Legal principle

An authority deciding a Rule 7A relaxation claim under the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995 must objectively consider the exporter's explanation for delay and pass a reasoned, speaking order; a cryptic, non-speaking rejection is liable to be quashed and cannot be defended or improved upon with fresh material before the writ court.

Court decision

The Madras High Court (Justice Abdul Quddhose) quashed the impugned orders dated 24.11.2022 and remanded the matters to the first respondent for fresh consideration on merits and in accordance with law, directing final orders within eight weeks after due consideration of the petitioner's written submissions dated 03.11.2022 and after affording one personal hearing to the petitioner. The court rejected the Standing Counsel's attempt to justify the orders using documents not considered by the first respondent. The writ petitions were disposed of with no costs. The court did not decide the merits of whether the delay reasons were beyond the petitioner's control.

Facts

M/s. Flextronics India Pvt. Ltd. imported accessories for manufacture of mobile phones from China and, after utilising them, re-exported the leftover accessories and claimed duty drawback under Section 74 of the Customs Act, 1962. The re-export was within the two-year period under Section 74 and the goods were identified by the customs authorities, which was not in dispute. As the drawback claim was filed only on 27.12.2019, beyond the period under Rule 5(1) of the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995, the petitioner sought relaxation under Rule 7A from the Central Government (first respondent) on 18.06.2020. By orders dated 24.11.2022, the first respondent rejected the relaxation request on the ground that the petitioner had not satisfactorily established that the reasons for delay were beyond its control. The petitioner filed four writ petitions seeking quashing of these orders and disbursement of drawback of Rs.15,61,029/-, Rs.5,87,685/-, Rs.4,29,952/- and Rs.21,36,859/- 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