Gujarat High Court
M/S Jbs Exports vs Union Of India on 3 April, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/3825/2023 CAV JUDGMENT DATED: 03/04/2025
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Reserved On : 05/12/2024
Pronounced On : 03/04/2025
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 3825 of 2023
With
R/SPECIAL CIVIL APPLICATION NO. 3827 of 2023
With
R/SPECIAL CIVIL APPLICATION NO. 3833 of 2023
With
R/SPECIAL CIVIL APPLICATION NO. 3856 of 2023
With
R/SPECIAL CIVIL APPLICATION NO. 3859 of 2023
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
==========================================================
Approved for Reporting Yes No
✓
==========================================================
M/S JBS EXPORTS & ANR.
Versus
UNION OF INDIA & ANR.
==========================================================
Appearance:
MR HARSHADRAY A DAVE(3461) for the Petitioner(s) No. 1,2
MR CB GUPTA(1685), MR SIDDHARTH DAVE WITH MR CHIRAYU MEHTA
for the Respondent(s) No. 1,2
==========================================================
CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
CAV JUDGMENT
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(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr.
Harshadray A. Dave for the petitioners,
learned advocate Mr. C.B. Gupta,
learned Senior Standing Counsel Mr.
Siddharth Dave and learned Senior
Standing Counsel Mr. Chirayu Mehta for
the respondents.
2. Rule returnable forthwith. Learned
advocate Mr. C.B. Gupta and learned
Senior Standing Counsel Mr. Siddharth
Dave and learned Senior Standing
Counsel Mr. Chirayu Mehta waives
service of notice of rule on behalf of
the respondents.
3. By these petitions under Article
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226 of the Constitution of India, the
petitioners have challenged the show
cause notices issued by respondent no.2
Joint Commissioner, Customs, Mundra,
Kutch. The show cause notices were
issued in the year 2016.
4. The petitioner is engaged in the
business of export of nut, bolts,
washer, hand tools etc. falling under
Chapter Heading 7318, 8205, 3926 of the
petitioner is exporting the said goods
to Dubai, UAE.
5. Respondent no.2 based upon the
intelligence seized the containers of
the petitioner along with other
exporters on 20.01.2015 on the ground
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that the goods are under weighing and
are not properly classified. According
to respondent no.2, the goods were
required to be classified under Chapter
Heading 7308 and not under Chapter
heading 7318 and therefore, the same
was considered as mis-declared goods.
6. The petitioners preferred Special
Civil Application No.7305 of 2015
challenging the condition imposed by
respondent no.2 for provisional release
of the seized goods which was modified
by this Court requiring the petitioner
to give bond for value of the goods for
provisional release.
7. Respondent no.2 thereafter issued
the impugned show cause notices dated
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12.01.2016 in Special Civil Application
No.3827/2023, Special Civil Application
No.3833/2023 and Special Civil
Application No.3859/2023 and show cause
notice dated 20.12.2016 in Special
Civil Application No.3856/2023 and show
cause notice dated 29.11.2016 in
Special Civil Application No.3825/2023
on three grounds i.e. mis-declaration
of weight, mis-declaration of
classification and mis-declaration of
value of the goods sought to be
exported.
8. The petitioners have therefore,
preferred these petitions challenging
the show cause notices on the ground
that the same are without jurisdiction
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as no action was taken by the
respondents after issuance of the show
cause notices and show cause notices
therefore are deemed to have lapsed.
SUBMISSIONS FOR THE PETITIONER
9. Learned advocate Mr. Harshadrai
Dave submitted that as per the
provisions of section 28(1)(a) read
with section 28(9)(a) of the Customs
Act, 1962 (For short “the Act”), the
show cause notice is required to be
adjudicated within a period of six
months whereas the impugned show cause
notices are issued in the year 2016 and
the same were pending for adjudication
till the petitioners preferred these
petitions in the year 2023 and
therefore, the respondents cannot
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adjudicate upon such show cause notices
after a period of seven years.
10. It was submitted that the impugned
show cause notices are issued without
jurisdiction as the respondent no.2
exercised the powers in excess of the
jurisdiction vested in him. It was
further submitted that approaching
respondent no.2 in compliance of the
show cause notice after a period of
seven years would not be an efficacious
alternative remedy as the action taken
by respondent no.2 constitute an abuse
of process of law. It was therefore,
submitted that in such circumstances,
the petitioners have preferred these
petitions under Article 226 of the
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Constitution of India.
11. Learned advocate Mr. Dave placed
reliance upon the following decisions
in support of his submissions:
1) State of H.P. and others v.
