IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN WEDNESDAY, THE 11TH FEBRUARY 2009 / 22ND MAGHA 1930 OP.No. 34192 of 2002(U) ----------------------- PETITIONER(S): --------------- M/S. CHAKOLAS SPINNING & WEAVING MILLS LTD., KALAMASSERY-683 104, REPRESENTED BY ITS MANAGING DIRECTOR. BY SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR SMT.PRIYA MAHESH SMT.PRIYA MANJOORAN RESPONDENT(S): --------------- 1. THE UNION OF INDIA, REPRESENTED BY THE SECRETARY, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NEW DELHI-110 001. 2. DIRECTOR (DRAW BACK), MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, JEEVANDEEP BUILDINGS, PARLIAMENT STREET, NEW DELHI. 3. COMMISSIONER OF CUSTOMS, CUSTOMS HOUSE, COCHIN-682 009. 4. ASST. COMMISSIONER OF CUSTOMS (DRAW BACK DEPARTMENT) CUSTOMS HOUSE, KOCHI-9. ADV. SRI.P.S.SREEDHARAN PILLAI, SCGSC FOR R1TO4 SRI.JOHN VARGHESE, SCGSC FOR R1TO4 SRI.THOMAS MATHEW NELLIMOOTTIL,SC,CB EX FOR R THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 11/02/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: PETITIONER'S EXHIBITS: O.P.NO. 34192/2002 --------------------------------------------------------------- EXT.P1 TRUE COPY OF CIRCULAR DT. 2-12-1997. EXT.P2 CIRCULAR DT. 25-6-1999. EXT.P3 TRUE COPY OF APPLICATION. EXT.P3(a) DO. DO. EXT.P4 LETTER ISSUED BY R1 AND R2. EXT.P5(a) CHEQUE DT. 12-6-00. EXT.P5(b) CHEQUE DT. 28-6-2000. [TRUE COPY] P.S TO JUDGE. S. Siri Jagan, J. =-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-=-= O.P. No. 34192 of 2002 =-=-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-= Dated this, the 11th February, 2009. J U D G M E N T The petitioner is an exporter of viscose stable fibre fabrics. Under the EXIM policy, the petitioner is entitled to the benefits of the Duty Entitlement Pass Book (DEPB) Scheme, whereby exporters of specified goods would be entitled to refund of duty paid on the inputs which goes into the manufacture of the goods so exported. For the purpose of giving this benefit, a percentage of the FOB value of the exported goods is returned to the exporter as export incentive. For getting this benefit, the standard input /output norms (SION) have been prescribed, wherein for each item of export inputs eligible for the benefit of DEPB have been specified and only in respect of those specified inputs, the benefits under the DEPB Scheme would be applicable. In certain cases, the manufacturers use inputs not mentioned in SION. On representation from the industry, in respect of those inputs, exporters were allowed to claim duty draw back under the Customs and Central Excise Draw Back Rules, 1995. Consequently, Exts.P1 and P2 circulars were issued clarifying that export effected under the DEPB Scheme is also entitled for the benefits under the Draw Back Rules. In accordance with those circulars in respect of the inputs not mentioned in SION, the petitioner submitted applications in respect of 84 consignments one which application is produced as Ext. P3 with details of the other 83 consignments as Ext. P3(a). Pursuant thereto, brand rate for draw back was fixed and granted. Ext. P5 series of cheques were also issued to the petitioner. That was in 2000. Subsequently, by Ext. P6 order, the petitioner was informed that in view of Circular No. 39/2001-Cus dated 6-7-2001 and on re-examination of the petitioner's case, in the light of the same, it has been decided to revoke the brand rate draw back granted to the petitioner. The petitioner is O.P. No. 34192/2002 -: 2 :- challenging Ext. P6 in this original petition. 2. The petitioner submits that it may not be necessary to go into the contentions in detail in so far as the matter is covered by the decision of the Supreme Court in Union of India v. Arviva Industries (I) Ltd., [2007(209) E.L.T.5 (S.C)], which confirmed the Bombay High Court decision in Arviva Industries (I) Ltd. v. Union of India, [2004 (167) E.L.T. 135 (Bom.)], wherein it has been held that the said circular relied on in Ext. P6 which is produced by the petitioner as Ext. P7 is applicable only prospectively. The petitioner submits that in view of that decision, Ext. P6 is liable to be quashed in so far as the draw back sanctioned to the petitioner was prior to the date of Ext. P7, namely, 6-7-2001. 3. I have heard the counsel appearing for the Central Excise Department also. In the counter affidavit filed by the respondents, it is stated that the decision of the Bombay High Court as also an earlier judgment of the Gujarat High Court, which held against the department on the issue are pending in appeal before the Supreme Court in S.L.P.No. 2126/2005. In fact, the judgment of the Supreme Court in Arviva Industries' case covers that S.L.P also. In view of the said decision, in so far as the draw back granted to the petitioner was prior to Ext. P7 order, which has been declared to be prospective, Ext. P6 is quashed with consequential benefits to the petitioner. The original petition is allowed as above. Sd/- S. Siri Jagan, Judge. Tds/