Delhi High Court
Rajbir Singh vs Union Of India & Ors. on 8 April, 2025
Author: Prathiba M. Singh
Bench: Prathiba M. Singh
$~113
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 8th April, 2025
+ W.P.(C) 4496/2025
RAJBIR SINGH .....Petitioner
Through: Mr. Anurag Soan, Advocate.
versus
UNION OF INDIA & ORS. .....Respondents
Through: Mr. Arnav Kumar, CGSC with Mr.
Priyam Gandhi and Ms. Savi Garg,
Advocates for R-UOI.
Mr. Gibran Naushad, Sr. Standing
Counsel with Mr. Harsh Singhal and
Mr. Suraj Shekhar Singh, Advocates
for R-2.
Mr. Avijit Dikshit, Standing Counsel
for R-4 & 5.
Mr. Jatin Singh, Sr. Standing Counsel
with R-7.
CORAM:
JUSTICE PRATHIBA M. SINGH
JUSTICE RAJNEESH KUMAR GUPTA
Prathiba M. Singh, J. (Oral)
1. This hearing has been done through hybrid mode.
CM APPL. 20779/2025 (for exemption)
2. Allowed, subject to all just exceptions. The application stands disposed
of.
W.P.(C) 4496/2025, CM APPLs. 20778/2025 & 20780/2025
3. The present petition has been filed by the Petitioner under Article 226
of the Constitution of India, seeking quashing of the Show Cause Notices
dated 14th January, 2021 and 30th December, 2021 (hereinafter ‘impugned
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SCNs’) as well as Order-in-Original dated 14th January, 2025 (hereinafter
‘impugned OIO’).
4. The present case revolves around the Duty Drawback Scheme
(hereinafter ‘Scheme’) which is a unique scheme administrated by the
Government. This scheme allows refund or recoupment of customs and excise
duties that are paid by the exporters on products which are exported. The
purpose is to encourage exports and to enable exporters to set off some of the
costs accrued in the process of manufacturing the products which are
exported. Even after the introduction of Integrated Goods and Service Tax
(hereinafter ‘IGST’) regime, this scheme had been continued in respect of
IGST and Compensation Cess which may have been paid by the exporters.
The said duty drawbacks are claimed under Sections 74 and 75 of the Customs
Act, 1962.
5. This scheme, however, has become the subject of misuse by some
traders/ exporters who make fraudulent exports merely with a view of availing
the benefits under the scheme. Fraudulent exports could be in various forms
including (i) filing of fake documents, (ii) over-valuation of goods that have
been exported and (iii) the exporters themselves being completely non-
existent etc., Several cases have come before the Court where such duty
drawbacks have, in fact, been availed of, which is detected by the Customs
Department subsequently.
6. The present case is one such case where the exporter M/s. Abhishek
EXIM India, is stated to have exported goods and claimed duty drawback in
respect thereof. The Petitioner is the proprietor of M/s Abhishek EXIM, India.
He was issued the impugned SCNs with regard to the duty drawbacks claimed
by him.
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7. A perusal of the impugned SCNs reveal that the primary allegation
against the Petitioner and his company is that he created parallel invoices with
different valuations for the same exports. One set of invoices was submitted
to the Delhi Chamber of Commerce and the other set, with the overvalued
price, was submitted to the Department only with the intention to claim a
higher duty drawback. The entire process is alleged to have been executed by
the Petitioner in connivance with two staff members including a Chartered
Accountant (hereinafter, ‘CA’).
8. Upon the issuance of the impugned SCNs, the Petitioner participated in
the proceedings. In his reply, the stand of the Petitioner was that the shipping
bills were duly endorsed by the Assessing Officer and there was application
of mind at the time of the exports. Other than this limited submission on
merits, the reply has only dealt with various technical issues, including issues
of jurisdiction. The Court has seen the reply and there is no specific answer
by the Petitioner to the allegations regarding parallel invoices.
9. No issue of the limitation was raised by the Petitioner in the reply. The
impugned OIO was passed on 14th January, 2025. In terms of the said order,
the value of the exports was considered and upon being found to be
overvalued, the recovery of drawback amounts was directed along with
penalties. The operative portion of the order:
“ORDER
(a) In respect of Show Cause Notice No.
