TMI Blog2017 (5) TMI 498X X X X Extracts X X X X X X X X Extracts X X X X ..... within three months from the date of receipt of application made under subsection (1) of Section 27, then, there shall be paid to that applicant interest at such rate, not below five per cent and not exceeding thirty per cent per annum as is for the time being fixed by the Central Government, by Notification in the Official Gazette. Where any drawback payable to any claimant under Sections 74 or 75 is not paid within the period set out under subsection (1) of Section 75A, then, there is an obligation to pay interest. That interest is to be paid at the rate fixed under Section 27A. The entitlement for interest is from the date after the expiry of the period of one month till the payment of such drawback. At the relevant time, it was three months. It is, therefore, not possible to agree with Mr. Rao that for such delayed release of the supplementary credit, though in terms of money, there is no obligation to pay interest - respondents shall pay the amount of interest quantified at ₹ 1,58,91,182/ within a period of six weeks - petition allowed - decided in favor of petitioner. - WRIT PETITION NO. 9 OF 1999 - - - Dated:- 17-4-2017 - S.C. DHARMADHIKARI PRAKASH D. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a scheme. It was known as the Pass Book Scheme. The petitioners were eligible, as far as the claim made for the relief vide Chapter VII of the Export and Import Policy. That was in effect from 1 4 1992 to 31 3 1997, though it was amended from time to time. It is stated that the import of raw materials, intermediates, components, etc., required for the products to be exported is permitted duty free. The Competent Authority issues licences in terms of Chapter VII. 8. The para 54 of the Policy provides that a Pass Book Scheme shall be available for some categories of exporters as set out therein. The Pass Book Scheme applies only for the export of products where Standard Input Output Norms (SION) have been published. The seventh respondent is the designated authority appointed in the Customs House in respect of these matters. Upon the export of goods by a Pass Book holder, respondent No.7 should calculate, on the basis of these standard norms, the import contents of the export and determine the basic customs duty payable on such exports. He has to credit this amount in the Pass Book. After imports being made by the Pass Book holder, the credit has to be utilised to pay the basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the representation was disposed of by a non speaking order. It is in these circumstances that the petitioners pointed out that there are several aspects of the matter which have to be considered. 14. The petitioners also pointed out that in pursuance of oral directions given by a Division Bench of this Court on 10 3 1999, the fourth and the fifth respondents have duly given credits which have been entered in the petitioners' Pass Book. However, the sixth respondent is refusing to grant that credit on the ground that an adjudication order, dated 30 12 1998, signed on 31 12 1998, has been passed by respondent No.6 and no appeal was preferred against this order to the Customs, Central Excise and Gold Control Appellate Tribunal. The petitioners pointed out that the order itself was communicated during the pendency of this petition. Therefore, the question of it being known to the petitioners does not arise. Apart therefrom, the Central Board itself was to consider the applicable Notification and the Public Notice. It has not taken a decision. That decision was merely communicated by the sixth respondent. Therefore, an appeal would lie not to the Tribunal but to the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on the duty amount inter alia for default in complying with the export obligations and that is referable to para 127 of the Hand Book of Procedure and that is prevalent from 1992 1997. The respondents further state that they charged the interest at the specified rates where the Policy itself provides for the same. In this case, neither the Policy nor the Notifications provide for payment of interest. That is why the claim for interest made by the petitioners is untenable in law. The other argument is that the interest cannot be claimed simply by invoking the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India. 19. The amendment of the petition is to claim interest on the alleged delay in giving credits. In the Policy there is no provision for payment of interest. This is not a case of delayed payment of the amount of refund. It is in these circumstances, the respondents deny that the petitioners are entitled to any interest. 20. This stand raised is specifically controverted in the additional affidavit in reply. 21. Though the petitioners initially claimed interest at the rate of 24%, they revised and restricted it to 15% and that is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c customs duty payable on such import would be determined. The amount of customs duty so determined is credited to the Pass Book issued to the exporter. 24. After inviting our attention to the conditions in the Customs Notification No.104/95, Mr. Sridharan submits that the petitioners had obtained a Pass Book from the designated authority in terms of para 54. That para 54 of the Policy, therefore, is rightly invoked by the petitioners. The petitioners also applied to the customs authorities for calculating the customs duty on the import content in the export product. This was duly verified and approved by the customs authorities from time to time. The petitioners thus earned the credits. 25. On 6 3 1997, Customs Notification No.24/97 was issued under Section 25 of the Act, amending the earlier Notification No.104/95. The issue that arises is, whether the petitioners' entitlement has to be computed in terms of the earlier Notification or this new Notification. The issue that the petitioners raised was that this new Notification or the amended Notification would not apply as far as their entitlement is concerned. 