Legal principle

Drawback under Section 74 for re-export of imported goods is admissible only where the shipping bill is filed under Section 74 declaring the re-export, so that customs can verify the identity and eligibility of the goods; a claim wrongly filed under Section 75 cannot be converted later, and Rules 4 and 5 of the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995 cannot override the statutory conditions of Section 74.

Court decision

The Madras High Court dismissed the writ petition, holding that the Joint Secretary's order dated 6.4.2011 disallowing the drawback claim on the 5,000 kg of Metronidazole 'cannot be said to be invalid in the eye of law', that the petitioner was not eligible for Section 74 drawback for the 5,000 kg, and that the petitioner was not entitled to any of the reliefs sought (no costs; connected M.P. closed).

Facts

Medopharm, a partnership firm licensed under the Drugs and Cosmetics Act, imported consignments of 5,000 kg and 12,000 kg of Metronidazole BP 98 from Chinese suppliers after paying customs and anti-dumping duty, and, finding the material costlier than Indian equivalents, re-exported 13,000 kg in two consignments (shipping bills dated 23.7.2001 and 4.10.2001) after obtaining the Assistant Drug Controller's NOC. The shipping bills were filed, admittedly inadvertently, under Section 75 of the Customs Act, 1962 (classified under drawback tariff item 9801 for brand rate) instead of Section 74, and the brand-rate application was returned by Central Excise because the goods had been re-exported without any process. After a show cause notice dated 24.9.2003, the Assistant Commissioner (Drawback) rejected the claim by Order-in-Original dated 13.3.2007 purely on the ground that the shipping bills were filed under the wrong section. On appeal under Section 128(1), the Commissioner (Appeals) allowed Section 74 drawback for 8,000 kg but disallowed the claim for 5,000 kg because the batch numbers did not tally with the bills of entry; in cross-revisions under Section 129DD, the Joint Secretary by common order dated 6.4.2011 held the petitioner had failed to comply with Section 74 and Rules 4 and 5 of the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995, dismissing the petitioner's revision and allowing the Department's. Aggrieved, Medopharm filed the present writ petition under Article 226.

Key provisions

• Section 74, Customs Act, 1962 — Drawback allowable on re-export of duty-paid goods
• Section 75, Customs Act, 1962 — Drawback on imported materials used in the manufacture of goods which are exported
• Rule 4, Re-export of imported goods (Drawback of Customs duties) Rules, 1995 — Statements/Declarations to be made on exports other than by post
• Rule 5, Re-export of imported goods (Drawback of Customs duties) Rules, 1995 — Manner and time of claiming drawback on goods exported other than by post
• Section 128(1), Customs Act, 1962 — Appeal to Commissioner (Appeals)
• Section 129, Customs Act, 1962 — Appellate Tribunal