Case Law Details
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.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The petitioner claims that they are statutorily entitled for duty drawback and the shipping bills filed by them in this regard have to be treated as a claim for duty drawback. The petitioner has filed five drawback claims in respect of five shipping bills bearing Nos.4578261, 3554406, 3613576, 3866876 and 4993062 dated 08.12.2015, 14.10.2015, 17.10.2015, 31.10.2015 and 30.12.2015 respectively for the claim of Rs.2,70,256/-, Rs.2,39,429/-, Rs.2,32,949/-, Rs.1,15,955/- and Rs.2,70,085/- respectively. According to the petitioner, arbitrarily, the duty drawback claim in respect of the five shipping bills, referred to supra, was zeroed on 11.06.2018 and 12.6.2018. According to the petitioner, the respondent has unilaterally proceeded to reject the drawback claims made by the petitioner. According to the petitioner, no speaking order was passed informing the reasons for
2. Learned counsel for the petitioner drew the attention of this Court to the Customs Central Excise Duty and Service Tax Drawback Rules, 1995 and in particular, referred to Rule 13(3)(a) and would submit that it is the responsibility of the respondent that in case the claim for drawback made by the exporter is incomplete in any material particulars or is without the documents specified in sub-rule 2, the same shall be returned to the claimant with a deficiency memo in the form prescribed by the Commissioner of Customs within 10 days and shall be deemed not to have been filed for the purpose of Section 75A of the Customs Act. Learned counsel for the petitioner would submit that the mandatory procedure, referred to supra, has not been followed by the respondent as they did not return the drawback claim made by the petitioner along with the deficiency memo as prescribed in the rule.
3. Learned counsel for the petitioner drew the attention of this Court to the impugned order dated 06.12.2023 passed by the respondent and would submit that the rule, which makes it mandatory on the part of the respondent to produce deficiency memo along with the return of the duty drawback claim made by the petitioner, has not been considered and it is also an admitted fact that the deficiency memo, as prescribed under the Customs Central Excise Duty and Service Tax Drawback Rules, 1995, was not furnished to the petitioner, while returning the duty drawback claim made by the petitioner. Therefore, he would submit that the impugned order has to be quashed.
4. On the other hand, the learned Standing Counsel appearing for the respondent would submit that after the implementation of the Indian Customs EDI Systems (hereinafter referred to as ‘ICES’) module, the filing of shipping bills in physical copy was discontinued and Indian Customs Electronic Data Interchange Gateway (hereinafter referred to as ‘ICEGATE’ is being used, which is the national portal of Indian Customs of Central Board of Indirect Taxes and Customs (hereinafter referred to as ‘CBIC’) that provides e-filing services to the trade, cargo carriers, and other trading partners electronically. Therefore, according to him, the queries raised by the respondent, pertaining to the five shipping bills, for which, the petitioner had claimed duty drawback, were directly raised in ICES itself and the same were available for a long time to enable the petitioner to reply through ICEGATE. Therefore, he would submit that being aware of the queries raised by the respondent on the petitioner with regard to the petitioner’s duty drawback claim, the petitioner cannot now rely upon the rule, which prescribes that deficiency memo will have to be furnished to the petitioner for the five shipping bills submitted by the petitioner for which duty drawback claim has been made. Learned Standing Counsel for the respondent also submits that the petitioner is also aware of the Public Notice 17/18 dated 09.03.2018, which has zeroed the duty drawback claim of the petitioner in ICES. He would also submit that the petitioner failed to appear for personal hearing or replied to the queries within the stipulated time period as specified in the Public Notice 17/18 dated 09.03.2018. He would submit that the petitioner, being aware of the Public Notice, cannot now claim that they have not been informed of the deficiency memo in the five shipping bills for which duty drawback claim has been made by the petitioner. He would submit that the impugned order has been passed only in accordance with law and therefore, it has to be confirmed by this Court.
