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2021 (3) TMI 240 - HC - CustomsMEIS scheme - conversion of the EPCG shipping bill into the EPCG cum Drawback shipping bill - Striking down circular No.36/2010Cus dated 23.9.2010 (i.e. para 3(a) of this Circular) as ultra vires Section 149 of the Customs Act, 1962 and also ultra vires Articles 14 and 19(1)(g) of the Constitution of India - whether the Principal Commissioner committed any error in passing the impugned order? - HELD THAT:- There is no merit in the principal argument of Mr. Dave that in Section 149 of the Act, no time period has been prescribed and if in a substantive statutory provision of law, if no time period has been prescribed, then the CBEC could not have issued the circular providing for three months time period to make a request for conversion from the date of the LEO. Under Rule 3 of the Drawback Rules, a Drawback is allowed on the export of goods at such amount, or at such rates, as may be determined by the Central Government. Such rates determined by the Central Government are called “All industry rate”, because Drawback at such rates is allowed to all the exporters in the country without any conditions. This is because all the industry rates are determined by the Central Government on the basis of the general data collected from the industry about utilization of duty paid inputs, input services etc. While allowing such All industry rate of Drawback, no verification of the exported goods is required, and hence no verification is undertaken also by the Custom authorities. But there may be cases where the rate of Drawback has not been determined, and such cases are covered under Rule 6 - Where no All India rate of Drawback is determined in respect of any goods, the manufacturer/exporter has to apply within 3 months from the relevant date for fixation of Drawback rate in his individual case, and all the relevant facts including the proportion in which the materials or components or input services are used in the production or manufacture of goods and the duties paid on such materials or components or the tax paid on input services have to be submitted with such application as mandated under Sub Rule (1) of Rule 6. Thereafter, as laid down under Clause (b) of Rule 6(1), the proper Revenue Officer would make an enquiry and determine the amount or rate of Drawback in respect of such goods; which is the brand rate for that particular case. In the present case, no verification whatsoever of the goods or any examination of the exported goods is required, because the claim for Drawback is at the All industry rate, which is the common and general rate fixed by the Central Government for all exporters of the goods in the country. If the writ applicant herein had been claiming Drawback at the special brand rate, then the amendment of shipping bills by allowing conversion into Drawback shipping bill may not be possible only on the basis of the documentary evidence which was in existence at the time the goods were cleared for export. For fixing brand rate, examination of the goods and also verification of the goods as well as inputs, raw materials, input services etc. used for such goods would be necessary; and such verification would be impossible once the goods have been exported - On the value so assessed by the Custom officers, the calculation of Drawback at All industry rate is only an arithmetical exercise, which could be easily done on the basis of the documentary evidence (i.e. the export documents like shipping bill and export invoice) which was in existence when the goods were cleared for export. Since in the present case, the amendment of shipping bills by converting them into Drawback shipping bills is possible on the basis of the documentary evidence which was in existence at the time the goods were cleared for export and the benefit of Drawback at All industry rate of 1.5% of value of the exported goods is also possible to be allowed - the impugned circular to the extent of para 3(a) is ultra vires Articles 14 and 19(1)(g) of the Constitution of India as also ultra vires Section 149 of the Customs Act, 1962. The impugned order passed by the Principal Commissioner of Customs, Ahmedabad is hereby quashed and set aside - It is declared that the writ applicant is entitled to the drawback of ₹ 11,18,458/ being the principal amount with statutory interest as provided in Rule 14 of the Drawback Rules - application allowed.
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