VHI/ICD/6/TKD/SUB-Exp/DRI-SCN/ Abhishek/85/2020
dated 14.01.2021.
(i) I hereby reject the total declared value of 21,31,23,362/- in
respect of 47 Shipping Bills exported from ICD-
Tughlakabad(Export) in terms of Rule 8 of the Customs
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Valuation (Determination of Value of Export Goods) Rules, 2007
and I re-determine the total FOB value at Rs. 4,22,42,775/- in
respect of 47 Shipping Bills exported from ICD-Tughlakabad
(Export) in terms of Rule 5 and Rule 6 of the Customs Valuation
(Determination of Value of Export Goods) Rules, 2007 read with
Section 14 of the Customs Act, 1962.
(ii) I order for recovery of duty drawback amount of Rs.
1,85,84,,666/- (Rs. 83,30,980/- Plus Rs. 1,02,53,686/-
considering eligible drawback as Rs. Zero in case where no
remittance has been received ) under the provisions of Rule 16
and 16A of the Customs, Central Excise Duties and Service Tax
Drawback (Amendment) rules, 2000 read with proviso to Section
75 of the Customs Act, 1962, along with interest under the
provisions of Section 75A(2) of the Customs Act, 1962 as detailed
above.
(iii) I hold that the goods having declared FOB value Rs.
21,31,23,362/- (Rupees Twenty One Crores Thirty One Lakhs
Twenty Three Thousand Three Hundred Sixty Two Only) are
liable for confiscation under the provisions of Section 113(i) of
the Customs Act, 1962 read with Section 11 of the Foreign Trade
(Development & Regulation) Act, 1992, Rule 11 and 14(2) of the
Foreign Trade(Regulation) Rules, 1993 and provisions of
Section 50(2) of the Customs Act, 1962. As, the goods were not
seized under Section 110 of the Customs Act, 1962, therefore, I,
refrain from imposing redemption fine under Section 125 of the
Customs Act, 1962.
(iv) I order for appropriation of Rs. 30,00,000/- (Rupees Thirty
Lakhs only) which were voluntarily deposited during the course
of investigation towards adjustment of excess/inadmissible duty
drawback amounting to Rs. 1,85,84,666/-.
(v) I impose penalty of Rs. 10,00,000/- (Rupees Ten Lakhs only)
under Section 114(iii) of the Customs Act, 1962 upon the
exporter M/s Abhishek Exim India.
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(vi) I impose penalty of Rs. 10,00,000/- (Rupees Ten Lakhs only)
under Section 114AA of the Customs Act, 1962 upon the exporter
M/s Abhishek Exim India.
(vii) I impose penalty of Rs. 5,00,000/- (Rupees Five Lakhs only)
under Section 114(iii) of the Customs Act, 1962 upon Shri Manoj
Goyal Proprietor of M/s MA Enterprises, M/s MB Fabric and
Mis JJ International.
(viii) I impose penalty of Rs. 5,00,000/- (Rupees Five Lakhs
only) under Section l 14AA of the Customs Act, 1962 upon Shri
Manoj Goyal Proprietor of M/s MA Enterprises, M/s MB Fabric
and M/s JJ International.
(ix) I impose penalty of Rs. 5,00,000/- (Rupees Five Lakhs only)
under Section 114(iii) of the Customs Act, 1962 upon Shri
Yogendra Singh Balyan, husband of Smt. Anita Chaudhary
(Proprietor) of Mis Balyan Associates.
(x) I impose penalty of Rs. 5,00,000/- (Rupees Five Lakhs only)
under Section J 14AA of the Customs Act, 1962 upon Shri
Yogendra Singh Balyan, husband of Smt Anita Chaudhary
(Proprietor) of M/s Balyan Associates.
(xi) I impose penalty of Rs. 1,00,000/- (Rupees One Lakh only)
under Section 114(iii) of the Customs Act, 1962 upon Shri Rajiv
Soni, CHA, M/s Triveni Cargo.
(xii) I impose penalty of Rs. 1,00,000/- (Rupees One Lakh only)
under Section 114AA of the Customs Act, 1962 upon Shri Raj iv
Soni, CHA, Mis Triveni Cargo.
