IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated: 20-11-2008 Coram: The Honourable Mr.Justice M.JAICHANDREN W.P.No.7888 of 2003 SARAF TRADING CORPORATION Saraf House, P.O.Box No.570, Marar Raod, Wellington Island, Kochi-682 003 .. Petitioner. Versus 1.Union of India Rep. By its Secretary, Ministry of Finance, Department of Revenue, North Block, New Delhi-110 001. 2.The Chairman and Ex officio Spl. Secretary to Government of India, Ministry of Finance, Department of Revenue, North Block, New Delhi 110 001. 3.The Commissioner of Customs, Custom House, New Harbour Estate, Tuticorin-628 004. 4.The Assistant Commissioner Customs (Drawback), Custom House, New Harbour Estate, Tuticorin-628 004. .. Respondents. Prayer: Petition filed seeking for a writ of Certiorarified Mandamus, calling for the records of the fourth respondent pertaining to the Show Cause Notice bearing No.C.No.VIII/22/8/2002-DBK, dated 17.2.2003, and quash the same and direct the 1st and 2nd respondents to treat the drawback allowed for the exports effected under the Shipping Bills covered under the impugned Show Cause Notices as the rebate under Central Excise Act, 1944. https://hcservices.ecourts.gov.in/hcservices/ For Petitioner : Mr.Hari Radhakrishnan For Respondents : Mr.T.S.Rajamohan (SCGSC) O R D E R Heard the learned counsel appearing for the petitioner and the learned counsel appearing for the respondents. 2. This writ petition has been filed praying for a writ of Certiorarified Mandamus, to call for the records relating to the show cause notice, dated 17.2.2003, quash the same and to direct the first and second respondents to treat the draw back allowed for the exports effected under the shipping bills, covered under the impugned show cause notices, as the rebate under the Central Excise Act, 1944. 3. It has been stated that the petitioner firm is engaged in trading and export of tea, to various countries. The petitioner firm had exported 3,46,402.50 Kilograms of tea, vide twenty nine shipping bills, during the period, from December, 2000 to April, 2001 and claimed drawback at the rate of Rs.2/- per kilogram of tea exported. The drawback was sanctioned, on 31.5.2002 for Rs.6,40,197.00 for a quantity of 3,20,098.50 kilograms of Tea and on 12.7.2002 for Rs.52,608.00 for the remaining quantity of 26,304 Kilograms of Tea, by the Assistant Commissioner of Customs, Drawback, Customs House, Tuticorin, the fourth respondent herein. 4. While so, the petitioner firm had been issued with show cause notice bearing No.C.No.VIII/22/8/2002-DBK, dated 17.2.2003, calling upon the petitioner firm to show cause, as to why the amount of drawback to the tune of Rs.6,92,805/-, should not be recovered, under Rule 16 of the Customs and Central Excise Duty (Drawback) Rules, 1995. It has been stated that the show cause notice had been issued due to the reason that there was no rate of drawback in the Schedule appended to the Customs and Central Excise Duty (Drawback) Rules, 1995, effective from 1.6.2000. Since the drawback had been allowed to the petitioner firm the show cause notice has also proposed to recover the interest on the said amount of drawback and also to impose a penalty, under Section 117 of the Customs Act, 1962. 5. It has also been stated that the impugned show cause notice would result in substantial monetary loss to the petitioner firm if the amount of drawback allowed in favour of the petitioner firm is recovered and if the interest and penalty is imposed on the petitioner firm, as proposed in the show cause notice. Further, it would defeat the policy of the Government to provide export incentives for enhancing the exports from India. In such circumstances, the writ petitioner has preferred the present writ https://hcservices.ecourts.gov.in/hcservices/ petition before this Court, under Article 226 of the Constitution of India. 6. The main contentions of the learned counsel appearing on behalf of the petitioner are that the petitioner firm had made the drawback claims without having any intention to mislead or to misrepresent the matter. The drawback made by the petitioner firm had been sanctioned by the concerned customs authorities. However, the impugned show cause notice had been issued after a substantial delay, which is not due to the fault of the petitioner firm. Since the petitioner firm is not responsible for the sanctioning of the drawback amounts by the customs authorities concerned, the drawback amounts already paid, should not be recovered under Rule 16 of Customs and Central Excise Duty (Drawback) Rules, 1995, read with Section 142 of the Customs Act, 1962. Further, the petitioner firm would not be liable to pay any penalty for the alleged contravention of Section 147 of the Customs Act, 1962, read with Rule 12 of the Customs and Central Excise Duty (Drawback) Rules, 1995. 