:1: bgp IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.2932 OF 2002 1. M/s.Cotton Club Inc. Proprietorship firm having its registered office at 218, Commerce House, Nagindas Master Road, Fort, Mumbai – 400 023. 2. Shri Aditya Gupta, Proprietor of Petitioner No.1 Company residing at 3rd Floor Mitra Kunj, Flat No.4, Padder road, Opp. Jaslok Hospital, Bombay – 400 026. ..Petitioners Vs. 1. Union of India through the Joint Secretary, Ministry of Law, Justice and Company Affairs, Aayakar Bhawan, M.K.Road, Churchgate, Mumbai – 400 020. 2. The Secretary to the Government of India having his office at 4th Floor, Jeevan Deep Bldg. Parliament Street, New Delhi – 110 001. 3. The Additional Commissioner of Central Excise and Customs, Mumbai – IV having his office at New Central Excise Building, 115, M.K.Road, Bombay – 400 020. ..Respondents Mr.Sushant Murthy for petitioners. Mr.P.S.Jetly with Rajender Kumar for respondents. CORAM :- V.C.DAGA & S.J.KATHAWALLA,JJ. DATE :- 14TH JUNE, 2010 :2: JUDGMENT (PER : V.C.DAGA,J.) 1. This petition filed under Article 226 of the Constitution of India is directed against the order dated 22nd March,2002 passed by the Joint Secretary to the Government of India - respondent No.2 herein, whereby and whereunder the Revision Application filed by the petitioner was dismissed. THE FACTS 2. The facts giving rise to the present petition, in short are, as under: Petitioner No.1 is a proprietorship concern, interalia, engaged in the 100% export of cotton textiles manufactured by them, including bed-sets falling under Chapter 63 of Central Excise Tariff Act,1985. Petitioner No.2 is the proprietor of petitioner No.1 and erstwhile partner of the erstwhile partnership firm, who, at all relevant times had carried on business in the name and style of petitioner No.1. At the relevant time, petitioner No.1 was engaged in the manufacture and export the said goods falling under Chapter 63 of Central Excise Tariff Act. The petitioners had filed 5 rebate claims under Rule 12(1)(b) of the Central Excise Rules,1944 (“said Rules” for short) of Rs. 7,52,047/- in respect of the goods exported by them. 3. According to the petitioners, while claiming rebate under Rule 12(1)(b) of the said Rules, by mistake and through inadvertence of the employees of their Customs House Agent (“CHA” for short), also filed the Shipping Bills for Drawback. 4. Thereafter, on 21st January, 1998, before the Revenue could point out the mistake to the petitioners and soon after realisation of the mistake, they, on their own, paid back the rebate amount of Rs.7,52,047/- drawn by them along with interest thereon @ 20% of Rs.1,11,675/-. The petitioners submit that, after the refund of rebate amount drawn by them, the Revenue started investigation in the matter. In this connection a summons was served on the petitioners on 18th February, 1998. A Show Cause Notice Cum Demand Notice :3: dated 29th April, 1998 was issued to the petitioners alleging therein that the rebate had been claimed and received by them submitting false and incorrect declarations that the exports had been made without claiming duty drawback. The petitioners were, required to show cause as to why sum of Rs.2,80,468/- under the two additional rebate claims drawn by them should not be recovered in terms of Section 11A of the said Act, with interest thereon @ 20% p.a. together with penalty in the sum of Rs.10,32,515/- should not be imposed in terms of Section 11AC of the said Act? The petitioners, on 24th July,2000 replied to the aforesaid show cause notice. On 6th March, 2000, the Department sought to make substantive changes to the notice dated 5th May, 1998. 5. On 13th June, 2000 the said show cause notice was adjudicated upon by respondent No.3 vide Order-in-Original No.07/2000 and the demand in the sum of Rs.2,80,468/- in terms of the proviso to Section 11A(1) of the said Act read with Notification No.41/94-C.E. dated 22nd September, 1994 was confirmed. Respondent No.3 further directed payment of interest under Section 11AB of the said Act at the applicable rates. In addition to this respondent, No.3 also imposed penalty of Rs.10,32,515/- in terms of the provisions of Section 11AC of the said Act read with Rule 173 Q(1) and Rule 209 of the said Rules on petitioner No.1 with penalty of Rs.1,00,000/- on petitioner No.2. 6. Aggrieved thereby, petitioner filed an appeal to the Commissioner of Central Excise (Appeals), who by an Order-in-Appeal dated 26th July, 2001 upheld the order passed by respondent No.3 while rejecting the appeal filed by the petitioners. 