TMI Blog2002 (10) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... red to submit a valid insurance certificate along with the drawback claim. A perusal of the drawback application submitted by the claimants show that the Insurance Certificate was invalid and has been cancelled by the Insurance Company before the exports were effected?" 4.The material facts of the case for a proper appreciation of the points involved in the said question are stated below : M/s. Terai Overseas Limited, the respondent No. 1 in this application, [hereinafter called TOL] as a Merchant-Exporter entered into a contract with M/s. Avia Exports, Moscow, a Government Undertaking of Russia for sale of various types of dresses and garments. Consequently, letters of credit were opened by the said Export House in the name of TOL on 18-4-1996. Therefore, TOL entered into a contract with M/s. Dugar Impex Pvt. Ltd. and M/s. Aruna Impex Pvt. Ltd. for manufacture and export of the said goods on certain terms and conditions. The relevant condition being that the export would be against the contract entered into by TOL with the overseas buyers and the documents would be negotiated against the Letter of Credit opened by the foreign buyer in favour of TOL and the Duty Drawback was to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the said reply that the said firms were under lock out for sometime and during that period letters were returned. Insofar as the cancellation of the insurance policy, it was submitted that the same was an illegal act on the part of the Insurance Company and TOL were pursuing the matter with the Insurance Company and fresh cheques were given to the Insurance Company to cover the transit insurance as the goods had already reached its destination under the cover of Insurance Policy and the matter was only of academic interest. 10.In reply to the show cause, TOL contended that the claim of Duty Drawback would be received by them as an agent of M/s. Dugar Impex and M/s. Aruna Impex. Such claim is admissible under Rule 14 of the Drawback Rules, 1995. M/s. Dugar Impex and M/s. Aruna Impex had already authorised them to receive the admissible amount of Drawback claim for which they executed a Power of Attorney. It was also stated that all necessary documents were filed and are on record and no deficiency memo was issued to them. 11.On those facts, the Commissioner of Customs, Bombay, rejected the contentions made on behalf of M/s. Dugar Impex and M/s. Aruna Impex and held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondents under the said Drawback Rules. The Tribunal held that in the instant case, the export admittedly, took place and as such, TOL was entitled to the benefit of Drawback Claim and, accordingly, the Tribunal allowed the appeal of TOL. 16.Learned Counsel appearing in support of the reference application submitted that various other issues were involved in the questions which were framed in this reference application and those issue are of some importance, but, since those questions have not been allowed to for reference by the Division Bench by its order dated 17-4-2001, the learned Counsel is not in-a-position to agitate those questions and has to confine his submissions only to the question referred. 17.The learned Counsel submitted that there is admittedly a statutory requirement for furnishing the insurance certificate and non-furnishing of the said certificate makes the claim incurably bad. Therefore, the Tribunal committed an error by holding that the Drawback Claim of the respondent with such gross defect is acceptable. The learned Counsel submitted thus the Tribunal committed grave error of law and acted contrary to the provisions of the said Rules. The learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ack after complying with the requirements specified in the deficiency memo, the same will be treated as a claim filed under sub-rule (1) for the purpose of section 75A. For computing the [period of two months](4) prescribed under section 75A for payment of drawback to the claimant, the time taken in testing of the export goods, not more than one month, shall be excluded." This Court finds that drawback has been defined Rule 2(a) of the said Rules as follows : "Rule 2(a): "Drawback" in relation to any goods manufactured in India, and exported, means the rebate of duty chargeable on any imported materials or excisable materials used in the manufacture of such goods." 21.On a reasonable construction of the various provisions of the Drawback Rules, this Court is of the opinion that the same is an incentive oriented scheme for augmenting export and claim for drawback cannot be withheld on the basis of mere technicality. This Court finds that if it is ultimately found that benefit of the Drawback Claim has been given to a party unauthorisedly, there are provisions under Rule 16(a) of the said Rules for its recovery where the export proceeds were not realised. Therefore, at the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of drawback claim the time taken in testing of the goods, not more than one month, shall excluded. Therefore, intent of Rule 13 is not mandatory in all its sub-clauses. Rule 13(2) makes it very clear that the claim should be accompanied by certain documents and sub-rule (3) makes it clear that if it is not so accompanied, there should be a deficiency memo issued by the Customs giving the exporter a chance to rectify the deficiency. 25.In the instant case, admittedly, no deficiency memo was issued. Therefore, the curative provision in Rule 13(3) was not resorted to. So the filing of claim under Rule 13(2) is not in complete. This Court, therefore, does not find any error in the order of the Tribunal far less any error of law on the face of the record. In this connection, certain decisions cited by the learned Counsel for the respondent No. 1 are discussed below. 26.The first decision cited by the learned Counsel was rendered in the case of Kumud Chandra Nandi Anr. v. Emperor, reported in AIR 1931 Cal. 265 (1). In that case, the provision of Section 87 of the Companies Act, 1913 came up for consideration. The said provision required a notice of change among directors to be g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, so that the main purpose of the Act is not frustrated (see Para 10, page 365 of the report). 29.In the instant case also, this Court finds that filing for such claim with the accompanying document under Clause 13(2) of the said Rule, is a procedural aspect and the said procedure is not mandatory. Therefore, the same should receive a liberal construction. And a filing of documents which has been found incomplete by the appropriate authority, the benefit of drawback cannot be denied. 30.The other judgment cited by the learned Counsel was rendered in the case of Collector of Customs, Calcutta v. Sun Industries, reported in 1988 (35) E.L.T. 241 (S.C.). In that case, the question which came up for consideration was what is meant by export under the Drawback Rules, 1971. The Court held that if the ship had left the Indian port and passed beyond the territorial waters of India, but, thereafter, the engine of the ship developed a trouble and the ship was in the high seas and the goods in question were on board, the export was complete. The fact that subsequently the ship decided to sail back into the territorial water of India was of no consequence. In that case, the goods did not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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