Gujarat Ambuja Cement Ltd and
others reported in AIR 2005 SC
3936.
2) Union of India and anr. v. Vicco
Laboratories reported in AIR 2007
SC (Supp) 1225.
3) Dhampur Sugar Mills Ltd. v.
State of UP and others reported in
(2007) 8 SCC 338.
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4) M/s. Godrej Sara Lee Ltd. v.
The Excise and Taxation Officer cum
Assession Authority reported in
(2023) 384 ELT 8 (SC)
12. It was further submitted that
the shipping bills in question were
finally assessed, and the petitioners
were granted the benefit of duty
drawback and the goods in question have
already been exported out of India and
have reached their respective
destination. It was further pointed out
that duty drawback for the entire
period from 1st January 2011 to 30th
September, 2016 was already paid to the
petitioners and Bank Realisation
Certificates have been issued upon
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realization of the consideration in
foreign exchange declared in the
shipping bills. It was also pointed out
that no appeal challenging the final
assessment of the shipping bills is
preferred by the respondents and appeal
period has already lapsed.
13. It was submitted that the
impugned show cause notices are liable
to be quashed as the same are not
adjudicated upon by the authority from
2016 till 2023, more particularly, when
the impugned notices are for goods
exported by the petitioners from
01.01.2011 to 30.09.2016 and therefore,
show cause notices in some cases is
composite show cause notice of six
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years. It was therefore, submitted that
the impugned show cause notices are
without jurisdiction as the
classification of the goods exported by
the petitioners are already adjudicated
by final assessment of the shipping
bills which has attained finality.
14. Learned advocate Mr. Dave submitted
that co-noticee by a detailed reply to
the show cause notice has also pressed
reliance up on binding precedents with
respect to the classification of the
goods and despite such replies,
respondent no.2 instead of dropping the
proceedings has sought the presence of
the petitioners for personal hearing
which clearly shows mala fide intention
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of respondent no.2.
15. Learned advocate Mr. Dave submitted
that when this Court directed
respondent no.2 to produce the original
file concerning the impugned show cause
notices, it was revealed that the show
cause notices in question were placed
under “Call Book” by respondent no.2
which was never intimated to the
petitioners. It was pointed out that
even respondent no.2 never submitted
before this Court that the impugned
show cause notices were placed under
“Call Book” nor any averment was made
in the two affidavits in reply filed by
the respondents. It was therefore,
submitted that there was breach of
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principles of natural justice on
failure of the respondent authority in
not informing/intimating the petitioner
about placing the impugned show cause
notices in the Call Book. In support of
his submission, reliance was placed on
the following decisions:
1) Union of India v. ATA Freight
Line(I) Pvt Ltd reported in (2023)
6 Centax 153 (SC).
2) ATA Freight Line(I) Pvt Ltd v.
Union of India reported in (2022) 1
Centax 32 (Bom).
3) Commissioner GST and Central
Excise v. Shree Baba Exports
reported in (2023) 3 Centax
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279(SC).
4) Shree Baba Exports v.
Commissioner, GST & C.Ex.
Chandigarh reported in (2022) 381
ELT 53 (P&H).
5) ICICI Home Finance Company Ltd.
v. Union of India reported in
(2024) 20 Centax 390 (Bom).
16. Learned advocate Mr. Dave referred
to and relied upon Rule 16 of the
Custom, Central Excise Duties and
Service Tax Drawback Rules, 1995 (For
short “the Drawback Rules”) for the
goods exported during the period from
01.01.2011 to 30.09.2016 as respondent
no.2 has issued the impugned show cause
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notices to demand differential duty
drawbacks under the said Rule. It was
submitted that though the Rule 16 of
the Drawback Rules is silent as to the
period during which the show cause
notice can be issued by the authority,
however, in similar issue, this Court
in case of Pratibha Syntex Limited v.
Union of India and others (judgment
dated 04.07.2022 rendered in Special
Civil Application No.2039 of 2004) has
held that the period for issuance of
show cause notice under Rule 16 would
be three years from the date of duty
drawback being paid. It was therefore,
submitted that the impugned show cause
notices and subsequent proceedings
initiated by respondent no.2 are beyond
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the period of limitation prescribed by
this Court. The decision of this Court
was followed in various other decisions
and the SLP filed against such decision
including the review petition preferred
by the respondents have been rejected
by Hon’ble Supreme Court.
17. Learned advocate Mr. Dave further
submitted that as per section 128 of
the Customs Act, any person including
the department if aggrieved by the
final assessment must file an appeal
before the stipulated time frame and if
no appeal is filed, assessment would
attain finality and cannot be reopened.
