TMI Blog2010 (2) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... Mitra, Advocate, for the Petitioner. S/Shri S.K. Dubey, Ritesh Kumar, Akshay Singh, Vanshdeep Dalmia, Abhishek Kumar, Satish Aggarwala with Ms. Hrishika Pandit, Advocates, for the Respondent. [Order]. - The petitioner which is an Export Oriented Unit ('EOU') having its office at Ansal Bhavan, Kasturba Gandhi Marg, New Delhi challenged the impugned order dated 15th/16th February, 28th February, 19th April and 18th September, 2006 issued by the Respondents seeking to recover a sum of Rs. 3,22,91,926/- stated to be the amount of duty drawback paid to it in excess. 2. In terms of a letter of permission dated 18th May, 1999 the petitioner was approved for manufacture and export of sesame seeds in terms of the Export and Import Policy ("Exim Policy") for the period 2002-07. The petitioner states that its approval was upto 2011. 3. According to the petitioner certain concessions are given to exporters operating from the EOUs to enable them to compete at the international level. Goods manufactured by the petitioner, the raw material whereof is sourced from the Domestic Tariff Area ('DTA') are eligible to the benefit of duty drawback. The petitioner claims that it is entitled f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Policy. (iii) That the duties claimed were based on the duties chargeable based on duty confirmed by Federation of Indian Export Organisation (FIEO) vide their letter No. FIEO/EP.10(2)/(04) dated 16-6-2004 (Annexure-I). (iv) That although the duty paid would be shown as Nil, the claims were based not on the actual import duty to be paid but on the deemed import price worked out for the purposes of parity for deemed imported goods to cater to the needs of EOU. (v) The petitioner was not required to submit any bill of entry/import invoice nor any duty paying documents as queried." 6. It is stated in para 15 of the writ petition that "since the petitioner has exported the sesame seeds therefore it had claimed the duty drawbacks in respect of custom duty leviable on imports of sesame seeds." It is claimed further that the petitioner is "entitled for duty drawback of customs duty as applicable under the custom tariff irrespective of whether the seeds were sourced from actual import by paying import duty or the same were sourced from the domestic market." The petitioners claimed that they have already been granted deemed export drawback by DGFT on high speed diesel ('HSD') on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The petitioner was reminded that it had furnished a declaration/undertaking signed by it granting "immediate refund of the amount of drawback obtained... in excess and any amount/rate which may be re-determined by the Government as a result of post verification." The petitioner made a representation dated 2nd March, 2006 which was rejected on 19th April, 2006 by the DGFT. A further representation dated 21st April, 2006 was rejected by a letter dated 1st May, 2006 issued by the Joint Development Commissioner, NSEZ, once again raising a demand of Rs. 3,22,91,926/-. This was reiterated by a further demand to the same effect dated 18th September 2006. 9. On 28th September, 2006 the Petitioner was again informed by the Respondents that sesame seeds were not entitled to any duty drawback benefits as duty incidence on the same cannot be established and therefore the duty drawback claims forwarded for the year 1st April, 2003 to 30th September, 2003 and 1st October, 2003 to 31st March, 2004 were inadmissible. It was in the above circumstances that the present petition has been filed. 10. On 8th November, 2006 while directing notice to issue Respondents an interim order was passed rest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e form to be endorsed by the supplier's banker whereas the petitioner's form had been endorsed by its own banker. No response had been received from petitioner's banker SBI for the clarification sought. Along with the counter affidavit the Respondents enclosed letters dated 3rd January, 2007 and affidavits dated 31st January, 2007 issued by M/s. Amee Traders and M/s. Chandarana Brothers both of Rajkot stating inter alia that they had not prepared the disclaimer certificates produced by the petitioner although the signatures shown therein was similar to theirs. It was staled that since the sesame seeds were purchased from the local mandi it was not possible to provide any customs duty documents. The Respondents have with the counter affidavit also enclosed a letter dated 3rd January, 2007 of the Agricultural Produce Market Committee (APMC), Rajkot has been enclosed stating that to the best of its knowledge "there is no import of sesame seeds into the State of Gujarat as the State has abundant product of sesame seeds locally grown." 13. In the rejoinder affidavit of the petitioner it is inter alia sought to be contended that a criminal case filed by M/s. Amee Traders against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 28, Sector 9A, Chandigarh and also from taking any action to recover the amounts due. The petitioner was also directed to maintain status quo as regards the title in the properties. 16. Detailed written submissions have been filed by the petitioner. The submissions of Mr. Arjun Mitra, learned counsel for the petitioner and Mr. S.K. Dubey, learned counsel for the Respondent Union of India have been heard at great length. 