Drawback at All industry rate of value of exported goods was allowable

Messrs Mahalaxmi Rubtech Ltd. Vs Union of India (Gujarat High Court)

Conclusion: Since in the present case, the amendment of shipping bills by converting them into Drawback shipping bills was possible on the basis of the documentary evidence which was in existence at the time the goods were cleared for export and the benefit of Drawback at All industry rate of 1.5% of value of the exported goods was also possible to be allowed, the impugned circular to the extent of para 3(a) was ultra vires Articles 14 and 19(1)(g) of the Constitution of India as also ultra vires Section 149 of the Customs Act, 1962. It was declared that the writ applicant was entitled to the drawback of Rs.11,18,458/­ being the principal amount with statutory interest as provided in Rule 14 of the Drawback Rules.

Held: In the present case, no verification whatsoever of the goods or any examination of the exported goods was required, because the claim for Drawback was at the All industry rate, which was the common and general rate fixed by the Central Government for all exporters of the goods in the country. If the writ applicant herein had been claiming Drawback at the special brand rate, then the amendment of shipping bills by allowing conversion into Drawback shipping bill might not be possible only on the basis of the documentary evidence which was in existence at the time the goods were cleared for export. For fixing brand rate, examination of the goods and also verification of the goods as well as inputs, raw materials, input services etc. used for such goods would be necessary; and such verification would be impossible once the goods have been exported. But for Drawback at All industry rate, the only requirement would be to consider the export documents where the description, quantity and value of the goods had been recorded, and verified as well as assessed by the Custom Officers while allowing clearance of the goods for export. On the value so assessed by the Custom officers, the calculation of Drawback at All industry rate was only an arithmetical exercise, which could be easily done on the basis of the documentary evidence (i.e. the export documents like shipping bill and export invoice) which was in existence when the goods were cleared for export. Since in the present case, the amendment of shipping bills by converting them into Drawback shipping bills was possible on the basis of the documentary evidence which was in existence at the time the goods were cleared for export and the benefit of Drawback at All industry rate of 1.5% of value of the exported goods was also possible to be allowed, the judgement of the Delhi High Court in case of M/s. Terra Films Pvt. Ltd. was not applicable. Thus, the impugned circular to the extent of para 3(a) was ultra vires Articles 14 and 19(1)(g) of the Constitution of India as also ultra vires Section 149 of the Customs Act, 1962. In the result, this writ application was hereby allowed. It was declared that the writ applicant was entitled to the drawback of Rs.11,18,458/­ being the principal amount with statutory interest as provided in Rule 14 of the Drawback Rules.

FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT

1 By this writ application under Article 226 of the Constitution of India, the writ applicant, a company, has prayed for the following reliefs:

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