(b) In respect of Show Cause Notice No. 25/RB/JC/ACE/2021
Dated 30.12.2021.
(i) I hereby reject the total declared value of Rs. 2,15,31,800/- in
respect of 37 Shipping Bills exported from Air Cargo Customs
(Export) in terms of Rule 8 of the Customs Valuation
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(Determination of Value of Export Goods) Rules, 2007 and I re-
determine the total FOB value at Rs. 78, 17,9311- in terms of
Rule 5 and Rule 6 of the Customs Valuation (Determination of
Value of Export Goods) Rules, 2007 read with Section 14 of the
Customs Act, 1962.
(ii) I order for recovery of duty drawback amount of Rs.
10,28,836/- (Rs. 8,84,334/- Plus Rs. 1,44,5021-considering
eligible drawback as Rs. Zero in case where no remittance has
been received ) under the provisions of Rule 16 and 16A of the
Customs, Central Excise Duties and Service Tax Drawback
(Amendment) rules, 2000 read with proviso to Section 75 of the
Customs Act, 1962, along with interest under the provisions of
Section 75A(2) of the Customs Act, 1962 as detailed above.
(iii) I hold that the goods having declared FOB value Rs.
2,15,31,800/- (Rupees Two Crores Fifteen Lakh Thirty One
Thousand Eight Hundred Only) are liable for confiscation
under the provisions of Section 113(i) of the Customs Act, 1962
read with Section 11 of the Foreign Trade (Development &
Regulation) Act, 1992, Rule 11 and 14(2) of the Foreign
Trade(Regulation) Rules, 1993 and provisions of Section 50(2)
of the Customs Act, 1962. Though, the goods were not seized
under Section 110 of the Customs Act, 1962, therefore, I, refrain
from imposing redemption fine under Section 125 of the Customs
Act, 1962.
(iv) I impose penalty of Rs. 5,00,000/- (Rupees Five Lakhs only)
under Section 114(iii) of the Customs Act, 1962 upon the
exporter Mis Abhishek Exim India.
(v) I impose penalty of Rs. 5,00,000/- (Rupees Five Lakhs only)
under Section 114AA of the Customs Act, 1962 upon the exporter
M/s Abhishek Exim India.
(vi) I impose penalty of Rs. 5,00,000/- (Rupees Five Lakhs only)
under Section 114(iii) of the Customs Act, l 962 upon Shri Manoj
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Goyal Proprietor of M/s MA Enterprises, M/s MB Fabric and
M/s JJ International.
(vii) I impose penalty of Rs. 5,00,000/- (Rupees Five Lakhs only)
under Section 114AA of the Customs Act, 1962 upon Shri Manoj
Goyal Proprietor of M/s MA Enterprises, M/s MB Fabric and
M/s JJ International.
(viii) I impose penalty of Rs. 1,00,000/- (Rupees One Lakh only)
under Section 114(iii) of the Customs Act, 1962 upon Shri
Yogendra Singh Balyan, husband of Smt Anita Chaudhary
(Proprietor) of M/s Balyan Associates.
(ix) I impose penalty of Rs. 1,00,000/- (Rupees One Lakh only)
under Section 114AA of the Customs Act, 1962 upon Shri
Yogendra Singh Balyan, husband of Smt Anita Chaudhary
(Proprietor) of Mis Balyan Associates.
(x) I impose penalty of Rs. 50,000/- (Rupees Fifty Thousand
only) under Section 114(iii) of the Customs Act, 1962 upon Shri
Rajiv Soni, CHA, M/s Triveni Cargo.
(xi) I impose penalty of Rs. 50,000/- (Rupees Fifty Thousand
only) under Section 1 l 4AA of the Customs Act, 1962 upon Shri
Rajiv Soni, CHA, M/s Triveni Cargo.”