It was submitted that shipping bills
relating to the period covered by the
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impugned show cause notices are already
finally assessed by the Proper Officer
and duty drawback was paid based on
such assessment and no appeal was filed
against the final assessment and period
of filing appeal has also lapsed and
therefore, in such circumstances,
action of respondent no.2 in reopening
such final assessment without any
challenge in appeal is therefore,
beyond the jurisdiction and the
impugned show cause notices are
required to be quashed and set aside.
18. In support of his submission,
reliance was placed on the following
decisions:
1) ITC Limited v. Commissioner of
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Central Excise, Kolkatta IV
reported in (2019) 17 SCC 46.
2) Gargip International v. Union of
India (judgment dated 12.06.2017
rendered in Special Civil
Application No. 17255 of 2016).
3) M/s. S.J.S. International V.
Union of India (judgment dated
9.12.2021 in Special Civil
Application No.20484 of 2019)
19. Learned advocate Mr. Dave
submitted that respondent no.2 has
acted in excess of the powers vested in
it due to failure to follow the binding
precedent.
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20. Reliance was placed on the
decision of Hon’ble Supreme Court in
case of Union of India v. Kamlakshi
Finance Corporation Ltd reported in
1991 (9) TMI 72(SC), wherein Hon’ble
Supreme Court has held as under:
“It cannot be too vehemently
emphasised that it is of utmost
importance that, in disposing of
the quasi-judicial issues before
them, revenue officers are bound
by the decisions of the
appellate authorities; The order
of the Appellate Collector is
binding on the Assistant
Collectors working within his
jurisdiction and the order of
the Tribunal is binding upon the
Assistant Collectors and the
Appellate Collectors who
function under the jurisdiction
of the Tribunal. The principles
of judicial discipline require
that the orders of the higher
appellate authorities should be
followed unreservedly by the
subordinate authorities. The
mere fact that the order of the
appellate authority is not
“acceptable” to the department –
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in itself an objectionable
phrase – and is the subject
matter of an appeal can furnish
no ground for not following it
unless its operation has been
suspended by a competent court.
If this healthy rule is not
followed, the result will only
be undue harassment to assessees
and chaos in administration of
tax laws.”
21. It was therefore, submitted that
respondent no.2 has failed to follow
the binding precedent of appellate
authority, revisional authority and
this Court wherein it is already held
that classification of such goods
sought to be exported by the petitioner
and other exporters would be item
specific and not as per end use and
classification made by the exporters in
Chapter Heading No.7318 was held to be
proper. It was submitted that despite
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such binding decisions, the respondents
have continued to issue the show cause
notices to reopen the assessment on the
ground of classification and as such,
the show cause notices are without
jurisdiction. Reliance was placed on
the following decisions:
1) M/s.S.J.S International
(Special Civil Application No.20484
of 2019).
2) Gargip International v. Union of
India (Special Civil Application
No.17255 of 2016).
3) Vinod Electropating Works(order
dated 19th November, 2015 of
Appellate Commissioner).
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4) Vinod Electropating Works,
(order dated 1st /3rd February, 2022
of revisional authority).
5) Hind Steels, Additional
Commissioner (Export) order dated
20.03.2014.
6) Vinod Electroplating Works,
Additional Commissioner (Export)
Order dated 20.03.2014.
22. With regard to the allegation of
over valuation of the goods exported by
the petitioners leveled in the show
cause notices, it was submitted that
once the value declared in the shipping
bills has been realized and Bank
Realization Certificates are available,
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respondent no.2 could not have made
such allegation. Reliance was placed on
the decision of Hon’ble Supreme Court
in case of Commissioner of Customs,
Mumbai v. Vishal Exports Overseas Ltd
reported in (2007) 9 SCC 168.
23. It was further submitted that
respondent no.2 has failed to apply the
circular No.1053/02/2017-CX issued by
the Central Board of Indirect Taxes
which clearly stipulates that long
standing assessment practice cannot be
changed merely by issuing show cause
notice, but the issue ought to have
been referred to the Board for
consideration. Reliance was placed on
the decision of Hon’ble Apex Court in
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case of Paper Products Ltd. v.
Commissioner of Central Excise reported
in 1999(8) TMI 70(SC) wherein it is
held by Hon’ble Supreme Court that the
departmental circulars are binding on
the revenue authority.
24. Reliance was also placed on the
decision of Hon’ble Supreme Court in
case of Collector of C.Ex. Vadodara v.
