By TIOL News Service

CHENNAI, JULY 27, 2018: THE petitioner filed 27 'supplementary' claims under Rule 15 of the Drawback Rules. The same were rejected by the lower authorities on the ground of delay as they were filed after 12 months period including the three months condonable period granted under the Drawback Rules. As the revision applications were also dismissed, the petitioner is before the Madras High Court.

It is submitted that they had made a specific prayer for exercising the power under Rule 17 of the Drawback Rulesand relax any of the provisions of the Drawback Rules but the same was not considered. Reliance is placed on the decision in Greaves Cotton Ltd. - 2018-TIOL-95-HC-MAD-CUS to seek a remand in the matter. Also referred is the decision in Acer India Pvt. Ltd. - 2015-TIOL-1745-HC-KAR-CUS.

The counsel for the Revenue sought to distinguish the Madras High Court decision in Greaves Cotton Ltd. and submitted that the Drawback Rules, more particularly, Rule 15 of the said Rules is a complete code by itself and the limitation for maintaining an application for ‘supplementary' claim has been specified under the Rules and this limitation period cannot be extended by the Government or by the Court. Further, rule 17 of the Rules which deals with power to relax, does not speak about the power to condone the delay in filing a supplementary drawback claim, but it is a power of the Central Government in relation to the export of any goods; that the view of the concurrent findings of the lower authorities should be confirmed and the petition be dismissed.

The High Court observed that the petitioner had exported 27 consignments to various countries and claimed drawback in terms of the rates announced by the Central Government u/s 75 of the Customs Act, 1962 read with Drawback Rules, 1995; that by Notification No. 77/2003-CUS(NT) dated 18.09.2003, the Central Government retrospectively revised the drawback rates for those goods, which were exported by the petitioner.

That on account of the revised rate of drawback sanctioned by the Government, the petitioner had to necessarily file a supplementary claim as per Rule 4 of the Drawback Rules and the period for filing such an application is three months from the date of publication of the notification in the Official Gazette; however, the supplementary claim was not filed within the said period but filed on 25.09.2004 after being advised by their Consultant.

Inasmuch as in view of the delay of 12 months and 7 days in filing the claim, the original authority rejected the same as time barred and the appeals filed by the petitioner seeking condonation of the delay were dismissed on the ground that no such powers exist.

After examining the case laws cited by the petitioner, the High Court extracted the provisions of rule 15 of the Drawback Rules dealing with supplementary claim and observed thus -

++ This Rule can be invoked when the exporter finds that the amount of drawback paid to him is less than what he is entitled to. In the instant case, the supplementary claim made by the petitioner for the 27 export consignments was as a result of the Central Government issuing Notification No. 77/2003-CUS(NT) dated 18.09.2003, revising the drawback rates with retrospective effect on the goods, which were exported by the petitioner. Thus, the supplementary claim made by the petitioner was not on account of any error or mis-calculation done by the petitioner or for any reason attributable to the petitioner.

++ The period of limitation for filing the supplementary claim has been provided in the proviso to the said Rule and Clause (i) of the proviso would be attracted, since the rate of drawback was determined or revised under Rule 4 of the Rules and the period of limitation was three months from the date of publication of such rate in the official gazette. The second proviso in Rule 15 empowers the Assistant Commissioner of Customs or Deputy Commissioner of Customs to extend the aforesaid three months period of limitation for a further period of nine months on being satisfied that the exporter was prevented by sufficient cause from filing his supplementary claim within the period of three months. Thus, the period of limitation as per Rule 15(1)(i) read with the second proviso is 3 months + 9 months, i.e., = 12 months.

++ Central Government Standing Counsel for the Revenue is right in his submission that Rule 15 provides for an outer time limit for condonation of delay in filing the supplementary claim petition. It is his submission that if the Rule prescribes the time limit for filing the application, the same cannot be extended by the Court and in this regard, the learned counsel drew parallel to the provisions of the Arbitration and Conciliation Act, 1996.

++ While the Court would accept the submission of the learned Central Government Standing Counsel for the respondent, what is required to be examined in the instant case is whether the Drawback Rules provide for any other remedy or power for the assessee or the Department. If we examine Rule 17, it is seen that the power to relax the Rules has been granted to the Central Government.

++ To exercise the power under Rule 17, satisfaction of the Central Government is primordial. This satisfaction should be with regard to the fact that the exporter failed to comply with any of the provisions of the Rules for reasons beyond his control and as thus, been entitled to drawback. The Central Government may after considering the representation and for reasons to be recorded in writing, exempt such exporter or agent from the provisions of such Rule and allow drawback in respect of such goods.

++ The power conferred on the Assistant Commissioner/Deputy Commissioner of Customs under the second proviso to Rule 15 is no doubt limited. The Central Government, under the Scheme of the Act and Rules, is the Revisional Authority , as legislature thought it fit to confer additional powers on the Central Government. Therefore, it cannot be stated that the power under Rule 17 is in derogation of the other provisions of the Rules. Equally, the argument that Section 15 should be treated as code by itself and Rule 17 would have no application is an argument, which is stated to be rejected more so on account of the language of Rule 17.

++ What has to be noted is that a claim for drawback can arise only in a case where an export occurs. Therefore, to state that Rule 17 would have no application is a very narrow and incorrect way of interpreting Rule17. Above all, the object of the Drawback Rules is to encourage and boost exports and if the entitlement for drawback is interpreted to be on par with the exemption notification, then what is essential is compliance of the mandatory conditions.

++ So far as the procedural aspect is concerned, always liberal interpretation is given so that the exporter or the importer gets the benefit of the scheme framed by the Government.

++ The respondents in the counter affidavit have taken strong exception to such a statement made by the petitioner stating that ignorance of procedure cannot be excused for condonation of delay, which is beyond the permissible period of 12 months. In my understanding what the petitioner has stated is that they were not properly advised that they would have entitled to get the benefit of the revised drawback rate only upon filing a supplementary claim and on enquiry, they were orally informed that the drawback amount would be automatically credited to their account, since it is the decision of the Government of India to revise the rate of drawback retrospectively. Therefore, I am of the view that the petitioner should not be non-suited on the ground stated by the respondents.

++ Even if a different interpretation is sought to be given to Rule 17, this is not a case where the petitioner should be denied the benefit of revised rate on such interpretation, as the delay beyond 12 months is only 7 days.

The Writ petition was allowed.

The impugned order was set aside and the Dy. Commissioner of Customs, Drawback was directed to apply the revised drawback rates as notified by the Central Government in Notification No. 77/2003-CUS(NT) dated 18.09.2003 and sanction and effect payments of the amount to the petitioner within a period of three months.

(See 2018-TIOL-1457-HC-MAD-CUS)