TMI Blog2019 (9) TMI 970X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessment and it would be at the whims and fancies of Respondent to open any assessment at any point of time. Under Customs Act, 1962 every consignment passes through scrutiny of team of Customs officers and there may be mistake on the part of customs officers in one or two cases but cannot be so in every shipping bill - Period of 5 years for all purposes is reasonable period so we hold that any notice issued under Rule 16 of Drawback Rules, 1995 beyond 5 years from the date of export is bad in the eyes of law and barred by limitation - decided in favor of petitioner. Whether re-enacted Drawback Rules, 2017 w.e.f. 1.10.2017 save Show Cause Notice dated 9.2.2018 (Annexure P-9) issued under Rule 16 of repealed Drawback Rules, 1995? - HELD THAT:- By inserting Rule 20(2) government has shown its different intention and Rule 20(2) of Drawback Rules, 2017 does not save show cause notices relating to demand of already paid duty drawback, therefore, Respondent cannot initiate or continue with show cause notice ( P-9 ) issued under Rule 16 of erstwhile Drawback Rules, 1995. Whether Rule 16 of Drawback Rules, 1995 provides complete machinery to declare already paid drawback as erron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hort 'Drawback Rules, 1995) which were framed vide Notification No. 37/95- CUS (NT) dated 26.05.1995, in exercise of power conferred by Section 75 of Customs Act, 1962 (for short Act, 1962 ), Section 37 of the Central Excise Act, 1944 and Section 93A of the Finance Act, 1994. As required under Section 50 of the 1962 Act, the Petitioner as and when exported goods, filed shipping bills declaring description, quantity, value, name of buyer etc. A team of Custom Officers i.e. Inspector, Superintendent and Assistant Commissioner physically verified export goods and noted on shipping bill as per invoice and packing list or value reduced for the purpose of duty drawback . The goods were examined and assessed in terms of Section 17 of the 1962 Act. It would be relevant to notice that prior to 8.4.2011, there was no self assessment which was introduced by Finance Act, 2011 w.e.f 8.4.2011. The Petitioner concededly exported goods vide 10 Shipping Bills during 2010 and 2 Shipping Bills during 2012 which are subject matter of present writ petition. The Custom Officers permitted export of goods in terms of Section 51 of the Customs Act, 1962. As conceded by both parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued after the expiry of 5 years from the date of export. Under Section 28 of the 1962 Act maximum period prescribed to issue show cause notice is 5 years even in case of fraud, suppression of facts or wilful mis-statement so any demand notice beyond five years is bad in the eyes of law. Rules are piece of subordinate legislation and primary legislation i.e. Customs Act, 1962 has fixed outer limit of 5 years so any notice under any Rule beyond 5 years is bad in the eyes of law. The impugned notice ( P-9 ) has been issued under Rule 16 of Drawback Rules, 1995 whereunder no limitation period has been prescribed. Gujrat High Court in the case of Padmini Exports Vs UOI 2012 (284) ELT 325 and Pratibha Syntex Ltd 2013 (287) ELT 290 has held that Section 28 of the Act, 1962 is not applicable in such cases of duty drawback, however three years period is reasonable period. Still further, as per judgment of Hon ble Supreme Court in the case of State of Punjab versus Bhatinda District Co-Op. Milk P. Union Ltd. 2007 (217) ELT 325 revisional jurisdiction cannot be invoked after a reasonable period of limitation. There are a number of judgments under different statutes wherein Hon ble Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealization of export proceeds. Rule 16 does not prescribe any procedure to hold any drawback as erroneous and thereafter its demand. Rule 16 only talks of repayment of excess or erroneous Drawback and it does not provide any machinery for determination and demand of erroneous or excess drawback. Erroneous drawback means drawback which has been paid by mistake or error like calculation error and excess drawback means drawback which after redetermination of entitlement of drawback is declared as excess drawback. It is settled law that demand cannot be made in the absence of prescribed mechanism which is absent in Drawback Rules, 1995. In support of his argument, Ld. Counsel cited judgment of Hon ble Supreme Court in the case of Commissioner of Central Excise versus Larsen and Toubro 2015 (39) STR 913 and this court judgment in the case of Laqshya Media Pvt. Ltd. Vs State of Punjab and Others CWP No. 4215 of 2016. ( iv) Prior to 08.04.2011, there was no self assessment and it was framed by Proper Officer under Section 17 of the Customs Act, 1962 which w.e.f. 08.04.2011 was substituted and as per substituted Section, scheme of self assessment was introduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order. Department has no power to reassess already assessed value. As per Section 2(19) of the Customs Act, 1962 Export Goods means any goods which are to be taken out of India to a place outside India. Ld. Counsel placed reliance upon judgment of Hon ble Supreme Court in the case of Priya Blue Industries Vs CC (Preventive) 2004 (172) ELT 145. 