Texcomash Exports v. Commission of Customs

ORDER

31.10.2012 The writ petition in both these matters seek appropriate directions and the quashing of the order dated 26.03.1999 made by the Central Government in revision, partly allowing its claim for enhancing the FOB price, for the purposes of duty draw back to Rs.242/- per unit. The facts briefly are that the petitioner in both the proceedings had entered into five contracts for shipment of readymade '':c---- garments to the Russian Federation during the period 1993-94. The unit price in FOB terms, the exported goods are between Rs.l388/- and Rs.1422/- per set. The goods were shipped in 29 consignments. On the basis of the exports, the writ petitioner claimed duty draw back. The Assistant Commissioner who considered the application by order dated 27.07.1994, allowed the claim on a value determined at Rs.210/- per set. The petitioner's appealed to the Commissioner against this valuation was rejected. It, therefore, preferred revisional proceedings to the Central Government. The concerned Joint Secretary acting as the Revisional Authority on behalf of the Revenue, by order dated 26.03.1999 accepted the revision in part and enhanced the FOB value to Rs.242/- per set.

¶2Apparently during the pendency of the revision the petitioner was granted duty draw back on the value of Rs.21 0/- per set in accordance with the determination of the Assistant Commissioner. Subsequent to the order of the Central Government dated 26.03.1999 - it requested for the payment of the balance i.e. the difference between Rs.242/- finally determined as FOB value for the purpose of duty draw back and the amount originally granted and on the basis of which the duty draw back was actually paid. In the meanwhile, the petitioner had questioned the fixation of Rs.242/- as the proper FOB value itself by filing W.P. (C) No.48411999. The Central Government apparently did not disburse the balance i.e. difference between Rs.242/- and Rs.210/- or Rs.32/- per unit for the purpose of duty draw back. This triggered W.P. (C) No.12241/2009. During the pendency of the first writ proceeding, sometime in January, 2000 the customs authorities issued a show-cause notice alleging that the writ petitioner had unjustifiably claimed drawback to which it was not entitled. This show-cause notice was resisted. It culminated in an adverse order-in-original (against the petitioner) dated 28.11.2003, by the Commissioner of Customs. The petitioners felt aggrieved by the order of the Commissioner, which had inter-alia ruled against the eligibility and entitlement of the petitioner to the drawback itself. Its appeal to the CESTAT was allowed by an order dated 15.03.2005. That Tribunal rf I \..--.._ inter-alia held that the issue as to eligibility and entitlement had already been concluded heading collected against the customs authorities by the order of the Central Government dated 26.03.1999. The customs authorities, apparently aggrieved by the order of the CESTAT preferred an appeal inCA No.499/2006 under Section 129(e) of the Customs Act to the Supreme Court; that appeal is pending.

¶3It is argued on behalf of the writ petitioners that the question of entitlement having _been concluded, there was no reason for the Central Government to withhold the duty drawback. It is contended on its behalf by learned counsel that the methodology to be adopted for the purpose of determining value and granting duty drawback has now been concluded by the decision of the Supreme Court in Eicher Tractors Ltd. vs Commissioner of Customs, Mumbai 2000 (122) ELT 321

(SC) and Siddachalam Exports Pvt. Ltd. Vs. Commissioner of Central Excise, 2011 (267) EL T 3 (SC). It is urged that a proper application of the said methods of valuation would lead to acceptance of higher value which the petitioner has claimed i.e. Rs.l424/- per set, for the purpose of duty draw-back. Learned counsel for the customs authorities on the other hand urged that when the question or issue as to entitlement is itself at large and is pending consideration before the Supreme Court in an appeal preferred by it, it would neither be appropriate nor proper for this Court to comment or rule on the entitlement and the quantum of the duty draw-back to which the petitioner would be eligible. It is argued that such determination would have to await the final order of the Supreme Court and in these circumstances it would not be proper for this Court to make any direction.

¶4This Court has considered the submissions. The arguments of the revenue regarding the propriety of this Court entering into the debate and deciding the proper method of valuation appears to be sound and justified. Although the writ petitioner had succeeded before the Central Government through the order dated

26.03.1999 the fact remains that subsequently a show-cause notice was issued seeking to cancel that entitlement and recover the amount of drawback already tb --- --------- '-- ! -----:< I r- ' ' paid . No doubt the Revenue lost the appea l befo re the CESTA T but Ihal is nol the end of the matter beca use the Suprf me Court is sei zed of the basic question i.e. t ntil lemen t of the to the d(Jty drawback. In thes e circumstance s the only appropr iate order that this Court C.'lt make is to direct the authorities that in the event o f the disposa l of the appeal in the present petitioner' s favo ur, the most I correct method indicated in the tw1 j udg ments cited by Ihe writ petitioner has to be applied to ca lculated the amoUl1t of duty drawback. In other word s, in Ihe eventu al ity lite writ petitio ner s+ceeds and appea l being dismissed by the Suprenlt" Court the aUlhority (Asst. Comm issioner) shall quanti fy the correc l FOB vi'\ lu e for the purpose of duty in acco rdance with law declared by the Su preme Court in the two jud glllentk cited on behalf of the wr it petitioner . I S. The writ petition s are diSPlsed o f in t(:rms of this direction. The mane r sha ll be rema nded bac k 10 the asseSsing authority for disp osa l in the abo ve terms. All the rights and contenti ons are lefl ope n. S. RAVI NDRA BHAT . J ttl "-"1 . RV. EASWAR, J OCTOBER 3 1, 20 12 hs

', i '"' '-> & 16 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 4864/1999 MIS TEXCOMASH EXPORTS Through: versus UOI Through: + W.P.(C) 1224112009 TEXCOMASH EXPORTS Through: versus COMMISSION OF CUSTOMS Through: CORAM: ..... Petitioner Mr. A. K. Jain & Rajesh Jain, Advocates. ..... Respondent Mr. V. C. Jha and Ms. Sonia Sharma, Advocates. Mr. Satish Kumar, Sr. Standing Counsel with Mr. Chirag Bhatia, Advocate. ..... Petitioner Mr. A. K. Jain & Rajesh Jain, Advocates. ..... Respondent Mr. V. C. Jha and Ms. Sonia Sharma, Advocates. Mr. Satish Kumar, Sr. Standing Counsel with Mr. Chirag Bhatia, Advocate. HON'BLE MR. JUSTICE S. RA VINDRA BHAT HON'BLE MR. JUSTICE R.V.EASW AR o;o