Custom duty demand for alleged non-repatriation of export proceeds: Kerala HC Grants Opportunity

Frontline Exports Pvt Ltd Vs Deputy Commissioner (Kerala High Court)

Custom duty demand for alleged non-repatriation of export proceeds: Kerala HC Grants Opportunity

Frontline Exports Pvt Ltd, a seafood export company, faced allegations of non-repatriation of export proceeds. The Kerala High Court recently addressed this issue in a significant judgment.

The petitioner, Frontline Exports Pvt Ltd, claimed duty drawback under Section 75 of the Customs Act, 1962, for exporting marine products. However, they were served with an order demanding Rs. 87,58,913 for alleged non-repatriation of export proceeds related to 374 shipping bills.

The petitioner contested the demand, asserting that they had indeed repatriated the export proceeds. They provided evidence, including a certificate from Federal Bank Limited and receipts from the Customs Department, indicating compliance.

The court considered both sides’ arguments and found the allegation of non-repatriation to be incorrect. It noted that the petitioner had provided evidence suggesting repatriation and directed the adjudicating authority to reconsider the matter, granting the petitioner an opportunity to prove repatriation.

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

Petitioner is a Company engaged in sea food export. The petitioner is entitled to claim duty draw back under Section 75 of the Customs Act, 1962, at the rates published in the Drawback Schedule. According to the petitioner, the petitioner had exported marine products to various buyers during the period from 06.01.2020 to 30.06.2022 and claimed duty drawback . The petitioner has now been served with Ext.P1 order confirming the demand of Rs.87,58,913/- (Rupees Eighty seven lakhs fifty eight thousand nine hundred and thirteen only), alleging non-repatriation of export proceeds against 374 shipping bills mentioned therein.

2. Learned counsel appearing for the petitioner submits that the demand raised on the basis that there is non-repatriation of export proceeds in respect of 374 shipping bills for the period from 06.01.2020 to 30.06.2022, is absolutely incorrect. It is submitted that the notice issued by the adjudicating authority, calling upon the petitioner to produce the details was not received by the petitioner. It is submitted that Ext.P2 certificate issued by the Federal Bank Limited will indicate that there has been repatriation of export proceeds and that wherever there has not been any repatriation, the petitioner has paid the amounts as is evident from Exts.P4 and P5 receipts issued by the Customs Department. It is submitted that, in such circumstances, Ext.P1 order of adjudication may be set aside and the adjudicating authority may be directed to reconsider the matter afresh, after affording an opportunity of hearing to the petitioner.

3. Learned Standing Counsel appearing for the Department would vehemently oppose the grant of any relief to the petitioner. It is submitted that, a reading of Ext.P1 order will show that the demand against the petitioner was on account of the failure of the petitioner to produce necessary documents substantiating the repatriation of export proceeds. It is submitted that the petitioner cannot be heard to contend that no notice was received by the petitioner. It is submitted that there is no ground made out for interference with Ext.P1 order under Article 226 of the Constitution of India.

4. Having heard the learned counsel appearing for the petitioner and Adv. Sreelal N. Warrier, the learned Standing Counsel appearing for the Customs-Department, I am of the view that the in the light of the submission of the learned counsel appearing for the petitioner that the finding in Ext.P1 that there has not been repatriation of export proceeds in respect of 374 shipping bills during the period from 06.01.2020 to 30.06.2022 is obviously a mistake. I am of the opinion that one further opportunity can be granted to the petitioner to prove before the adjudicating authority that such export proceeds have actually been repatriated. Accordingly, to provide the petitioner one last opportunity to prove before the adjudicating authority that the export proceeds have already been repatriated, Ext.P1 order will stand set aside. The petitioner shall appear before the respondent at 11.00 A.M on 26.03.2024 along with all necessary documents to prove that there has been repatriation of export proceeds as claimed by the petitioner. The respondent shall, thereafter, proceed to adjudicate the matter afresh, after affording an opportunity of hearing to the petitioner. This order is issued taking into consideration the fact that Ext.P2 prima facie suggests that there has been repatriation of export proceeds and this fact has not been noticed by the respondent in Ext.P1 order.