Dhiren Chemical Industries reported in
2001 (12) TMI 3 (SC), wherein it is
held that there are circulars which
have been issued by the Central Board
of Excise and Customs which place a
different interpretation and such
interpretation will be binding upon the
Revenue. It was therefore, submitted
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that the respondent authorities have
failed to follow the binding precedent
and legal norms and therefore, the
impugned show cause notices are without
jurisdiction and only remedy available
to the petitioners is to prefer these
petitions under Article 226 of the
Constitution of India.
SUBMISSIONS FOR THE RESPONDETS
25. Per contra, learned advocates for
the respondents submitted that in these
petitions, intelligence was gathered by
the Directorate of Revenue Intelligence
(DRI), Ahmedabad Zonal Unit that
various Jalandhar, Ludhiana and Delhi
based exporters were exporting the
goods from Mundra port claiming higher
duty drawback by way of
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misclassification, short shipment and
over valuation. It was submitted that
“scaffolding items” falling under
Customs Tariff Head (CTH) 7308 were
wrongly classified under CTH 7318 and
8205 where duty drawback rate was
higher and overvaluation was done to
claim higher incentives.
26. It was therefore, submitted that
after inquiry being initiated against
the petitioner and during the
investigation the goods were seized on
reasonable belief that the same were
liable for confiscation. It was
submitted that merely because the goods
were provisionally released, it cannot
be said that show cause notices cannot
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be issued if during the investigation
it is revealed that there is short
shipment, mis-classification and over
valuation of exported goods. It was
therefore, submitted that the impugned
show cause notices are issued for
recovery of fraudulently availed excess
duty drawback by the petitioners under
Rule 16 of the Drawback Rules read with
section 75 of the Customs Act. It was
submitted that though relied upon
documents and evidence have been
provided to the petitioners to
represent their case before the
adjudicating authority, the petitioners
have not complied with the impugned
show cause notices.
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27. It was submitted that as per
Circular No.24/2011 dated 31.05.2011
issued by the Central Board of Excise
and Customs at the relevant time,
Proper Officer can issue the show cause
notice in cases involving collusion,
willful misstatement or suppression of
facts without any time limit and
therefore, the impugned show cause
notices issued by respondent no.2 being
a proper officer cannot be said to be
barred by limitation.
28. It was submitted that though
respondent no.2 has given opportunity
of personal hearing to the petitioners
no one appeared for personal hearing
and in view of stay grated by this
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Court vide order dated 27.03.2023,
respondent no.2 could not proceed with
adjudication as the matter is pending
before this Court. It was therefore,
submitted that respondent no.2 may be
permitted to complete the adjudication
and if the petitioners are aggrieved by
the outcome of the show cause notices,
alternative efficacious remedy by
preferring an appeal is also available
in which the petitioners may raise all
the issues which are raised in these
petitions. It was also submitted that
the petitioners are entitled to raise
all the issues during adjudication of
show cause notices.
29. Learned advocate for the
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respondents referred to the provision
of section 75 of the Customs Act, 1962
which provides for duty drawback on
imported materials used in the
manufacture of goods which are
exported. It was submitted that Rule 16
of the Drawback Rules empowers
respondent no.2 for recovery of
erroneous or excess payment of drawback
and interest and merely because the
shipping bills are self-assessed, it
cannot be said that the same are
finally assessed and respondent no.2
can take recourse to Rule 16 where it
is found on verification, examination
or testing of the goods or otherwise
that self-assessment is not done
correctly and reassessment of the duty
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leviable on such goods is permissible.
30. It was therefore, submitted that in
facts of the case when DRI has found
during the investigation that the
petitioners were making exports
claiming higher duty drawback by way of
misclassification, short shipment and
over valuation by describing the
exported goods with generic description
as “Nuts and Bolts”, “Plastic Caps”,
“Washers”, “Clamps” etc. by
classifying under CTH Tariff Item No.
7318 , 3923, 3926, 8205 etc. but during
the investigation, such goods were
found to be parts of equipment for
scaffolding used for construction work.
It was submitted that as per the report
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of the Chartered Engineer, it was found
that after investigation of the samples
of the goods that these were parts of
scaffolding items, and such fact is
accepted by the partner of the
petitioners in statement recorded by
the officer of DRI.
31. It was therefore, submitted that
the issues raised by the petitioners
can also be considered by the
adjudicating authority during
adjudication process.