17. Apart from reiterating the submissions already noted hereinbefore, the learned counsel for the petitioner submitted that as long as the EOU purchases goods from the DTA suppliers and carries out the manufacturing activity as defined under Clause 9.3 of the Exim Policy and thereafter proceeds to export the finished goods, the sesame seeds so exported are entitled for the claim of deemed export duty drawback. Since the concept of duty export promotion is structured on a deeming event where there is no requirement of any actual incidence of duty having been suffered, there is no requirement for the DTA suppliers to actually import the goods. According to the learned counsel for the Petitioner the rationale for the deeming construction is to place the EOU at p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd. v. Union of India - 2006 (204) E.L.T. 161 (Del.) = 132 (2006) DLT 500. 18. Appearing for the Respondents. Mr. S.K. Dubey pointed out that the petitioner has been changing its stand from time to time. The Exim Policy had to be read and interpreted consistent with the concept of "drawback" as understood under the Excise and Customs Law. The deeming fiction of an export or import cannot be permitted to go beyond the original concept itself under the relevant statutes. Relying on the definition of 'drawback' as given in P. Ramanatha Aiyar's The Law Lexicon Second Edition (1999 reprint p. 594) he pointed out that drawback implies that a commodity in respect of which it is granted, has in fact suffered the incidence of duty. If it is locally manufactured it should have suffered excise duty and if imported it should have suffered customs duty. In this connection he also places reliance upon the judgment in State of UP v. Delhi Cloth Mills - (1991) 1 SCC 454. It is submitted that sesame seeds being a marketable produce procured locally may not possibly have suffered excise duty. Since affidavits of the very traders from whom the petitioner is stated to have procured the sesame see ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) or Electronic Hardware Technology Parks (EHTPs) or Bio Technology Parks (BTP)." 21. The clauses require that an EOU, for the purposes of claiming deemed export duty drawback, should produce "a suitable disclaimer from the DTA supplier". The very basis for the claim is the disclaimer certificate. There are enough documents produced by the Respondents in the instant case to show that the very traders in the DTA from whom the petitioner claims to have procured the sesame seeds have stated that such stock was not imported. The letter of the APMC, Rajkot as well as of these traders indicate that sesame seeds are grown in abundance locally. There was no occasion to import sesame seeds at all. This is at complete variance with the petitioner's stand that the goods were imported. 22. At the time of disbursement of the claim, on 27th October, 2004, the petitioner gave the following declaration : "DECLARATION We, Sesame Foods Private Limited, 807. Ansal Bhawan, 16, Kasturba Gandhi Marg, New Delhi-110001 confirm that : 1. We have received the confirmation for prices charged by the DTA suppliers for Sesame seeds as per their letter dated 5th and 9th July (copy enclosed.) 2. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Although the petitioner has questioned the affidavits claiming that these were 'procured' by the Respondents, the Court in its writ jurisdiction has only to examine if this was relevant material justifying the Respondents' decision to withdraw the benefit of drawback granted to the petitioner. The answer to that question has to be in the affirmative in the facts and circumstances of the case. 26. The petitioner has during the course of arguments tried to shift its stand to urge that there was no need for the goods supplied by the DTA suppliers to be imported at all in the first place since this was only a 'deemed export' and the supplies to the EOU by the DTA suppliers were accordingly 'deemed imports'. This Court is unable to accept this submission. In the first place, the petitioner cannot be permitted to shift its stand about the requirement of the law to suit its convenience. If it maintained before the Respondents, and the documents referred to show that it in fact did, that the goods in question were imported, it has to make good that case. Clearly the Respondents were led to believe that the goods were in fact imported. After being unable to make good this claim despite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n AIR for such commodity cannot arise. The parity sought with HSD is plainly misconceived as HSD is a non-agricultural commodity which is manufactured and otherwise is amenable to levy of excise duties. This fundamental difference was perhaps lost sight of when the Respondents proceeded to fix AIR for sesame seeds. The only manner in which the petitioner could have got the benefit was to show that the sesame seeds were in fact imported. That explains why it repeatedly assured the Respondents that it would provide proof to this effect. And it failed to do so. 29. In the above circumstances, there is no question of invocation of the principle of promissory estoppel against the Respondents. There is no estoppel against an illegality. If the petitioner was in fact not entitled in law to claim deemed export duty drawback they cannot prevent the Respondents from taking corrective steps to recover the amounts wrongly released to the petitioner. Notwithstanding that the petitioner may subsequently have made arrangements with its banker and financial institutions, the illegality in releasing the deemed export duty drawback to the Petitioner cannot be justified or condoned. 30. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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