5 .As on the date of submission of the five shipping bills by the petitioner, it is an admitted fact that the Customs Central Excise Duty and Service Tax Drawback Rules 1995, more particularly, Rule 13(3)(a), which the petitioner relies upon, was in force. Only thereafter, the implementation of the Indian Customs, EDI Systems, module for filing of shipping bills in physical copy was discontinued and presently, Indian Customs Electronic Data Interchange Gateway (herein after referred to as ‘ICEGATE’) is being used, which is the national portal of Indian Customs of Central Board of Indirect Taxes and Customs. Rule 13(3)(a) of the Customs Central Excise Duty and Service Tax Drawback Rules 1995 is extracted hereunder:
‘If the said claim for drawback is incomplete in any material particulars or is without the documents specified in sub-rule (2), it shall be returned to the claimant with a deficiency memo in the form prescribed by the Commissioner of Customs within 10 days and shall be deemed not to have been filed for the purpose of Section 75-A.’
6. As seen from Rule 13(3)(a) referred to supra, it is clear that while returning the duty drawback claim, a deficiency memo in the form prescribed by the Commissioner of Customs within 10 days shall be given to the petitioner. Admittedly, in the case on hand, the deficiency memo contemplated in Rule 13(3)(a) has not been given to the petitioner.
7. Learned Standing Counsel for the respondent would submit that the Central Government is having the power to relax any of the rules prescribed under the Customs Central Excise Duty and Service Tax Drawback Rules 1995 and only by exercising the said power, the respondent issued a Public
8. The petitioner has categorically stated that they are not aware of the Public Notice. In the impugned order, the respondent has also not considered Rule 13(3)(a) of the Customs Central Excise Duties and Service Tax Drawback Rules 1995, which makes it clear that while returning the duty drawback claim, the respondent will have to furnish the deficiency memo in the form prescribed by the Commissioner of Customs. Admittedly, the Public Notice relied upon by the learned Standing Counsel for the respondent was issued only in the year 2018, though the duty drawback claim made by the petitioner for the five shipping bills pertains to the year 2015. Therefore, the submission made by the learned Standing Counsel for the respondent, who has relied upon the Public Notice, referred to supra, has to be rejected.
9. According to the respondent, queries were raised by the respondent on 22.12.2015, 20.04.2016, 03.01.2016, 02.01.2016, 18.01.2016 and 28.03.2016 and the petitioner did not reply to most of the queries.
10. Admittedly, in the impugned order, the respondent has not considered Rule 13(3)(a) of the Customs Central Excise Duty and Service Tax Drawback Rules, 1995 which were applicable on the date when the petitioner had made a duty drawback claim in respect of five shipping bills submitted by them. Rule 13(3)(a) of the Customs Central Excise Duty and Service Tax Drawback Rules, 1995 also makes it clear that while returning the duty drawback claim, the respondent will have to issue a deficiency memo in the form prescribed by the Commissioner of Customs within 10 days.
11. In the case on hand, admittedly, no such deficiency memo, as prescribed under the aforesaid rule, was furnished to the petitioner by the respondent while returning the duty drawback claim made by the petitioner.
law, after giving due consideration to the contentions of the petitioner as well as the respondent as raised in the counter before this Court.
12. This Court is not expressing any opinion on the merits of the matter. It is for the respondent to consider the same, on merits and in accordance with law, after affording three personal hearings to the petitioner.
13. For the foregoing reasons, the impugned order dated 06.12.2023 passed by the respondent is hereby quashed and the matter is remanded back to the respondent for fresh consideration, on merits and in accordance with law. The respondent, while passing the final order, shall consider all the contentions raised by the petitioner as well as the respondent including the contentions raised in the counter filed by the respondent before this Court and shall pass final orders, on merits and in accordance with law, within a period of eight weeks from the date of receipt of a copy of this order, after affording three personal hearings to the petitioner. With the above directions, this writ petition is disposed of.
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