4 . Mr. Sourabh Goyal, Sr. Standing Counsel for the Union of India Customs-Respondent No. 1 3 and Mr. Sunish Bindlish, Sr. Standing Counsel appearing for DRI/Respondent No. 2, on the question of limitation and maintainability of writ petition contended that no limitation period has been prescribed under Rule 16 of Drawback Rules, 1995, therefore, proceedings could be initiated within a reasonable time. It is well settled that what would be reasonable period would have to be decided in the facts and circumstances of each case. In support of their contention, Ld. Counsels cited judgment of Hon ble Supreme Court in the case of Collector of Central Excise, Jaipur Vs Raghuvar India Ltd. 2000 (118) ELT 311 (SC), Govt. of India Vs Citadel Fine Pharmaceuticals 1989 (42) ELT 515 (SC) and Karnataka High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disposed of in accordance with Drawback Rules of 1995 and in the present case an investigation was in progress at the time of repeal of 1995 Rules so proceedings initiated under Rule 16 are saved. Mr. Sourabh Goyal contended that show cause notice has been issued calling upon the Petitioner to show cause as to why FOB Value of exported goods should not be rejected in terms of Valuation Rules, 2007 and Drawback Rules, 2017 contain identical provision for repayment of erroneous or excess payment of Drawback interest, therefore, repeal of Drawback Rules, 1995 has no effect on pending cases. On the question of mechanism both the State Counsels contended that Drawback is sanctioned as some percentage of FOB Value. As per Rule 8 of the Valuation Rules, 2007 which are framed in terms of Section 14 of Act, 1962 the Proper Officer has power to reject declared value, in case he has reason to doubt the truth or accuracy of the value. The Proper Officer after rejecting value may determine value as per Rule 6 of the Valuation Rules, 2007. It clearly shows that there is complete mechanism to reject declared value and determine fresh value. In the present ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Rule 16A of Drawback Rules procedure has been prescribed for raising demand of drawback in case export proceeds are not realized. Mr. Bansal further contended that in case of import or export, short levied or not levied duty or interest is demanded under Section 28 of the Act, 1962. The duty may be demanded under Section 28 of the Act, 1962 on account of mis-declaration of value or description. The redetermination of value of goods under Valuation Rules, 2007 entails into demand of Customs duty in case of import as well export of goods. The short levied or not levied duty is consequential to re-determination of value under Valuation Rules, 2007, still procedure has been prescribed under Section 28 of the Act, 1962 thus it is wrong to contend that there is no need of machinery under Rule 16 of the Drawback Rules, 1995. In support of his contention he relied upon judgment in case of Eternit Everest Ltd. Vs UOI 1997 (89) ELT 28 (Mad)wherein Madras High Court quashed show cause notice issued under Section 11D of the Central Excise Act, 1944 holding that no procedure has been prescribed to raise demand of duty collected in excess of duty liability. Hon ble Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , unloading and handling charges to the extent and in the manner specified in the rules made in this behalf: Provided further that the rules made in this behalf may provide for ,- ( i) the circumstances in which the buyer and the seller shall be deemed to be related; ( ii) the manner of determination of value in respect of goods when there is no sale, or the buyer and the seller are related, or price is not the sole consideration for the sale or in any other case; ( iii) the manner of acceptance or rejection of value declared by the importer or exporter, as the case may be , where the proper officer has reason to doubt the truth or accuracy of such value, and determination of value for the purposes of this section : Provided also that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under section 46, or a shipping bill of export, as the case may be, is presented under section 50. ( 2) Notwithstanding anything contained in sub-section (1), if the B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess the duty leviable on such goods . ( 5) Where any re-assessment done under sub-section (4) is contrary to the self-assessment done by the importer or exporter regarding valuation of goods, classification, exemption or concessions of duty availed consequent to any notification issued therefore under this Act and in cases other than those where the importer or exporter, as the case may be, confirms his acceptance of the said re-assessment in writing, the proper officer shall pass a speaking order on the re-assessment, within fifteen days from the date of re-assessment of the bill of entry or the shipping bill, as the case may be. ( 6) Where reassessment has not been done or a speaking order has not been passed on reassessment, the proper officer may audit the assessment of the duty of the imported goods or export goods at his office or at the premises of the importer or exporter as may be expedient, in