32. In support of his submission,
reliance was placed on the decision of
Calcutta High Court in case of M M
Exports v. Zonal Director General of
Foreign Trade reported in 2001 (133)
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ELT 558 (Cal.) wherein it is held that
officer of the Customs Department is
competent authority for assessment and
reassessment of the value of goods. It
was therefore, prayed that no
interference may be made in these
petitions and respondent no.2 may be
permitted to adjudicate the show cause
notices in accordance with law. It was
further submitted that reliance placed
by the petitioners on various decisions
are based upon the facts which are
different and present case cannot be
compared with other consignments not
covered by investigation by DRI as show
cause notices in the present case have
been issued after following findings of
the investigation. It was therefore,
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submitted that no period of limitation
would apply in view of Rule 16 of the
Drawback Rules and the petitioners may
be subjected to the adjudication
process before respondent no.2 in
respect of show cause notices.
DISCUSSION AND FINDINGS:
33. Having heard the learned advocates
for the respective parties and
considering the facts of the case,
following undisputed facts emerge from
the materials placed on record.
(i) On the basis of intelligence
gathered by DRI, searches were
carried out at the office premises
of M/s. D.K. Logistics, Gandhidham
and office premises of M/s. Mak
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Container Line, Jalandhar and
inquiry was also initiated against
the petitioners and examination of
export goods covered under various
shipping bills was also undertaken.
(ii) After search and investigation
and on examination of imported
goods, it was found that same were
mis-declared in terms of quantity
and classification and therefore,
the same were seized by seizure
memo dated 20.1.2015 by DRI.
(iii) Thereafter, respondent no.2 on
receipt of No Objection Letter
dated 27.01.2015 from DRI for
provisional release of the seized
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good, permitted the same to be
provisionally released on execution
of bond of 100% FOB value of goods
along with 25% security in form of
bank guarantee.
(iv) However, the petitioner
approached CESTAT Ahmedabad who
vide order dated 1.05.2015 ordered
for release of goods on furnishing
bond of 100% of value. Accordingly,
goods were released by the customs
authority.
(v) Thereafter impugned show cause
notices were issued by respondent
no.2 based upon the statements
recorded during the course of
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investigation by DRI and report
submitted by Chartered Engineer
after examination of samples drawn
under Panchnama dated 11.02.2015 by
DRI calling upon the petitioners as
to why duty drawback sanctioned
should not be recovered as the
goods in question were
misclassified under CTH 7318
instead of CTH 7308 and for under
valuation and under weighment of
the exported goods.
(vi) After issuance of the show cause
notices, it appears that same were
kept in “Call Book” which fact is
found out from the original file
placed before this Court produced
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during the course of hearing on
5.12.2024.
34. In view of above facts, the main
ground of challenge of the petitioners
to the impugned show cause notices, is
that the show cause notices are without
jurisdiction as the same are not
adjudicated for more than seven years
and approaching respondent no.2 for
adjudication of the show cause notices
would not be an efficacious remedy for
the petitioners as respondent no.2 has
no jurisdiction to issue the show cause
notices in the facts of the case, more
particularly, when such show cause
notices are time barred and respondent
no.2 has failed to take into
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consideration the binding precedent.
35. This Court in case of M/s. SJS
International (supra) in similar facts
after considering similar contentions
raised by the petitioners and the
respondents in the said case, examined
Rule 16 of the Drawback Rules as under:
“7.4 Apt would be to refer to Rule
16 of the Drawback Rules, at this
stage, which speaks of repayment of
erroneous or excess payment of
drawback and interest.
“Rule 16. Repayment of erroneous
or excess payment of drawback
and interest. –
Where an amount of drawback and
interest, if any, has been paid
erroneously or the amount so
paid is in excess of what the
claimant is entitled to, the
claimant shall, on demand by a
proper officer of Customs repay
the amount so paid erroneously
or in excess, as the case may
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to repay the amount it shall be
recovered in the manner laid
down in sub-section (1) of
section 142 of the Customs Act,
1962.”
7.5 It is quite clear from the said
Rule that any amount of drawback
and interest when paid erroneously
or is paid in excess of the
entitlement of the claimant, on
demand by a proper officer of the
Customs, the claimant is required
to repay the amount paid
erroneously or in excess. Rule 16
of the Drawback Rules provides for
recovery of an amount of drawback
and interest paid erroneously or in
excess of what the claimant is
entitled to, on demand by a proper
officer of the customs the same
shall need to be repaid. And, where
he fails to repay the amount, it is
permitted to be recovered in the
manner provided under Sub-section
(1) of Section 142 of the Act. It
is quite clear from Rule 16 of the
Drawback Rules that what all it
provides for is the recovery of
excess drawback paid erroneously,
but choses not to prescribe the
time limit. The question which has
come up for consideration as to
whether in absence of any period of
limitation provided under Rule 16
of the Drawback Rules, any
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reasonable time period could be
read into the said Rule. It also
provides for statutory mechanism of
recovery under Section 142 of the
Act.”
