the drawback schedule is generic in nature and covers knitted garments of all sorts. Similarly, the heading 61.09 encompasses within itself knitwears and hosiery articles made up of specific materials such as cotton, polyester, cellulosic yarn etc. Going by the nature of the subject exported goods that these were blended knitted garments, the same are https://hcservices.ecourts.gov.in/hcservices/ rightly classifiable under heading 60.07 of the drawback schedules. The order of the lower Authority is thus sustainable to this extent." 5. The Commissioner of Customs (Appeals), however, set aside the claim for interest stating that there was no demand for interest in the notice. The writ petitioner exporter filed an appeal to the first respondent in terms of Section 129DD of the Customs Act, 1962 challenging that portion of the order rejecting their plea that the claim for drawback was rightly made and granted. The revenue also filed an appeal challenging that portion of the order of the Commissioner of Customs (Appeals) rejecting the Department's claim for interest. Both the revisions were taken up together and disposed off by the first respondent by a detailed common order dismissing the appeal filed by the writ petitioner exporter and allowing the appeal filed by the revenue insofar as interest is concerned. Aggrieved thereby, the present writ petition has been filed by the exporter. 6. Thiru Suresh Kumar, learned counsel appearing for the writ petitioner exporter submitted his arguments as follows:- (i) In the Drawback Shipping Bill, it has been clearly stated that the goods are Knitted Sweat Shirts and Knitted T-Shirts with Hood. As per Drawback Schedule 2002-2003 Knitted T- Shirts/Blouses/T-Shirts/Tops fall under Serial No.61.01 and the Drawback eligible will be 12% of the F.O.B. value. In view of the description contained in the Shipping Bill, the specific entry 61.01 alone will apply to the goods exported under Drawback Shipping Bill. He stated that Serial No.60.07 relates to all types of blended knitwears containing wool/Acrylic/Nylon/Polyester Fibres/Viscos Fibres/Linen/ Cotton. Therefore, it is a generic entry. In the description as per the Drawback Shipping Bill, it is specifically mentioned as "Knitted Sweat Shirts and Knitted T-Shirts with Hood" and as per Drawback Schedule 2002-2003, it will fall only under Serial Nos.61.01/61.09. (ii) He submitted that in respect of another exporter, the Commissioner of Customs (Appeals), Coimbatore has taken a view that the exported goods, viz., Cotton and Cotton Viscose Knitted T-Shirts will fall under the Heading 61.01 and not under 60.07 as claimed by the Department and such order has not been challenged by the Department to the knowledge of the petitioner. (iii) Assuming without admitting that the view taken by the Department in the present case that the goods will fall under Serial No.60.07 of the Drawback Schedule, in view of the different view taken by the Commissioner of Customs (Appeals), Coimbatore, it is clear that within the Department, there are two https://hcservices.ecourts.gov.in/hcservices/ views insofar as the classification is concerned and therefore, the one which is favourable to the assessee should be preferred. Learned counsel for the petitioner exporter relied upon the decisions in Sun Export Corporation – vs. - Collector of Customs, Bombay reported in 1997 (93) E.L.T. 641 (S.C.) and also Collector of Customs, Madras - vs. - Lotus Inks reported in 1996(87) E.L.T. 580 (S.C.). (iv) Insofar as interest is concerned, learned counsel for the petitioner exporter submitted that in the notice, demand for interest is not claimed in terms of Section 75A(2) of the Customs Act, 1962, though there is a specific provision for interest. The Department, having not claimed interest in the demand notice, are not entitled to the same. 7. Counter-affidavit has been filed on behalf of the respondents 3 and 4. Thiru Peter Gunasekaran, learned Central Government Standing Counsel appearing for the Department reiterated the stand taken by the Department in the counter- affidavit and submitted his arguments as follows:- (i) The order of the first respondent is a well considered order on the merits of the case. He pointed out that the description of the goods exported under Drawback Shipping Bill as per the Drawback Schedule, will fall only under the Serial No.60.07, a specific entry, whereas the claim of the petitioner under the Serial No.61.01/61.09 is the generic entry as it applies kinds of goods, like Knitted Sweat Shirts, Knitted T-Shirts, Tops, etc. (ii) He submitted that in terms of Section 75A(2) of the Customs Act, 1962, on a claim for excess payment of Drawback, the interest payable is automatic as per the provision of the Act and no separate demand need be issued. 