7. The petitioners, aggrieved by the aforesaid order of Commissioner of Central Excise (Appeals), filed Revision Application before respondent No.2. The respondent No.3 heard the petitioners on 19th February, 2002, and :4: thereafter by an order No.21/22/2002 dated 22nd March, 2002 rejected the said revision application filed by the petitioners. 8. Aggrieved by the aforesaid order, the petitioners have invoked the writ jurisdiction of this Court under Article 226 of the Constitution of India. SUBMISSIONS: 9. In support of his submission, learned Counsel for the petitioner would submit that respondent No.3 failed to consider the fact that the shipping bills for drawback had been filed through inadvertence of the employees of the petitioners CHA and that there was no intention on the part of the petitioners to claim double benefit of rebate and drawback. That the said amount was paid back by the petitioners on 21st January, 1998 and the very next day i.e. 22nd January, 1998 they received summons from the Revenue. It is submitted that petitioner No.2 had categorically stated in the declarations that the rebate claimed by petitioner No.1 were erroneously claimed. The learned Counsel for the petitioners submit that the original notice was issued to the applicants without invoking the proviso (1) to Section 11A of the said Act and thereafter, the Department issued a corrigendum dated 16th March, 2000 invoking the said proviso. It is, thus, submitted that a corrigendum can be issued only to correct clerical or typographical errors or the errors apparent on the face of record and not to bring about substantive change in the show cause notice which was already issued. It is, thus, contended that the corrigendum to the impugned notice is also beyond the scope of the said Act. 10. According to learned Counsel for the petitioners, the petitioners did not make any false declaration regarding non-availment of duty drawback and/or non-availment of rebate. That these declarations were made on account of bonafide errors and without any intention to claim wrongful or illegal gain. :5: 11. It is further submitted that the consolidated penalty has been imposed by way of the impugned notice and such consolidated penalty is uncalled for and not sustainable in law. The petitioners have paid back the rebate amount much before the issuance of the show cause notice and, therefore, no penalty was called for. Finally, it is contended that the impugned order has the effect of demanding the amounts without authority of law and/or depriving the petitioners of their lawful property in breach of legal provisions. 12. Learned Counsel for the petitioners urged that insofar as the rebate and drawback claim in respect of AR5 No.71/22.10.96 appearing at Sr.No.6 of Annexure-A to the notice is concerned, the same was allowed for export by the proper officer on or about 22nd October,1996 i.e. much before the amendment of Rule 12 vide Notification No.49/96-Cus regarding non availment of rebate claim of duty paid on the inputs in respect of exports made under claim for drawback. According to him, the shipment was effected on the date on which the Notification was promulgated. In his submission, the date of removal for the purpose of export is the date of clearance of the goods for export from the factory on the basis of AR5 and, therefore the said Notification did not come in the way of the Petitioners in claiming drawback as well as rebate on the said consignments exported by them. 13. As regards rebate claim and drawback in respect of AR5 No. 80/26.11.96 covered by consignment at Sr.No.7 annexed to the Annexure-A to the notice is concerned, it is submitted that the Certificate dated 20th March, 1998 issued by the Assistant Commissioner (Customs) showing that the drawback had not been claimed by the petitioners on the said consignment ought to have been accepted and that, their claim for rebate under Rule 12(1) (b) of the said Rules in respect of the said consignment ought to have been held valid and subsisting. :6: 14. Without prejudice to the aforesaid contentions, learned Counsel for the petitioners submits that assuming though not admitting that the Revenue is right insofar as first five items shown in Annexure-A are concerned, however, to the extent of last two items i.e. 6th and 7th shown therein, the impugned order is bad and illegal as such liable to be quashed and set aside. PER CONTRA: 15. Mr.Jetly, learned Counsel for the respondent submits that the petitioners had claimed and obtained an amount of Rs.10,32,515/- as rebate in seven rebate claims. The then Assistant Commissioner of Central Excise, Division G-I Mumbai-IV had sanctioned the rebate claims on the basis of documents submitted by the petitioners. It is further submitted that the petitioners had claimed and received rebate claim under Rule 12(1)(b) of the Central Excise Rules,1944 by submitting false and incorrect declaration in Annexure-III that the export had been made without claiming duty drawback, especially when the petitioners had already claimed and received duty drawback under Rule 13 of the Customs and Central Excise Duty Drawback Rules,1995 on the same consignments by submitting incorrect and false declarations to the Customs Drawback authorities saying that the exports had not been made by them under claim for rebate of duty under Rule 12. 