36. This Court applying the decision
in case of SCA No. 2039 of 2004 and
allied matters held as under:
“9.2 The matter came up before this
Court, where it firstly directed the
review before the Revisional Authority
and thereafter once again, when the
petitioner approached before this
Court, the Court held thus:
xxxx
9.3 This decision has also been
followed in case of PADMINI EXPORTS &
1 vs UNION OF INDIA & 2 in Special
Civil Application No.17812 of 2003.
9.4 It is apt to note that these are
binding precedents from 2012. The
authority concerned ought to have
followed the same when the same have
attained finality.
9.5 In Special Civil Application
No.14917 of 2013 to 14921 of 2013 this
Court (Coram: Justice M.R.Shah, as HisPage 41 of 55
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Lordship then was & Justice Sonia
Gokani) in case of E I DUPONT INDIA
PRIVATE LIMITED & 1 vs UNION OF INDIA
& 3 had noticed the case of
Commissioner of Central Excise and
Customs vs. NBM Industries, reported
in 2013(29) STR (208) Gujarat wherein
it had been held that on inputs used
in manufacturing of goods cleared by
DTA units to 100% Export Oriented Unit
(EOU), refund of CENVAT credit is
available and the same cannot be
denied on the ground that the case was
of deemed export. It was insisted that
the refund would be granted only in
case of physical export. This Court
disapproved non following of a binding
decision and despite the direction of
this Court, the respondent had
rejected the refund claims of the
claimant on the ground that the
decision of NBM Industries (supra) is
the case of another assessee and not
in the case of claimant and each one
must fight its own battle and must
succeed or fail in such proceedings.
It also had relied on the decision of
the Madras High Court reported in
2007(211) ELT 23 (Madras) which was
against the assessee.
9.6 This Court taking note of various
decisions had directed that the action
of the rejection of refund claim
cannot be sustained and deserve to be
quashed and set aside. While parting,
the Court in very strong words
disapproved the arbitrary act on the
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part of the lower adjudicating
authority and in ignoring the binding
precedents. Apt would be to refer to
those words:
“[6.0] In view of the above and for
the reasons stated above and the
decision of this Court in the case
of NBM Industries (Supra), the
impugned orders passed by the
respondent No.4 rejecting the
refund claims of the petitioner
cannot be sustained and they
deserve to be quashed and set aside
and are accordingly quashed and set
aside and the respondents –
adjudicating authorities are hereby
directed to sanction the respective
refund claims of the claimant after
following the law laid down by this
Court in the case of NBM Industries
(Supra) and pass fresh orders
within a period of two months from
the date of the receipt of the
present order and to make the
actual payment within a period of
four weeks thereafter and also
grant consequential reliefs which
may be available to the petitioners
under the relevant provision of the
rules more particularly Rule 5 of
the Rules.
[6.1] Before parting with the
present order, we are constrained
to strongly disapprove such
arbitrary act on the part of the
lower adjudicating authority and/or
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lower authorities in ignoring the
binding decisions/orders passed by
the higher appellate
authorities/courts. Time and again
the Hon’ble Supreme Court as well
as various High Courts and this
Court have disapproved such
conduct/act on the part of the
lower authorities in ignoring the
binding decisions/orders passed by
the higher appellate
authorities/courts. Still it
appears that message has not
reached the concerned authorities.
In the recent decision in the case
of Claris Lifesciences Ltd. (Supra)
in para 26 this Court has observed
as under:
“26. Despite such clear and
specific directions and
authoritative pronouncements,
act of issuance of show cause
notice by the Deputy
Commissioner is wholly
impermissible and unpalatable
and deserves to be quashed and
struck down with a specific
note of strong disapproval. The
respondents simply could not
have exercised the powers
contained under the statute in
such arbitrary exercise and in
complete disregard to the
pronouncement of this Court
particularly reminding the
Revenue authorities of the
binding effect of decision ofPage 44 of 55
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Tribunal on the identical
question of law. This not only
led to multiplicity of
proceedings but also speaks of
disregard to the direction of
this Court rendered in the
earlier petition of this very
petitioner. Resultantly,
petition stands allowed. Both
the show cause notices dated
21.8.2012 and 22.1.2013 are
quashed and struck down.”
It appears that still the message
has not reached the concerned
authorities in following the
binding decisions of the higher
appellate authorities and/or courts
solely on the ground that the same
is in the case of another assessee.
Such a conduct is also required to
be viewed from another angle. This
would not only amount to
disregarding the direction of the
court rendered in earlier petitions
but would also lead to multiplicity
of proceedings. When the courts are
overburdened and are accused of
arrears, it is the duty of the
concerned authorities to avoid
multiplicity of proceedings and
lessen the burden of the courts.