8. On the question of classification of goods, two relevant aspects that have to be considered are the Drawback Shipping Bill and the Invoice that had been furnished by the writ petitioner exporter to cover the export goods. This will throw light on the nature of the classification which is in dispute. In the Drawback Shipping Bill, it has been clearly stated that the goods are Knitted Sweat Shirts containing 77% Poly Acrylic, 19% Wool and 4% Lycra. Insofar as Knitted T-Shirt with Hood is concerned, it contains 77% Acrylic, 19% Wool and 4% Lycra. This is the same description in the Invoice. The Commissioner of Customs (Appeals) has noticed that the writ petitioner exporter has described the goods as Knitted Garments made up of blended yarns in the proportion mentioned above. Therefore, the goods are blended knitwear and falls within the specific description under Serial No.60.07. https://hcservices.ecourts.gov.in/hcservices/ 9. In the present case, the writ petitioner exporter has clearly stated in the Drawback Shipping Bill as well as the Invoice, the description of the goods and the percentage content of the blend of the knit wear. Therefore to state that the goods will fall under Serial No.61.01/61.09 is incorrect. The goods admittedly are blended knitwear containing of Poly Acrylic/Wool/Lycra in different proportions and fall correctly as per the description under Serial No.60.07. In view of the description given by the writ petitioner in the Invoice and the Shipping Bill there can be no doubt that the reasoning of the Department that the goods will fall under Serial No.60.07 is correct. There can be no manner of doubt insofar as the classification of the goods as determined by the Department. The description of the goods as per the documents submitted along with the Shipping Bill will be a relevant criteria for the purpose of classification, if not otherwise disputed on the basis of any technical opinion or test. The petitioner cannot plead that the exported goods should be classified under different headings contrary to the description given in the Invoice and the Shipping Bill which have been assessed and cleared for export. The concurrent findings by the Authorities on facts with regard to the classification of the goods, needs no interference by this Court. 10. The reliance placed on the reasoning of the Commissioner of Customs (Appeal), Coimbatore in his order dated 12.12.2006 made in Appeal No.20 of 2006 will be of no relevance to the present case only because the Department has not preferred an appeal against the said decision. The finding of the Commissioner of Customs (Appeal), Coimbatore will not bind this Court, when the merit of the claim is before this Court. However, I find that the goods exported in that case under drawback claim are Cotton and Cotton Viscose Knitted T-Shirts which also finds place in Serial No.60.07. Blended Knitwear of cotton fibre will fall under Serial No.60.07 and not 61.01 as held by the Authority. I am unable to accept the reasoning in that case. 11. The claim for Drawback under Serial No.61.01 will apply only in case where the goods do not fall under Serial No.60.07. When the description of the goods in the present case clearly satisfy the requirement of Serial No.60.07 of the 2002-2003 Drawback Schedule as Blended Knitwear containing various percentage of Wool, Poly Acrylic, Polyester Fibre, etc., the petitioner's plea cannot be sustained. 12. The decision of the Apex Court in Sun Export Corporation case (cited supra) stating that if two views are possible in classification of goods, the one in favour of assessee should be taken, will not be applicable to the facts of the present case, as there is no ambiguity or another view in the https://hcservices.ecourts.gov.in/hcservices/ classification of the goods which are subject matter of the Drawback claim. All the Authorities have concurrently held that the goods fall under Serial No.60.07 of the Drawback Schedule 2002-2003. There is no ambiguity in the classification as held by the Department. In such view of the matter the two decisions relied upon by the petitioner will not be applicable to the facts of the present case. Hence the plea on classification of goods as upheld by the respondent Authorities stands confirmed and the writ petitioner's plea stands rejected. 13. Insofar as the interest is concerned Section 75A(2) of the Customs Act, 1962 reads as follows:- "(2) Where any drawback has been paid to the claimant erroneously or it becomes otherwise recoverable under this Act or the rules made thereunder, the claimant shall, within a period of two months from the date of demand, pay in addition to the said amount of drawback, interest at the rate fixed under section 28-AB and the amount of interest shall be calculated for the period beginning from the date of payment of such drawback to the claimant till the date of recovery of such drawback." On reading of Section 75A(2) of the Customs Act, it is clear that when the claimant is liable to pay the excess amount of drawback he is liable to pay interest as well. The section provides for payment of interest automatically along with excess drawback. No notice need be issued separately as the payment of interest become automatic, once it is held that excess drawback has to be repaid. 14. For all the above said reasons, I find no merit in the writ petition. Accordingly, writ petition is dismissed. No order as to costs. ts Sd/- Asst. Registrar //True Copy// Sub Asst. Registrar https://hcservices.ecourts.gov.in/hcservices/ To 1.The Joint Secretary, Government of India, Ministry of Finance, (Department of Revenue), 14, Hudco Vishala Buildings, B Wing, 6th Floor, Bhikaji Cama Place, New Delhi-110 066. 2.The Commissioner of Customs (Appeals), Custom House, No.33, Rajaji Salai, Chennai-600 001. 3.The Deputy Commissioner of Customs (Drawback), Air Cargo Complex, Meenambakkam, Chennai-600 027. 4.The Commissioner of Customs, Air Cargo Complex, Meenambakkam, Chennai-600 027. + 1 cc to Mr. S.Murugappan, Advocate SR No.66329 + 1 cc to Mr. A.P. Petergunasekaran, Advocate SR No.65896 RJ(CO) SR/15.12.2009 Order in W.P.No.5871 of 2006 https://hcservices.ecourts.gov.in/hcservices/