10. The contention of ld. Counsel for the Petitioner is that the exports dated
back to 2013-15 and the impugned SCNs have been issued only in 2021. This,
according to the Petitioner, is beyond the period of limitation as laid down by
the Gujarat High Court in –
(i) M/s S.J.S. International vs. Union of India (R/Special Civil
Application No. 20484 of 2019 decided on 9th December, 2021) and
(ii) Raghav International Through Proprietor Vishal
Bharatbhushan Jain & Others vs. Union of India & Anr (R/Special
Civil Application No. 7165 of 2021 decided on 22nd February, 2023)
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11. Mr. Gibran Naushad, ld. SSC appearing for Respondent No. 2, submits
that the issue of limitation that is being argued today has not been pressed in
the reply filed in the Show Cause Notice proceedings. He further submits that
the present order is appealable under Section 128 of the Customs Act, 1962
and the Petitioner deserves to be relegated to the concerned Appellate
Authority.
12. It is further pointed out that this Court, in fact, had the occasion to
consider the impugned SCN, in another writ petition, being W.P.(C)
3012/2025 titled ‘Yogendra Singh Balyan v. Union of India & Ors’. Ld. SSC
submits that the said writ petition was filed by the CA Mr. Yogender Singh
Balyan, who was a co-noticee against whom certain penalties etc., were
imposed vide the impugned OIO. In the said writ, this Court vide order dated
10th March, 2025, has already relegated the co-noticee to avail the appellate
remedy.
13. Mr. Anurag Soan, ld. Counsel for the Petitioner countering the above
submission states that in W.P.(C) 3012/2025, Rule 16 of the Customs Central
Excise Duties and Service Tax Drawback Rules, 1995 (hereinafter ‘Duty
Drawback Rules’) was not challenged.
14. The Court has considered the matter and heard the Counsels for the
parties. Firstly, on the aspect of limitation, the relevant rule, i.e., Rule 16 of
the Duty Drawback Rules, 1995 based on which the proceedings against the
Petitioner has been initiated, reads as under:
“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,
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paid erroneously or in excess, as the case may be, and where the
claimant fails 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 (52 of 1962).”
15. A perusal of the above provision reveals that there is no specific period
of limitation prescribed for proceeding against availing of excess duty
drawback.
16. With that said, it is relevant to point out that the impugned SCNs have
been issued based on documents recovered from the Petitioner as also
received from the Delhi Chamber of Commerce. For eg., in the invoice related
to the export of soccer balls/ sports goods, the two recovered parallel invoices
placed on record prima facie, reveal the manner in which the goods were
being over-valued by the Petitioner. For the sake of ready reference, the said
invoices are set out below:
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Invoice submitted to the Customs Department:
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Invoice submitted to the Delhi Chamber of Commerce:
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17. As can be seen from the above two invoices, the same product, i.e.,
inflated soccer balls made of Polyurethane, are valued at 0.36 USD in one
invoice and 9.70 USD in the other. This, in essence, shows an overvaluation
of the product to the tune of approximately 27 times the original value i.e., an
increase of 2700%(approx.). The total value of the invoice with the original
price is 2176 USD whereas the value of the invoice with the over-valued price
is 56,032 USD.
18. Therefore, there is no doubt that the former set of invoices was
submitted to the Delhi Chamber of Commerce, and the latter set was filed to
the Department. The difference might have come to the notice of the
Department much later after the assessment was conducted. Accordingly, the
issuance of the impugned SCN cannot be held to be barred by limitation.
19. On duly considering the above aspect and the fact that Rule 16 of the
Drawback Rules does not prescribe any limitation, the Court is of the opinion
that in the absence of a prescribed period of limitation being provided by the
statute, the general limitation period of three years cannot be presumed to
apply by default, especially when there are strong suspicions as to the
fraudulent availment of duty drawbacks and knowledge of such availment is
acquired much later.
20. With that said, the Court has also considered the following
circumstances:
(i) Creation of fake and fraudulent invoices being the basis of the
SCN;
(ii) A substantial amount of duty drawbacks has been alleged to have
been availed of by the Petitioner by completely altering the value of the
exports;
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(iii) No reply on merits being forthcoming from the Petitioner
(iv) The existence of the parallel invoices is not even being disputed.
Ld. Counsel for the Petitioner, in fact, confirms the allegation when a
question is put by the Court today.
21. On Considering the above aspects, the Court is not inclined to entertain
the challenge to the impugned OIO dated 14th January, 2025 in a writ petition
under Article 226 of the Constitution of India.
