Legal principle

Drawback provisions being an incentive-oriented scheme for augmenting exports, procedural requirements such as Rule 13(1)(a) documentation and Section 149 shipping bill amendment must receive a liberal construction and cannot be used to defeat a genuine drawback claim, even where a substantive exemption not available on the date of import (prospective CVD exemption) must be discharged.

Court decision

The Tribunal upheld the confirmation of CVD under Section 9 of the Customs Tariff Act, 1975, but set aside the confiscation under Section 111(d) and the penalties on the company under Section 114A and on the Directors under Sections 112(a) and 114AA as not legally sustainable. It also set aside the impugned letter dated 19.04.2022 (and the letter dated 21.02.2022) refusing the Rule 13(1)(a) relaxation and the Section 149 shipping bill amendment, holding these inconsistent with the Customs Act, 1962 and the Drawback Rules, 2017, and directed the jurisdictional Commissioner to examine the appellants' application and grant drawback benefits as per law. All four appeals were allowed in favour of the appellants with consequential relief.

Facts

M/s Hindustan Inox Limited imported stainless steel coils and plates (CTH 7219/7220) from China in eight consignments covered by eight Bills of Entry dated 12.10.2017, clearing them without duty under two Advance Authorisation Licences by availing Notification No.18/2015-Customs dated 01.04.2015 as amended. DRI investigation took the view that the imports were not eligible for CVD exemption under Section 9 of the Customs Tariff Act, 1975, because the CVD exemption was inserted only prospectively by Notification No.79/2017-Customs dated 13.10.2017; the adjudicating Commissioner accordingly confirmed the duty demand, confiscated the goods under Section 111(d) and imposed penalties (Section 114A on the company; Sections 112(a) and 114AA on Directors Hemant Bohra and Vimal Bohra). During investigation the appellants paid the applicable CVD with interest on 23.10.2018, and on 16.11.2018 applied for fixation of brand rate of drawback, condonation of delay, exemption from Rule 13(1)(a) of the Drawback Rules, 2017 under its proviso, and amendment/conversion of the shipping bills under Section 149 of the Customs Act, 1962. The Commissioner, by letter dated 19.04.2022 (following an earlier letter dated 21.02.2022), rejected the requests for conversion of the Free Shipping Bills to Drawback Shipping Bills and for exemption from Rule 13(1)(a), leading to these four appeals before the Tribunal.

Key provisions

• Section 149, Customs Act, 1962 — Amendment of documents
• Rule 13(1)(a), Customs and Central Excise Duties Drawback Rules, 2017 — Statement/Declaration to be made on exports other than by Post
• Section 9, Customs Tariff Act, 1975 — Countervailing duty on subsidized articles
• Section 114AA, Customs Act, 1962 — Penalty for use of false and incorrect material
• Section 112(a), Customs Act, 1962 — Penalty for improper importation of goods
• Section 75, Customs Act, 1962 — Drawback on imported materials used in the manufacture of goods which are exported
• Section 9, Customs Act, 1962 — [Omitted] ****
• Section 111(d), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 3, Customs Tariff Act, 1975 — Levy of additional duty equal to excise duty, sales tax, local taxes and other charges
• Section 114A, Customs Act, 1962 — Penalty for short-levy or non-levy of duty in certain cases
• Section 159A, Customs Act, 1962 — Effect of amendments etc of rules regulations, notifications or orders
• Section 25(1), Customs Act, 1962 — Power to grant exemption from duty