26. Mr. Sridharan submits that after the issue was settled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... introduced and inserting both Section 27 A and Section 75A. It is in these circumstances that it is urged that the liability to pay the interest arises. 28. It is clarified by Mr. Sridharan that the petitioners are not claiming interest for the delay, if any, in granting of the initial credit by the Department. The petitioners are claiming interest only for the delay in grant of supplementary credit in respect of exports made prior to 6 3 1997. Initially, the claim of the petitioners was for a higher amount. The Revenue initially granted a lower amount and later on, after delay, granted the balance claim as supplementary credit. It is not a case where the petitioners initially claimed a lower amount of credit which was granted and subsequently enhanced it and that is how the supplementary credit was obtained. Throughout the petitioners maintained that they were entitled to credit of the sum claimed. The petitioners are seeking interest only for the period of delay beyond three months from the date of the original claim. They are not seeking interest for a period of three months from the date of the original claim in accordance with the principles contained in Section 27 A r/w S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India, it would not be permissible for us to grant relief and of payment of interest. There is no foundation for it in the statute as well. 32. Mr. Rao has tendered written submissions as well and has submitted that there is a Judgment to that effect and rendered by the High Court of Judicature at Madras and which Judgment has been upheld by the Hon'ble Supreme Court. Then there is a Judgment of the Hon'ble Supreme Court itself in the case of Union of India Vs. Orient Enterprises (supra) which also clinches this issue. Our attention is invited by Mr. Rao to this Judgment. Our attention was also invited to the Judgment of the Hon'ble Supreme Court in the case of Suganmal Vs. State of Madhya Pradesh and others, reported in AIR 1965 SC 1740 . 33. For properly appreciating the rival contentions, we have to make a reference to the relevant Notification. 34. The petitioners have annexed a copy of this Notification No.104/95. That Notification has been issued by the Competent Authority, namely, the Central Government. That Notification grants an exemption. The ingredients of Section 25(1) of the Act are satisfied and it is pointed out that in public interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, in condition (2), the second proviso, in clause (iii), for sub clause (b), the following sub clause shall be substituted, namely: (b) where duties of customs are chargeable on any input by reference to its value, such value shall be determined by proceeding sequentially through the following methods, namely: (I) the value shall be deemed to be the price at which the same or similar inputs known to be usable in the export product were imported at the place of exportation of such export product within 90 days prior to such export, or (II) the price at which inputs of like kind were imported anywhere in India within 180 days prior to the export by the pass book holder himself or by any other person, or (III) the price at which such inputs were exported from India within 90 days prior to the date of exports, or (IV) the price published in a contemporary reputed journal which regularly publishes international prices of such inputs, or (V) the price arrived at by following and other reasonable method which the Assistant Commissioner of Customs may deem fit. Sd/ (K. Chopra) Under Secretary to the Government of India Issued by: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to letter F.No.605/6/99 DBK dated 1.2.99 of Drawback Directorate intimating that the representation dated 17.12.98 made by M/s Jindal Drugs Limited to Member (Customs) in this regard has been rejected (.) On re examination of the representation, it is seen that in this case the dispute is about the method of valuation of inputs used in the export goods under Pass Book Scheme in respect of exports made during November, 1996 to February 1997 by M/s Jindal Drugs Limited(.) The facts of the case and the practice followed in this regard have been rechecked(.) Prior to 6.3.1997 the parameters of valuation laid down in Notification No.104/95 Cus. Dated 30.5.1995 read with Notification No.155/95 Cus dated 27.10.1995 and Board's Circular No.62/95 Cus dated 7.6.1995 provide that for the purpose of allowing credit the value of input shall be which are comparable with the international prices of such inputs as on the date of exports(.) Thus the value may be determined on the basis of normal price of inputs prevalent in the international market for import at Mumbai as on the date of exports of the export product(.) In view of the aforesaid provisions, it is not proper to apply the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no provision for payment of interest. This is not a claim for interest on delayed refund as well. That is how the Revenue would approach the matter. 44. The Section 27 A of the Act follows Section 27. The Section 27 provides for refund of duty and how the claim has to be laid for that. The provision for interest on delayed refunds is to be found in Section 27 A, which was inserted with effect from 26 5 1995. 45. A bare perusal of Section 27 A would indicate that, if any duty ordered to be refunded under sub section (2) of Section 27 to an applicant is not refunded within three months from the date of receipt of application made under sub section (1) of Section 27, then, there shall be paid to that applicant interest at such rate, not below five per cent and not exceeding thirty per cent per annum as is for the time being fixed by the Central Government, by Notification in the Official Gazette. 46. We have before us also Chapter X in the very enactment which is titled Drawback . Chapter X contains Section 74, which provides for drawback allowable on re export of duty paid goods. The Section 75 provides for drawback on imported materials used in the manufacture of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for drawback and that is subject to the Customs Act, 1962 and the Rules thereunder. 