Legal principle

An authority deciding a Rule 7A relaxation request under the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995 must pass a reasoned, speaking order objectively considering the exporter's explanation for the delayed claim, and a cryptic, non-speaking rejection will be quashed and cannot be cured by materials counsel tenders for the first time before the court.

Court decision

The Madras High Court quashed the impugned orders dated 24.11.2022 as cryptic and non-speaking and remanded the matter to the first respondent for fresh consideration on merits and in accordance with law, directing final orders within eight weeks of receipt of the order after due consideration of the petitioner's written submissions dated 03.11.2022 and after affording one personal hearing. The writ petitions were disposed of with no costs — the decision favoured the petitioner on the procedural challenge, while leaving the merits of the Rule 7A relaxation open for fresh decision.

Facts

M/s. Flextronics India Pvt. Ltd. imported mobile phone accessories from China and, after utilising them in manufacture, re-exported the leftover accessories within the two-year period under Section 74 of the Customs Act, 1962 — a fact not in dispute, with the re-exported goods identified by the customs authorities. The petitioner filed its duty drawback claim belatedly on 27.12.2019, beyond the three-month period (extendable by a further three months) prescribed by Rule 5(1) of the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995, and on 18.06.2020 sought relaxation under Rule 7A from the Central Government. The Joint Secretary/Director (Drawback) rejected the relaxation request by orders dated 24.11.2022, holding that the petitioner had not satisfactorily established that the reasons for delay were beyond its control, thereby denying drawback of Rs.63,51,103 and Rs.1,78,420. The petitioner filed writ petitions under Article 226 seeking certiorarified mandamus to quash the orders and direct disbursement of the drawback with interest.

Key provisions

• Section 74, Customs Act, 1962 — Drawback allowable on re-export of duty-paid goods
• Rule 7A, Re-export of imported goods (Drawback of Customs duties) Rules, 1995 — Power to relax
• Rule 5(1), Re-export of imported goods (Drawback of Customs duties) Rules, 1995 — Manner and time of claiming drawback on goods exported other than by post