Legal principle

A genuine drawback claim on re-export under Section 74 should not be defeated by mere technicality of the Rule 5(1) time limit, for the Central Government has power under Rule 7A to relax the conditions and allow drawback where the failure to comply was for reasons beyond the exporter's control, adopting a liberal rather than narrow and pedantic approach.

Court decision

The Writ Petition was allowed: the order passed by the first respondent was set aside and the matter was remanded to the first respondent for fresh consideration of whether the petitioner was entitled to relaxation of the rigor of Rule 5(1) and whether the case fell under Rule 7A, to be decided on merits and in accordance with law expeditiously, with no costs.

Facts

Greaves Cotton Ltd. imported a Hydraulic Motor (Bill of Entry dated 11.02.2003) and, after the buyer refused to purchase it, re-exported it to Germany under a Shipping Bill dated 18.03.2004 filed under Section 74 of the Customs Act, 1962, with let export order issued on 06.05.2004. The petitioner's drawback claim under Rule 5 of the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995 was rejected by order-in-original dated 06.07.2005 as time-barred, not having been filed within three months or the further three months allowed by the proviso. The Commissioner of Customs (Appeals) dismissed the appeal on 16.02.2006 holding there was no statutory power to condone the delay, and the revisional authority (Union of India) under Section 129DD confirmed this by order No.618/2006 dated 31.10.2006, confining itself to the point of delay and not deciding the petitioner's alternate Rule 7A plea. The petitioner challenged the revisional order before the Madras High Court by writ petition seeking quashing of the order and disposal of the drawback claim.

Key provisions

• 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 74, Customs Act, 1962 — Drawback allowable on re-export of duty-paid goods