such manner as may be prescribed. Explanation . - For the removal of doubts, it is hereby declared that in cases where an importer has entered any imported goods under section 46 or an ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailed consequent to any notification therefore under this Act, and in cases other than those where the importer or the exporter, as the case may be, confirms his acceptance of the said assessment in writing, the proper officer shall pass a speaking order within fifteen days from the date of assessment of the bill of entry or the shipping bill, as the case may be. SECTION 50. Entry of goods for exportation. ( 1) The exporter of any goods shall make entry thereof by presenting electronically on the customs automated system to the proper officer in the case of goods to be exported in a vessel or aircraft, a shipping bill, and in the case of goods to be exported by land, a bill of export in such form and manner as may be prescribed: Provided that the Principal Commissioner of Customs or Commissioner of Customs may, in cases where it is not feasible to make entry by presenting electronically on the customs automated system, allow an entry to be presented in any other manner. ( 2) The exporter of any goods, while presenting a shipping bill make and subscribe to a declaration as to the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r order under this Act for the purpose of satisfying himself as to the legality or propriety of any such decision or order and may, by order, direct such authority or any officer of Customs subordinate to him to apply to the Commissioner (Appeals) for the determination of such points arising out of the decision or order as may be specified by the Principal Commissioner of Customs or Commissioner of Customs in his order . ( 3) Every order under sub-section (1) or sub-section (2), as the case may be, shall be made within a period of three months from the date of communication of the decision or order of the adjudicating authority: Provided that the Board may, on sufficient cause being shown, extend the said period by another thirty days. ( 4) Where in pursuance of an order under sub-section (1) or sub-section (2), the adjudicating authority or any officer of customs authorised in this behalf by the Principal Commissioner of Customs or Commissioner of Customs, makes an application to the Appellate Tribunal or the Commissioner (Appeals) within a period of one month from the date of communication of the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tually payable, then, he shall proceed to issue the notice as provided for in clause (a) of that sub-section in respect of such amount which falls short of the amount actually payable in the manner specified under that sub-section and the period of one year shall be computed from the date of receipt of information under sub-section (2). ( 4) Where any duty has not been levied or has been shortlevied or erroneously refunded, or interest payable has not been paid, part-paid or erroneously refunded, by reason of , - ( a) collusion; or ( b) any wilful mis-statement; or ( c) suppression of facts , by the importer or the exporter or the agent or employee of the importer or exporter, the proper officer shall, within five years from the relevant date, serve notice on the person chargeable with duty or interest which has not been so levied or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice. ( 5) Where any duty has not been levied o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch person, determine the amount of duty or interest due from such person not being in excess of the amount specified in the notice. ( 9) The proper officer shall determine the amount of duty or interest under sub-section (8), - ( a) within six months from the date of notice, where it is possible to do so, in respect of cases falling under clause (a) of sub section (1); ( b) within one year from the date of notice, where it is possible to do so, in respect of cases falling under subsection (4). ( 10) Where an order determining the duty is passed by the proper officer under this section, the person liable to pay the said duty shall pay the amount so determined along with the interest due on such amount whether or not the amount of interest is specified separately. ( 11) Notwithstanding anything to the contrary contained in any judgment, decree or order of any court of law, tribunal or other authority, all persons appointed as officers of Customs under subsection (1) of section 4 before the 6th day of July, 2011 shall be deemed to have and always had the power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermitting the clearance and loading thereof for exportation has been made under section 51 by the proper officer, or being goods entered for export by post under section 82 and in respect of which an order permitting clearance for exportation has been made by the proper officer, a drawback should be allowed of duties of customs chargeable under this Act on any imported materials of a class or description used in the manufacture or processing of such goods or carrying out any operation on such goods, the Central Government may, by notification in the Official Gazette, direct that drawback shall be allowed