Royale Marine Impex Pvt. Ltd. Vs Assistant Commissioner of Customs (EDI-Drawback) (Madras High Court)
Conclusion: Since customs authority had failed to follow the mandatory procedure under Rule 13(3)(a) of the Customs, Central Excise Duty and Service Tax Drawback Rules, 1995, by not issuing a deficiency memo within the prescribed timeline before rejecting the claims, therefore, the customs department was directed to reconsider the matter.
Held: Assessee had filed duty drawback claims pertaining to five shipping bills dated between October and December 2015, cumulatively amounting to over ₹11 lakh. According to assessee, these claims were arbitrarily “zeroed out” in June 2018 without any speaking order or prior intimation, and without issuing a deficiency memo highlighting the alleged deficiencies in the claims. Assessee argued that Rule 13(3)(a) of the 1995 Rules mandated that in case of an incomplete or defective drawback claim, the same must be returned with a deficiency memo within 10 days, failing which the claim could not be deemed unfiled. However, in the present case, no such memo was ever served. Assessee asserted that this was a gross violation of the mandatory statutory procedure, rendering the rejection order illegal. In response, the customs department contended that with the advent of the Indian Customs EDI System (ICES) and the ICEGATE portal, queries regarding the drawback claims were raised electronically, and assessee failed to respond or attend personal hearings as per Public Notice No. 17/18 dated 09.03.2018. Department claimed that the electronic communication of queries fulfilled the requirement of issuing deficiency memos. It was held that the customs authority had failed to follow the mandatory procedure under Rule 13(3)(a) of the Customs, Central Excise Duty and Service Tax Drawback Rules, 1995, by not issuing a deficiency memo within the prescribed timeline before rejecting the claims. The Court held that 2015 claims were governed by the then-prevailing legal framework, which expressly required issuance of a deficiency memo in a prescribed format under Rule 13(3)(a). The Public Notice cited by the department was issued in 2018, well after the relevant shipping bills had been filed, and could not be retrospectively applied. Moreover, the Court noted that the impugned order did not reflect or discuss the mandatory provisions or the contentions raised by assessee, rendering it a non-speaking order. The court, without expressing any opinion on the merits of the case, directed the customs department to reconsider the matter. It quashed the impugned order dated 06.12.2023 and remanded the matter back to the Assistant Commissioner of Customs. The officer had been directed to pass a fresh, reasoned order within eight weeks, after granting assessee three personal hearings and considering all relevant contentions on merits and in accordance with law.