51. Thus, drawback is a rebate on duty chargeable on any imported materials or excisable materials used in the manufacture of such goods. The duty that is chargeable on the imported materials is referable to the Customs Act, 1962. That is how the law establishes an equivalence as far as the refund of duty paid, styled as customs duty and when that refund has not been granted, there is a provision for claiming that refund in terms of Section 27. When that refund is granted but the payment thereof is delayed, then there is a provision for interest and incorporated in Section 27 A of the Act. 52. As far as drawback is concerned, by sub section (1) of Section 74, it has been clarified that when any goods capable of being easily identified which have been imported into India and upon which any duty has been paid on importation are, then, within the meaning of clause (i) of sub section (1) entered for export and the officer makes an order permitting clearance and loading of the goods for exportation under Section 51, then, by sub section (2) of Section 74 it has been clarified that notwithstanding a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of any of the aforesaid goods which the Central Government may, by rules made under sub section (2), specify, if the export value of such goods or class of goods is less than the value of the imported materials used in the manufacture or processing of such goods or carrying out any operation on such goods or class of goods, or is not more than such percentage of the value of the imported materials used in the manufacture or processing of such goods or carrying out any operation on such goods or class of goods as the Central Government may, by notification in the Official Gazette, specify in this behalf: Provided further that where any drawback has been allowed on any goods under this sub section and the sale proceeds in respect of such goods are not received by or on behalf of the exporter in India within the time allowed under the Foreign Exchange Management Act, 1999 (42 of 1999), such drawback shall, except under such circumstances or such conditions as the Central Government may, by rules, specify, be deemed never to have been allowed and the Central Government may, by rules made under subsection (2), specify the procedure for the recovery or adjustment of the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to make rules conferred by subsection (2) shall include the power to give drawback with retrospective effect from a date not earlier than the date of changes in the rates of duty on inputs used in the export goods. A perusal thereof would indicate as to how drawback shall be allowed in respect of such goods, namely, imported materials used in the manufacture of goods which are exported in accordance with and subject to the rules made under sub section (2) of Section 75. The Central Government has to make the rules and the power in that behalf is to be found in sub section (2) of Section 75. 54. There is, therefore, a provision made for interest on drawback. Where any drawback payable to any claimant under Sections 74 or 75 is not paid within the period set out under sub section (1) of Section 75 A, then, there is an obligation to pay interest. That interest is to be paid at the rate fixed under Section 27 A. The entitlement for interest is from the date after the expiry of the period of one month till the payment of such drawback. At the relevant time, it was three months. 55. We have no hesitation in our mind, when we read this provision carefully that what is contem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is that the importer has been permitted credit entries of the amount equal to basic/customs duties on the inputs used in the products exported by the importer as verified by the Assistant Commissioner of Customs. However, the proviso says that credit shall not be allowed by the designated authority in respect of goods exported under a claim for drawback or in discharge of export obligation against a licence issued under the Duty Exemption contained in Chapter VI of the Export and Import Policy or where export was from a port other than the port of jurisdiction of the designated authority. 60. It is based on this proviso that distinction is sought to be made, but without pointing out as to how this proviso is attracted as far as the claim for drawback laid by the petitioners is concerned. If that is not attracted, then, we need not go into the proviso and an issue arising out of the application of this proviso. 61. We have to only consider the argument of Mr. Rao that just as for a delayed refund of payment of duty there is a provision for interest, there is no such stipulation as far as drawback is concerned. That is belied by the statutory scheme itself and as demonstrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w cause why interest should not be demanded from them, since they had effected clearance beyond the interest free warehousing period of 90 days as per Section 61 of the Customs Act. 66. The reply was that the clearances were effected under the DEPB licence under the Notification issued under Section 25 of the Customs Act and that the Notification refers to exemption from payment of duty and so the liability to pay interest cannot arise on a non existing duty. The Order inOriginal held that debit in DEPB scrip tantamounts to payment of duty in cash, since the importer will be entitled to avail Cenvat credit of additional duty leviable under Section 3 of the Customs Tariff Act against the amount debited in DEPB. Therefore, whether the duty was paid by way of cash or by DEPB scrip, if there is delay in clearance from the warehouse, interest must be paid. The Appellate Authority confirmed the demand and the Tribunal also dismissed the appeal filed by the appellant Tanfac. 67. The only argument was that the debit entries and the DEPB scrips are treated as payment of duty only for the purpose of availment of Cenvat credit and as far as liability to pay duty under the Customs Act is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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