in respect of such goods in accordance with, and subject to, the rules made under sub-section (2). Provided that no drawback shall be allowed under this subsection in 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 mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which had been allowed under sub-section (1) or interest chargeable thereon ; ( b) for the production of such certificates, documents and other evidence in support of each claim of drawback as may be necessary; ( c) for requiring the manufacturer or the person carrying on any process or other operation to give access to every part of his manufactory to any officer of customs specially authorised in this behalf by the Assistant Commissioner of Customs or Deputy Commissioner of Customs to enable such authorised officer to inspect the processes of manufacture, process or any other operation carried out and to verify by actual check or otherwise the statements made in support of the claim for drawback. ( d) for the manner and the time within which the claim for payment of drawback may be filed; ( 3) The power to make rules conferred by sub-section (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. Customs Valuation Rules, 2007: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... racy of the declared value after the said enquiry in consultation with the exporter. ( iii) The proper officer shall have the powers to raise doubts on the declared value based on certain reasons which may include - ( a) the significant variation in value at which goods of like kind and quality exported at or about the same time in comparable quantities in a comparable commercial transaction were assessed. ( b) the significantly higher value compared to the market value of goods of like kind and quality at the time of export. ( c) the misdeclaration of goods in parameters such as description, quality, quantity, year of manufacture or production. Clause (a) and (c) of Rule 2, Rule 16 and 16 A of Drawback Rules, 1995: Rule 2 (a) drawback in relation to any goods manufactured in India and exported, means the rebate of duty or tax, as the case may be, chargeable on any imported materials or excisable materials used or taxable services used as input services in the manufactured of such goods; Rule 2 (c) export with its grammatical variations an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck to be recovered shall be the amount equal to that portion of the amount of drawback paid which bears the same proportion as the portion of the sale proceeds not realized bears to the total amount of sale proceeds: ( 3) Where the exporter fails to repay the amount under sub-rule (2) within said period of sixty days referred to in sub-rule (2), it shall be recovered in the manner laid down in rule 16. ( 4) Where the sale proceeds are realized by the exporter after the amount of drawback has been recovered from him under subrule (2) or sub-rule (3) and the exporter produces evidence about such realization within one year from the date of such recovery of the amount of drawback, the amount of drawback so recovered shall be repaid by the Assistant Commissioner of Customs or Deputy Commissioner of Customs to the claimant . Emphasis Supplied 6 . From the perusal of above quoted Sections and Rules, scheme of Customs Act, 1962 regarding export of goods, assessment thereof and Appeal against the assessment order is discernible. At the time of export of goods, an expor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under Rule 16 of the Drawback Rules, 1995. 7 . The conceded position as emerging from the record of case is that the Petitioner exported goods which were examined by a team of Customs Officers who after being satisfied qua description of goods and value thereof permitted export of goods. The Petitioner realized export proceeds within stipulated time and accordingly Respondent released drawback. No drawback claim of the Petitioner was pending on the date of introduction of Drawback Rules, 2017. The goods were exported during 2010-2012 and investigation by DRI which culminated into impugned show cause notice dated 9.2.2018 (Annexure P-9) was initiated in December 2012. Neither limitation period has been prescribed nor is there requirement of show cause notice and its adjudication under Rule 16 of the Drawback Rules, 1995 for recovery of drawback. Prior to 8.4.2011, there was no provision of self assessment which was introduced by Finance Act, 2011 w.e.f. 8.4.2011. No formal assessment order is framed at the time of export of goods; however, permission to export of goods is an assessment of shipping bill which can be challenged by both sides i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limitation period can be read into said Rule. Hon ble Supreme Court in umpteen numbers of cases as cited by both sides has enunciated that in the absence of period prescribed, every action should be initiated within reasonable period which would depend on facts and circumstances of each case. The authorities appointed under Customs Act, 1962 cannot decide that what is reasonable period of limitation and it is only courts which can decide said question. Para 24 of judgment of Hon ble Supreme Court in the case of Bhatinda District Coop. Milk (Supra) directly