Being a part of the justice
delivery system. All efforts should
be made by the authorities/quasi
judicial authorities and judicial
authorities to see that there is no
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multiplicity of proceedings and to
pass the orders considering the
binding decisions. It would also
avoid unnecessary harassment to the
parties as well as the unnecessary
expenditure.
[6.2] As observed hereinabove
despite clear and unequivocal
message by the pronouncement of the
decisions by the Hon’ble Supreme
Court as well as this Court, the
message has not reached to the
concerned authorities, we direct
respondent No.2 – Central Board
Excise and Customs, New Delhi to
issue a detailed circular to all
the adjudicating authorities
considering the observations made
by this Court in the present
judgment and order as well as the
law laid down by the Hon’ble
Supreme Court in various decisions
referred to in the present judgment
and order, within a period of 30
days from the date of receipt
of the present order so that such
eventuality may not happen again
and again.”
10. In the instant case, the grievance
on the part of the petitioners is that
the Order-in-Original does not
recognize the issue of limitation
although the same being the settled
law. Here the petitioners have
exported the articles from Mundra Port
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and had claimed that drawback and
benefit under the Focus Product Scheme
(FPS). The allegation has been that it
had indulged in misuse of drawback
scheme and FPS and other exports
incentives by way of making export of
scaffolding items falling under CTH
No.7308 by placing under CTH
Nos.731816000, 39235010, 39269099 and
82057000 with the allegation of export
of less quantity of goods than what
was declared and over valuing of the
export products. After the proper
officer had allowed the export to be
made, the DRI has initiated the
action.
11. Admittedly, the export of goods
covered under shipping Bill
Nos.6982047 and 6982039 both dated
01.01.2015 and export goods covered
under shipping Bill Nos.6998694 and
6997757 both dated 02.01.2015 had been
seized carrying out the panchnama
dated 08.01.2015. The DRI had
allegedly noticed the shortage of 3205
Kg and 2990 Kg than what had been
declared in the shipping bills. The
goods were detained pending the
inquiry and were handed over for safe
custody. After the seizure of the
goods as per Section 110 of the
Customs Act, the DRI, Ahmedabad wrote
a letter to the Joint/Additional
Commissioner of Customs for giving ‘No
Objection’ for provisional release of
seized goods.
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11.1 On execution of bond of 100% FOB
value of goods along with 25% security
in the form of Bank Guarantee, the
same had been permitted.
11.2 The petitioners had challenged
this provisional release by
approaching the CESTAT, which vide
order dated 01.05.2015 released the
seized goods on furnishing the bond of
100% value and accordingly, goods were
provisionally released for the exports
by the custom authority.
12. This Court notices the detailed
Order-in-Original adjudicating the SCN
against which there is already a
channel of appeal provided and
thereafter, if the party is still
aggrieved, the revisional authority
can also be approached by the
litigating party. However, here
previously SCN of dated 12.01.2016 in
relation to the seized goods was
already issued and yet, another SCN is
issued, the revenue has not challenged
what has been held favoring the
petitioner and the petitioner has
challenged it on the ground of breach
of principles of natural justice as
well as on substantive issues.
13. The petitioner has approached this
Court as the actions have been taken
of issuance of the SCN in relation to
the search made on 10.01.2015, the SCN
has been issued on 09.02.2018. It is
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thus clear that for the export which
had been made in the years 2011 to
2015 and for the shipping Bills of
01.01.2015 for which the duty drawback
had been given to the petitioner in
the year 2016, this action has been
initiated before expiry of a period of
three years so far as some bills are
concerned. As held by this Court in
case of PRATIBHA SYNTEX LIMITED vs.
UNION OF INDIA & OTHERS, Rule 16 of
the Drawback Rules though does not
provide for the period of limitation,
the reasonable period of limitation
has to be read into the same and the
SCN issued before expiry of a period
of three years from the date of
payment of the drawback to the
petitioner cannot provide a reason for
the Court to hold that the same as
time barred.
14. The petitioners have shown the
procedure for export of goods. It is a
detailed procedure to urge that the
petitioners have exported the goods
following the procedure upon the
export permitted by the proper officer
and the final shipping bills being
generated, the petitioners were
entitled to duty drawback as the
shipping bills were filed through EDI
system. Under the EDI system, once the
final shipping bill is generated, the
same becomes the final claim for the
duty drawback according to the
petitioner and the same needs to be
paid within three working days as per
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the Circular No.25 of 2000 of the
department.