22. However, it is relevant to note that this Court vide order dated 10th
March, 2025 in W.P.(C) 3012/2025 has, in fact, relegated the co-noticee to
avail the statutory appellate remedy. Further, the Coordinate Bench of this
Court in Commr. of Customs v. Sans Frontiers, (2023 SCC OnLine Del
7913) where a similar issue of limitation under Rule 16 of the Duty Drawback
Rules was raised, the Court had relegated the case on the ground that there
was an alternate remedy that remained un-exhausted.
“76. The other issue, which is raised by the firm, is
that the initial SCN dated August 24, 2015, which held
the firm ineligible for the drawback, was issued
belatedly, and was thus time-barred.
77. The learned counsel for the firm contended that
the drawback in the present case relates to the years
2008 to 2014, and therefore, any demand in the year
2015, would be hit by limitation.
78. He relies upon the following judgments
: Pratibha Syntex Ltd. v. Union of India [(2014) 27
GSTR 403 (Guj); 2012 SCC OnLine Guj
6147.], Padmini Exports v. Union of India [2012 SCC
OnLine Guj 6191.], State of Punjab v. Bhatinda District
Coop. Milk P. Union Ltd. [(2007) 10 VST 180 (SC);
2007 SCC OnLine SC 1254.], Collector of Central
Excise, Jaipur v. Raghuvar (India) Ltd. [(2000) 5 SCC
299.] and Government of India v. Citadel Fine
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Pharmaceuticals [(1990) 184 ITR 467 (SC); (1989) 3
SCC 483.]
79. On the other hand, the learned counsel for the
Revenue contended that no period of limitation is
prescribed under rule 16 of the Drawback Rules, and
the demand was made within a reasonable period from
when the Revenue came to know of the fact that the
firm had wrongly availed the drawback.
80. We do not consider it apposite to decide in the
facts of the present case as to whether that the SCN
dated August 24, 2015 was issued belatedly or not since
the said issue had been decided in favour of the
Revenue by the order passed by the Commissioner
(Appeals), and has not been adjudicated upon by the
revision authority having jurisdiction under section
129DD of the Customs Act.
81. In the peculiar facts of this case where the
Revenue originally had not taken any objection on the
appeal being heard by the learned CESTAT, and had
also, following the order of the learned CESTAT,
sanctioned refund of the drawback, the firm should not
be left remediless.
82. We, therefore, grant an opportunity to the firm to
prefer a revision, under section 129DD of the Customs
Act, against the order dated May 14, 2018 passed by the
Commissioner (Appeals).
83. We direct that if such a revision is preferred
within a period of two months, the same shall not be
dismissed on the ground of limitation and be entertained
on merits by the Central Government.
84. It is open for the firm to raise all grounds,
including the issue as to whether the SCN dated August
24, 2015 was barred by limitation. Needless to state that
if so raised, the same shall be considered by the Central
Government, and a speaking order shall be passed after
affording an opportunity of being heard to the firm.
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85. The writ petition is disposed of in the aforesaid
terms.”
23. In view of the above decision and considering that the co-noticee has
been relegated to the appellate remedy, this Court is of the opinion that,
though the exercise of writ jurisdiction in favour of the Petitioner may not be
warranted, the Petitioner ought not to be denied the opportunity to avail the
statutory remedy on grounds of parity.
24. Accordingly, the Petitioner is also permitted to avail of the appellate
remedy under Section 128 of the Customs Act, 1962.
25. Needless to say, any observations made by this Court in this proceeding
shall not have any bearing on the adjudication before the Appellate Authority
and it shall adjudicate the same in accordance with law. At this point, ld.
Counsel for the Petitioner submits that the statement made by the Petitioner
before the DRI has been relied upon in the impugned OIO, but the same was
extracted out of duress and coercion. Let the same be raised before the
Appellate Authority.
26. The petition is disposed of in the above terms along with all pending
applications.
PRATHIBA M. SINGH
JUDGE
RAJNEESH KUMAR GUPTA
JUDGE
APRIL 8, 2025
v/Ar.
(Corrected & released on 15th April, 2025)
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