deals with this question which is reproduced as under: 24. We are, however, not oblivious of the fact that ordinarily the writ court would not entertain the writ application questioning validity of a notice only, particularly, when the writ petitioner would have an effective remedy under the Act itself. This case, however, poses a different question. The Revisional Authority, being a creature of the statute, while exercising its revisional jurisdiction, would not be able to determine as to what would be the reasonable period of exercising the revisional jurisdiction in terms of Section 21(1) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Whether demand of duty drawback under Rule 16 of the Drawback Rules, 1995 can be made without any reasonable period of limitation? All the judgments including judgments of Hon ble Supreme Court in the case of Raghuvar (India) Ltd ( Supra ) and Citadal Fine Pharamaceutical ( Supra ) cited by counsels for Respondents hold that in the absence of specific period, action should be taken within reasonable period, thus both sides are at idem that every action in the absence of prescribed period should be initiated within reasonable period and what would be reasonable period would depend upon facts and circumstances of each case. Gujrat High Court in the case of Padmini Exports Vs UOI 2012 (284) ELT 325 and Pratibha Syntex Ltd 2013 (287) ELT 290 while dealing with question of reasonable period of limitation applicable to notice issued under Rule 16 of the Drawback Rules, 1995 and applicability of Section 28 has held that Section 28 of Act, 1962 is not applicable, however three years period is reasonable period to issue show cause notice for raising demand of duty drawback. The counsels for the Respondent contended that present case is of mis- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law. It would be apt to notice here that goods were exported during 2007-2012 after due verification by Customs officers and DRI searched premises on 27.12.2012 whereas impugned show cause notice came to be issued on 9.2.2018 means after the expiry of 5 years even from the date of search. Notice has been issued under Rule 16 and not 16A of Drawback Rules, 1995 so it is admitted fact that foreign currency stands realized thus in the absence of laying down some period as reasonable period, there would never be conclusion of assessment and it would be at the whims and fancies of Respondent to open any assessment at any point of time. Under Customs Act, 1962 every consignment passes through scrutiny of team of Customs officers and there may be mistake on the part of customs officers in one or two cases but cannot be so in every shipping bill. If contention of DRI is accepted, no assessment would conclude till an agency investigates and opines in one or another manner. Respondents have not cited any provision which either declares that no export is complete till NOC is issued by DRI or DRI has unlimited and unguided powers over and above the Custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or rescinding shall not - ( a) revive anything not in force or existing at the time at which the amendment, repeal, supersession or rescinding takes effect; or ( b) affect the previous operation of any rule, regulation, notification or order so amended, repealed, superseded or rescinded or anything duly done or suffered there under, or ( c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any rule, regulation, notification or order so amended, repealed, superseded or rescinded; or ( d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed under or in violation of any rule, regulation, notification or order so amended, repealed, superseded or rescinded; or ( e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceedings or remedy may be instituted, continued or enforced and any such penalty, forfeiture or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se (a) of Rule 20(2) saves applications made for determination or revision of drawback which are still pending; clause (b) saves any claim of drawback which is pending with respect to goods exported prior to commencement of 2017 Rules; and clause (c) provides that any rate or amount of drawback determined under Rules of 1995 shall not be applicable to goods exported after commencement of Rules, 2017. From the bare reading of aforesaid clauses of Rule 20(2) of Drawback Rules, 2017, it is evident that none of clause deal with drawback claims filed and sanctioned prior to 1.10.2017. By saving few rights accrued under Drawback Rules, 1995 Government has expressed different intention so Section 159A of 1962 Act becomes inapplicable. Had there been intention to save all rights and liabilities arising from Drawback Rules, 1995, the Government would not have inserted Rule 20(2) in Drawback Rules, 2017 saving only few rights/acts. Had there not been Rule 20(2) in Drawback Rules, 2017 as is in present form and manner, Section 159A of 1962 Act would have come into play and saved all the rights and liabilities arising out of Drawback Rules, 1995. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suit/proceeding whereas revision is not continuation of suit instead is an independent proceeding. It was held that Section 4 of Punjab General Clauses Act, 1898 cannot be considered because Section 61 of Haryana VAT Act, 2003 whereby Haryana Sales Tax Act, 1973 was repealed specifically deals with rights and liabilities arising out of repealed Act of 1973. The Hon ble Supreme Court as well Full bench of this court has upheld said Division Bench judgment. Para 25 of the judgment of this court and Para 11 of judgment of Hon ble Supreme Court read as under: 25 . We shall now deal with the provisions of section 4 of the General Clauses Act. A reading thereof shows that unless a different intention appears, the repeal does not affect any right, privilege or obligation or any legal proceedings or remedy in respect of any such right, privilege, obligation, liability etc. By virtue of Section 61 of the VAT Act, the legislature, while repealing the 1973 Act, save the pending application, appeal, revision and other proceedings made or preferred to any authority under that Act and transferred the same for disposal by the officer or author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of powers to DRI would be totally redundant, ineffective and useless if they cannot reopen an assessment. The Valuation Rules, 2007consist of complete mechanism to assess value of export goods as well as goods which have already been exported. The department under Rule 8 has right to reject already assessed value and re-assess value under Rule 6 of the Valuation Rules. Drawback is sanctioned on export of goods and phrase export has been defined under Rule 2(c) of the Drawback Rules, 1995. As drawback is sanctioned on export of goods, department has right to reassess value of goods already exported and consequentially raise demand of excess drawback. Demand of drawback under Rule 16 of Drawback Rules, 1995 is consequential so contention of Petitioner that mechanism is absent in Rule 16 of the Drawback Rules, 1995 is fallacious. Counsel for the Petitioner submitted that as per DRI itself they have been appointed as proper officer under Customs Act, 1962, therefore, there is no occasion to exercise any power which is not vested in Customs Officers-Proper officer. An officer appointed under a particular Act can exercise powers endowed by said Act, hence DRI cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eous' has not been defined under the 1962 Act and different Rules made thereunder, however as per different English Dictionaries 'Erroneous' means 'wrong, incorrect, mistake'. To our mind, Rule 16 of Drawback Rules, 1995 is applicable where drawback is released on account of some calculation mistake or other error which needs no adjudication and claimant is duty bound to refund as soon as demanded by proper officer. It is also applicable where after following procedure known to law, it is finally concluded that claimant/exporter was released drawback more than his actual entitlement. In such circumstances, there is no need to issue within reasonable period show cause notice and its adjudication thus under Rule 16 neither limitation period has been prescribed nor there is requirement of show cause notice and its adjudication. Rule 16 of Drawback Rules, 1995 cannot be straightway applied in a situation like case in hand where at the time of export, value of goods was assessed by Customs Officers; goods stand exported; currency stand realized and drawback stand released. In a situation like present case, due procedure i.e. complete machinery is inevitable which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1962. Section 28 AAA reads as under: SECTION28AAA. Recovery of duties in certain cases. - ( 1) Where an instrument issued to a person has been obtained by him by means of - ( a) collusion; or ( b) wilful misstatement; or ( c) suppression of facts, for the purposes of this Act or the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992), by such person or his agent or employee and such instrument is utilised under the provisions of this Act or the rules made or notifications issued thereunder, by a person other than the person to whom the instrument was issued, the duty relatable to such utilisation of instrument shall be deemed never to have been exempted or debited and such duty shall be recovered from the person to whom the said instrument was issued: Provided that the action relating to recovery of duty under this section against the person to whom the instrument was issued shall be without prejudice to an action against the importer under section 28. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) Where an order determining the duty has been passed under section 28, no order to recover that duty shall be passed under this section. ( 5) Where the person referred to in sub-section (3) fails to repay the amount within the period of thirty days specified therein, it shall be recovered in the manner laid down in sub-section (1) of section 142. From the perusal of Section 28 and 28 AAA, it appears that Government has provided complete machinery to recover duty, in case any instrument is wrongfully obtained under Foreign Trade (Development and Regulation) Act, 1992. We find ourselves in agreement with counsel for the Petitioner that if Valuation Rules, 2007 are omnibus, there is no need to issue show cause notice and follow procedure prescribed