15. We note that the show cause notice
is issued by the authority for the
shipping bills from the years 2011 to
2015. The list of shipping bills has
been given & barring a very few
shipping bills which have been
submitted here duty drawback has been
paid to the petitioner for numerous
shipping bills from 2011 to 2014 long
before and therefore, any show cause
notice issued after a period of three
years from the date when drawback came
to be paid, cannot be sustained. This
is also one serious breach deserving
indulgence. In relation to most of the
shipping bills, duty drawbacks have
been paid where this decision would
come to the rescue of the petitioner.
And, where completion of 3 years is
not happening for those payments of
duty drawbacks made in the year 2016
there appears to be no breach of
required time period. Assuming that
for the some of the shipping bills for
which the show cause notice has been
issued, the decision of this Court for
limitation will apply as the payment
is of 2016 and the SCN is of 2018,
period prescribed for payment is three
days on presentation and delay on the
part of the respondent also cannot
take away the right of party.
16. As held above in case of those
shipping bills as the show cause
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notice essentially cannot be issued
beyond the period of three years of
payment of the duty drawback, and that
being a settled legal position, if not
regarded, this Court needs to
interfere. Again, the proper officer
who assesses the shipping bills will
be in a position to reopen the same
provided that there is such a stage of
reopening the shipping bill filed once
are self assessed, that would attain
finality upon the proper officer
clearing the same. Had there been any
discrepancy, the proper officer would
not consider the self assessment final
and would obviously assess the
shipping bill before finalizing.
17. In the instant case, the shipping
bills had been finally assessed and
the assessment had attained finality.
The aggrieved party having any issue
on the classification would need to
approach the appellate authority
instead of reopening the assessment by
issuing the show cause notice. The
appeal appears to have become time
barred as averred by the petitioners,
the show cause notice is on account of
the misclassification.
18. However, the Court needs to regard
that the core issue raised in SCN is
of classification which is concluded,
and no challenge is made by the
revenue. It has also questioned this
after the export is already made and,
even when the statutory provision
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permits the same, settled legal
position would preclude such challenge
when made beyond a specific time
period. Additional reason is of the
time stipulated for clearing the
shipping bill which is of three days
(3) and any late clearance also cannot
furnish the reason to permit issuance
of the SCN calculating from the date
of payment of duty drawback. Even if,
this angle is not dilated and left to
the parties to argue before the
concerned authority, at the best, for
those bills where payment of duty
drawback is within 3 years of the
issuance of SCN, the adjudication can
be permitted. This has not been at all
considered in the order in original.
Again, with no challenge having been
made by the department to the decision
of the proper officer where many of
the aspects of the petitioners have
been accepted and with non
consideration of the decision of this
Court as discussed at length,
interference would be necessary.
19. The initiation of the action on
the part of the DRI on an intelligence
of is severally questioned when the
proper officer has already held in
favour of the assessee classifying the
item of export under a different head.
Reliance is placed also upon the case
of M/S.CANNON INDIA PRIVATE LIMITED
V/S. COMMISSIONER OF CUSTOMS, reported
in 2021 AIR 1699 to urge that the DRI
has no powers to initiate action
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against the petitioner. This surely
is an additional and potent ground
for the Court to regard the binding
decision of the Apex Court and hold
in favour of the petitioner.
19.1 Even without touching the
ratio laid down in case of
M/s.Cannon India Private Limited
(supra) as this decision came
recently, on non consideration of
the ground of limitation also,
interference is desirable.
20. Resultantly, this petition is
allowed partly. The action of the
respondent authority of issuance of
the SCN dated 09.02.2018 is
interfered with. The SCN in the
present form is quashed and set
aside with all consequential
actions with a clarification that
for the shipping bills not covered
by the decision of PRATIBHA SYNTEX
LIMITED (supra), the authority
shall be permitted to proceed if
allowed otherwise under the law.”
37. We are therefore of the opinion
that the decision in case of M/s. SJS
International of this Court in similar
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facts would be squarely applicable to
the facts of the present case also.
38. However, in the facts of the
present case, there is one additional
factor that impugned show cause notices
were kept in “call book” which was
never informed to the petitioner and
the show cause notices were not
adjudicated for seven years and hence
even if the show cause notices are
issued within three years from date of
shipping bill, the same would not be
saved in view of inordinate delay for
not adjudicating the same. Therefore,
these petitions are allowed and the
impugned show cause notices with all
consequential actions are quashed and
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set aside. Rule is made absolute to the
aforesaid extent. No order as to costs.
(BHARGAV D. KARIA, J)
(D.N.RAY,J)
RAGHUNATH R NAIR
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