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2015 (11) TMI 1232 - MADRAS HIGH COURT

2015 (11) TMI 1232 - MADRAS HIGH COURT - 2015 (325) E.L.T. 748 (Mad.) - Enforcement of Bank Guarantee - Denial of refund claim - Bar of limitation - Held that:- Petitioner was issued with the Export Obligation Discharge Certificate (EODC) against EPCG Licence by the office of the Joint Director General of Foreign Trade, Ministry of Commerce, Government of India, on 26.05.2003 - petitioner Company had fulfilled their export obligation and thereafter, they have also issued with Export Obligation D .....

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his order dated 20.08.2007, stating that the refund application has been filed beyond the limitation period of six months as stipulated in Section 27 of the Customs Act. Aggrieved by the same, when appeal was preferred, the appellate authority vide order dated 04.11.2009, confirmed the order passed by the Deputy Commissioner of Customs, by repeating the same reasons. Therefore, such reasons assigned by the original authority and appellate authority in their orders, in my view, are totally runni .....

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Respondent : Mr.V.Sundareswaran, Standing Counsel ORDER It is the claim of the petitioner that the petitioner Company, being 100% export oriented unit, had imported 6 auto striper knitting machines for a sum of ₹ 51,48,414/- under the Export Promotion Capital Goods (EPCG) Scheme, which has been notified by the Government of India vide its Customs Notification No.28/97. It is stated that the said scheme provided for Zero duty / Concessional duty for capital goods imported into the country w .....

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. Likewise, in the present case, the petitioner was stipulated to fulfil an export obligation of USD 7,39,969/-. Based on the said scheme, the total duty saved for the import of the aforesaid machines came to be ₹ 7,57,105/-, therefore, as per the said scheme, the petitioner importer is required to furnish a Bank guarantee in favour of the Commissioner of Customs, Chennai, totalling 100% value of the duty saved portion. Accordingly, the petitioner had also furnished a Bank Guarantee bearin .....

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pro-rata export obligation in the customs notification. Thereafter, the said Bank by letter dated 05.01.2001 paid the said amount demanded by way of demand draft in favour of the Commissioner of Customs (Airport) Chennai. However, since the petitioner had fulfilled its total export obligations and obtained the necessary export obligation discharge certificate (EODC) which was issued by the DGFT on 26.05.2003, wherein a sum of USD 8,14,639 had been fulfilled by the petitioner, which is over and .....

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an application for refund of duty on 10.04.2007 for return of the enforced sum of ₹ 4,07,245/, that has been paid by the petitioner's bankers M/s.Indusind Bank on 05.01.2001, the Deputy Commissioner of Customs, without providing an opportunity of personal hearing to the petitioner, dismissed the appeal in his Order-in-Original No.304/2007 DC (Acc), dated 20.08.2007 stating that the refund application has been filed beyond the limited period of six months as stipulated in Section 27 of .....

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04.11.2009, and only thereafter, on receipt of such information, the petitioner came to know the status of his appeal preferred before the respondent. 2. It is further submitted that the respondent ought to have seen that Section 27 of the Customs Act, 1962 and the provision of six months limitation contained thereon is not at all applicable to a case of an enforced Bank guarantee, for, the said sum of ₹ 4,07,245/- had not been paid by the petitioner, but, the same was taken by the departm .....

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ise (1994 (2) SCC 546) for a proposition that furnishing of bank guarantee cannot be regarded as payment of duty by the importer to the revenue. Further, a Division Bench of this Court in the case of Commissioner of Customs v. M/s.Aristo Spinners Private Limited ( passed in C.M.A.No.213 of 2008, dated 25.01.2008) held that the stand of the review that the claim made by the respondent is barred by Section 27 of the Act cannot be legally sustained, as the same cannot be made applicable. 4. Per con .....

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07, therefore, the original authority, vide its order dated 20.08.2007, rejected the claim for refund on the ground that the application filed by the petitioner was beyond six months period stipulated. As against that, when appeal was filed, the appellate authority also rejected the claim of the petitioner. It is further submitted that the agreed amount of target by the petitioner was not achieved by them in the second block year , hence, a sum of ₹ 4,07,245/- was encashed on 10.01.2001 in .....

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is Court in the case of Commissioner of Customs and another v. M/s.Areva T&D India Limited (passed in W.A.No.299 of 2013, dated 21.04.2014), it is submitted that when the Statute does not empower the authorities to collect the interest on the delayed payment of Central Excise Duty, the petitioner cannot be clothed with the liability of interest on the ground that they have asked for instalments for payment of Central Excise Duty, therefore, he pleaded, the question of awarding interest on th .....

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d Book of procedures. You have utilized the licence to the extent of 100% and the export obligation is fixed at US$7,39,960/- and annual average is fixed US$ NIL. It is seen that you have produced Original Shipping Bills for the export obligation against the Licence as below:- PERIOD E.O. FULFILLED EXCESS (+) SHORT FALLS (-) 1st year/block 03.09.1997 to 02.09.1998 US$ 41,253/- (+) 2nd year/block 03.09.1998 to 02.09.1999 US$ 44,759/- US$ 29,237/-(-) 3rd year/block 03.09.1999 to 02.09.2000 US$ 3,8 .....

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above said proceedings of the Ministry of Commerce, it is clear that the petitioner Company had fulfilled their export obligation and thereafter, they have also issued with Export Obligation Discharge Certificate on 26.05.2003, wherein a sum of USD 8,14,639/- has been fulfilled by the petitioner towards export obligation, which is over and above the sum stipulated as per the licence. Therefore, when the Export Obligation Discharge Certificate has been rightly issued by the DGFT, the petitioner, .....

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Deputy Commissioner of Customs, by repeating the same reasons. Therefore, such reasons assigned by the original authority and appellate authority in their orders, in my view, are totally running contrary to the ratio laid down by Hon'ble Apex Court and this Court. 8. In this regard, it is more appropriate to refer to a judgment of the Hon'ble Apex Court in the case of Oswal Agro Mills Limited (cited supra). Relevant portion of the said judgment is extracted hereunder: 10. The question, .....

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bank guarantee for the full amount of such tax or duty or part thereof. The bank guarantee is required to be given either in favour of the principal administrative officer of the court or in favour of the revenue authority concerned. In the event that the revenue fails in the proceedings before the court the question of payment of the tax or duty, the amount of which is covered by the bank guarantee, does not arise and, ordinarily, the court, at the conclusion of its order, directs that the ban .....

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or, where the bank guarantee is in favour of the principal administrative officer of the court, that officer to file a suit against the bank for the amount due upon the bank guarantee. The amount of the disputed tax or duty that is secured by a bank guarantee cannot, therefore, be held to be paid to the revenue. There is no question of its refund and Section 11-B is not attracted. 9. Following the above said judgment, Hon'ble Divison Bench of this Court in M/s.JrajExports (Pr) Limited's .....

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