under Section 28 of Act, 1962. The judgment cited by DRI counsel in the case of Jain Shudh Vanaspati (Supra) permits demand of duty under Section 28 of the Act which was short levied or not levied at the time of clearance of goods even though department refrained from filing appeal against assessment order. As noticed by Hon ble Supreme Court, show cause notice under Section 28 can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that Service Tax cannot be demanded in the absence of mechanism to determine value of service component in a works contract. On the ground of absence of mechanism, Hon ble Supreme Court quashed demand of Service Tax for the period prior to 01.06.2007. Hon ble Supreme Court in relevant Paras 24 to 26 43 has held as under: 24. A close look at the Finance Act, 1994 would show that the five taxable services referred to in the charging Section 65(105) would refer only to service contracts simpliciter and not to composite works contracts. This is clear from the very language of Section 65(105) which defines taxable service as any service provided . All the services referred to in the said sub-clauses are service contracts simpliciter without any other element in them, such as for example, a service contract which is a commissioning and installation, or erection, commissioning and installation contract. Further, under Section 67, as has been pointed out above, the value of a taxable service is the gross amount charged by the service provider for such service rendered by him. This would unmistakably show that what is referred to in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own no charge or machinery to levy and assess service tax on indivisible composite works contracts, such argument must fail. This is also for the simple reason that there is no subterfuge in entering into composite works contracts containing elements both of transfer of property in goods as well as labour and services. Relying upon said judgment of Hon ble Supreme Court, this Court in the case of Laqshya Media Pvt. Ltd. Versus State of Punjab and Others set aside demand of advertisement tax on the ground that even though Section 135 of Punjab Municipal Corporation Act, 1976 envisages issuance of a demand notice for recovery of the advertisement tax due on a prescribed form, however no form, as such has been prescribed. No procedure regarding filing of returns, assessment of Tax and consequently recovery thereof has been prescribed. Hon ble Supreme Court in the case of Shabina Abraham (Supra) while dealing with question of continuation of assessment proceedings under Section 11/11A of the Central Excise Act, 1944 has held that in the absence of machinery provisions to collect and assess duty, proceedings cannot continue against legal repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persons. We are afraid this argument cannot be countenanced in view of this Court s judgment in State of Punjab v. M/s. Jullunder Vegetables Syndicate, (1966) 2 S.C.R. 457. In that judgment, the question before this Court was whether a dissolved firm could be assessed to sales tax under the East Punjab General Sales Tax Act, 1948, with respect to its predissolution turnover. After analyzing the East Punjab General Sales Tax Act, this Court held :- The scheme of the Act is a simple one. A firm is a dealer; the said dealer is assessable to tax on its turnover, if its turnover exceeds the prescribed limit. It cannot do business while being liable to pay tax under the Act without getting itself registered and possessing a registration certificate. It is assessed to tax under Section 11 of the Act in the manner prescribed thereunder. If it discontinues its business, it shall within the specified time inform the prescribed authority accordingly. A dealer and its partners are jointly and severally responsible to pay the tax assessed on the dealer. But there is no provision expressly empowering the assessing authority to assess a dissolved firm in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person/dissolved firm abate. The aforesaid judgment has been followed by this Court in Khushi Ram Behari Lal Co. v. Assessing Authority, Sangrur, (1967) 19 STC 381 and in Additional Tahsildar, Raipur v. Gendalal, (1968) 21 STC 263. Madras High Court in the case of Eternit Everest Ltd. (Supra) while dealing with question of recovery of any sum collected by any person as Excise Duty though not payable under Central Excise Act, 1944 has held that in the absence of machinery provisions under Section 11D of the Central Excise Act, 1944 recovery cannot be effected from any person and machinery provided under Section 11A of the Act cannot be invoked. In the case in hand, Rule 16 of Drawback Rules, 1995 requires to pay drawback which has been availed erroneously or in excess of entitlement. The Rule does not prescribe mechanism to determine and demand any drawback as erroneous or in excess of entitlement. Applying the afore-cited judgments, we find that Rule 16 of Drawback Rules, 1995 does not have machinery to hold and demand any drawback as erroneous or excess and in the absence of mechanism demand is bad in the eye of law. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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