7. The learned counsel appearing on behalf of the petitioner firm had also submitted that the petitioner firm is entitled to claim rebate for the tea exported from the Central Excise authorities, even if the petitioner firm is not eligible for the drawback amount. The learned counsel for the petitioner had relied on the decision of the Supreme Court reported in Formica India Division Vs. Collector of Central Excise [1995(77) E.L.T. 511 (S.C.)] and a Division Bench of this Court in Commissioner of C.Ex., Coimbatore Vs. CEGAT, Chennai [2008(227) E.L.T 361 (Mad.), in support of his contentions. The learned counsel had also relied on a circular issued by the Ministry of Finance (Department of Revenue), Central Board of Excise and Customs, Government of India , in Circular No.489/55/99-CX, dated 13.10.99, to show that the `tea' exported by the petitioner firm is eligible for rebate of excise duty. 8. The learned counsel had also submitted that if the petitioner firm approaches the concerned authorities of the Central Excise Department for rebate on the tea exported by the petitioner firm, the claim could be rejected on the ground of delay. Since the Central Board of Excise and Customs is also shown as a respondent in the present writ petition, this Court may be pleased to issue a direction to the said Board to entertain the claim of the petitioner firm for rebate on the tea exported by it, even if it is found that the petitioner firm is not entitled to the drawback amounts already allowed in favour of the petitioner firm. 9. The learned counsel appearing on behalf of the respondents had submitted that the petitioner firm is not eligible for the drawback amount availed by the petitioner firm for the tea exported by it, since it had mis-declared the commodity under Sl.No.09.21 to avail the drawback benefits and even though there was no specific https://hcservices.ecourts.gov.in/hcservices/ rate of draw back fixed for `Pure Black Indian Tea' under Sl.No.09.21 of the table from 1.6.2000. 10. It was further stated that under Section 142 of the Customs Act, 1962, the collection of the duty short-paid, short-levied and erroneously refunded could be made. Further, if there is a delay in repaying the amount, interest and penalty could also be levied on the person or firm, which had wrongly availed the drawback benefits. Further, the petitioner firm had only challenged the show cause notice issued to it from the office of the Commissioner of Customs, Customs House, Tuticorin, issued under Section 124 of the Customs Act, 1962. Therefore, it is always open to the petitioner firm to show cause, as required under the impugned notice, along with the necessary documents, while putting forth its case. With regard to the claim or rebate from the Central Excise authorities, it is for the petitioner firm to approach the concerned authorities for claiming rebate for the tea exported by it by showing its eligibility. Since the writ petition is devoid of merits, it is liable to be dismissed. 11. In view of the averments made on behalf of the petitioner, as well as the respondents and in view of the submissions made by the learned counsels appearing on behalf of the parties concerned and on a perusal of the records available, this Court is of the considered that the petitioner has not shown sufficient cause or reason to interfere with the impugned notice, dated 17.2.2003. Further, this Court does not find it appropriate to direct the concerned respondents to entertain the request of the petitioner firm for rebate under the Central Excise for the tea said to have been exported. Since the petitioner firm has challenged only the show cause notice, issued under Section 124 of the Customs Act, 1962, this Court is not inclined to quash the same, at this stage. If the petitioner firm could show that it is eligible for the drawback benefits for the tea exported, the authorities concerned would consider the same and pass appropriate orders thereon. However, if it is found that the petitioner firm is not eligible for the drawback benefits, it would have to repay the amount availed by it as drawback amount. With regard to the claim of the petitioner firm for rebate from the Central Excise Authorities this Court is not persuaded to direct the concerned respondents to entertain the claim of the petitioner firm for such rebate. However, it is observed that it is open to the petitioner to approach the appropriate authorities to claim for the rebate from the concerned Central Excise authorities. It goes without saying that the appropriate authorities would decide the issue, on merits and in accordance with law. 12. While dismissing the above writ petition, it is observed that the petitioner firm is permitted to file its objections to the impugned show cause notice to the fourth respondent, within 15 days from the date of receipt of a copy of this order and on receipt of https://hcservices.ecourts.gov.in/hcservices/ the objections the fourth respondent is directed to pass appropriate order thereon, on merits and in accordance with law, within a period of eight weeks thereafter. The writ petition stands dismissed with the observations and directions as stated above. No costs. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar csh To 1. The Secretary, Union of India Ministry of Finance, Department of Revenue, North Block, New Delhi-110 001. 2.The Chairman and Ex officio Spl. Secretary to Government of India, Central Board of Excise and Customs, Ministry of Finance, Department of Revenue, North Block, New Delhi 110 001. 3.The Commissioner of Customs, Custom House, New Harbour Estate, Tuticorin-628 004. 4.The Assistant Commissioner Customs (Drawback), Custom House, New Harbour Estate, Tuticorin-628 004. W.P.No.7888 of 2003 jp(co) pmk/27.2.2009 https://hcservices.ecourts.gov.in/hcservices/