16. Mr.Jetly pointed out that during investigation, the statements of Mr.Aditya Gupta, partner of petitioner No.1 were recorded and that he had confessed and admitted the fact that both rebate of Central Excise Duty under Rule 12(1)(b) of the Central Excise Rules,1944 and Drawback of duty under Rule 13 of the Customs and and Central Excise Duties Drawback Rules,1995 had been claimed by them by filing false and incorrect declarations and that had been received by them. A show cause notice dated 5th May, 1998 after due investigation was issued to petitioners for recovery of Rs.2,80,468/- along with interest @ 20% on the said amount under Section 11A and 11B of the Central Excise Act,1944 read with Notification No.41/94 dated 22nd September, 1994. :7: 17. Mr.Jetly also tried to support the findings with regard to item Nos.6 and 7 reflected in Annexure-A to the show cause notice and prayed for dismissal of the petition. CONSIDERATION: 18. Having heard both parties, so far as first five (5) items shown in Annexure-A to the show cause notice is concerned, the petitioners have categorically admitted erroneous claim setup by them. The admission is unequivocal and the theory of mistake and/or erroneous claim by the employees of CHA has been rightly rejected by both the authorities below. Under these circumstances, with respect to first five items referred herein, no fault can be found with the finding of fact recorded by both the authorities below. To that extent, the impugned orders are liable to be confirmed. 19. So far as item Nos.6 and 7 appearing in Annexure-A to the notice are concerned, the submissions made by the learned Counsel for the petitioners deserves acceptance. So far as item No.6 is concerned, before amendment to Rule 12 by Notification No.49/96-Cus, the goods were cleared though the export was made subsequently. As stated, the goods were removed from the factory for export on the basis of AR5. Under these circumstances, the findings recorded by both the authorities below on this count cannot be sustained. So far as item No.7 reflected in Annexure-A to the show cause notice is concerned, the Certificate dated 20th March,1998 issued by the Assistant Commissioner (Customs) was produced, showing that the drawback was not claimed by the petitioners on the said consignment. The said certificate could not have been rejected by the authorities below. Therefore, claim for rebate under Rule 12(1)(b) of the said Rules in respect of the said consignment is valid and subsisting. Once the certificate is produced, then it cannot be said that the petitioners have claimed the drawback. The petitioners also took :8: a stand that they have not claimed drawback. There is no other material available on record to rebut the Certificate dated 20th March,1998 issued by the Assistant Commissioner (Customs). Under these circumstances, the adverse findings recorded against the petitioners on this item with regard to consignment at Sr.No.7 of the Annexure-A annexed to the show cause notice cannot be sustained. 20. In the aforesaid view of the matter, findings with respect to item Nos.6 and 7 appearing in Annexure-A to the show cause notice i.e. the demand to the extent (payment of Rs.1,30,450/- plus (+) Rs.1,50,018/-) of Rs.2,80,468/- is liable to be quashed and set aside. Once, the demand to the extent of Rs. 2,80,468/- is set aside, appeal is liable to be allowed to this extent. As a consequence, the penalty imposed will have to be reduced in proportion to the reduction in demand set up by the Revenue against the petitioners. Considering in this backdrop, the penalty imposed on the petitioners is liable to be reduced. As a consequence thereof, the penalty imposed on petitioner No.1 in the sum of Rs.10,32,515/- is reduced and stands substituted with that of Rs.7,52,047/-. Order accordingly. 21. In the result, Rule is partly made absolute in terms of this order with no order as to costs. (S.J.KATHAWALLA,J.) (V.C.DAGA,J.)