Legal principle

Discretion under the proviso to Rule 12(1)(a) of the Drawback Rules, 1995 must be exercised in a free, fair and impartial manner, and furnishing clear and cogent reasons for allowing or rejecting a drawback request is an imperative necessity flowing from natural justice, not a discretionary largesse to the exporter.

Court decision

The appeal was allowed by way of remand: the impugned order/communication dated 27-04-2015 was set aside and the matter remanded to the jurisdictional Commissioner of Customs for de novo adjudication within 90 days, after granting a personal hearing and following natural justice, and if the appellant is found entitled to the benefit, subject to compliance with other conditions, it should be extended. The Tribunal expressly refrained from making any observation on the merits of the controversy.

Facts

M/s. Turbo Energy Pvt Ltd, a manufacturer-exporter of turbochargers and parts (headings 84148030 and 84149090), exported 78 consignments under free shipping bills between 19-11-2011 and 7-9-2013. Having earlier claimed DEPB benefits, it believed after the scheme's withdrawal that no other export incentive was available, and later realised the goods were entitled to All Industry Rate of duty drawback under Notifications 92/2012-Cus (NT) and 96/2013-Cus (NT). By letter dated 15-05-2014, relying on para 4 of CBEC Circular No.36/2010-Cus dated 23-09-2010, it requested the department to allow All Industry Rate of duty drawback on goods exported under free shipping bills without converting them to drawback scheme shipping bills, in terms of the proviso to Rule 12(1)(a) of the Drawback Rules, 1995. The Assistant Commissioner of Customs (EXP-AIR), Chennai, by communication dated 27-04-2015 issued with the approval of the Commissioner (Air), rejected the request without assigning any reasons.

Key provisions

• Rule 12(1)(a), Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 — Statement/Declaration to be made on exports other than by Post
• Section 74, Customs Act, 1962 — Drawback allowable on re-export of duty-paid goods
• Section 149, Customs Act, 1962 — Amendment of documents