PRATIBHA SYNTEX LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) Since the controversy involved in all these petitions is common and the facts are also common, the same were taken up for hearing together and are disposed of by this common judgment. In each of the petitions, the petitioners have challenged the order passed by the Government of India (hereinafter referred to as "the revisional authority") allowing the revision preferred by the Revenue and holding that the drawback paid erroneously to the petitioners is liable to be recovered. For the sake of convenience, reference is made to the facts as stated in Special Civil Application No. 2039 of 2004.

(2.) The petitioners are Government recognized export houses, inter alia, engaged in the business of export of fabrics made from 100% polyester filament yarn. Under the Drawback Rules framed by the Government in exercise of powers under Section 75 of the Customs Act, 1962 (hereinafter referred to as "the Act") and Section 37 of the Central Excise Act, 1944, the Central Government is given power to fix rates at which drawback would be allowed to exporters of specified goods. The Schedule to the Drawback Rules provides for classification of goods specified for allowing drawback. Sub-Serial No. 54.04 of the Drawback Schedule covered goods of the description "all fabrics including sarees, dhotis and odhanies made of man-made staple fibers and filament yarn". The goods exported are covered under Sub-Serial No. 5404 of the Drawback Schedule and as such the petitioners in each of the petitions were eligible for drawback thereunder. Initially, under the Drawback Schedule in respect of goods falling under Sub-Serial No. 5404, drawback was payable at the rate of 20% of FOB value subject to maximum of Rs. 62 per kg of filament yarn content. The said Schedule was published vide Public Notice dated 15-6-1995 which contained conditions (a) and (b). Subsequently, with effect from 1st August 1995, clause (c) came to be added in column 3 of the Schedule. Sub-serial No. 5404 of the Drawback Schedule along with Note thereunder specifying the conditions subject to which the rates against the said sub-serial number would apply reads as under:

(3.) Subsequently, by a letter dated 20th September 1996, the Commissioner (Drawback) clarified that the rate mentioned against heading S.S. No. 5404 (1)(i) would read as "17% (seventeen percent only) of the FOB value subject to a maximum of Rs. 62 (Rupees sixty two only) per kg. of filament yarn content". It was further clarified that pending drawback claims may be finalised in the light of such clarification. It may be noted that the said letter which was circulated to all Chief Commissioners of Customs/Commissioners of Central Excise/and Commissioner of Customs (Preventive) was issued with the approval of the Chairman, C.B.E & C. Subsequently, by a letter dated 19th August, 1999 the Joint Secretary (DBK) clarified that clarification dated 20-9-1996 merely explained the scope of an already existing provision and has not laid down any new rule/provision. Therefore, the clarification was operative from the date of issuance of the original notification and thus could not be only prospective. By a letter dated 22-1-1997, the Commissioner, Custom Preventive Collectorate, stated that it had been reported by the Asstt. Commissioner of Customs in Surat that Duty Drawback of 17% without any maximum ceiling was disbursed by him till 1-8-1996. However, in view of the clarification on maximum ceiling vide letter dated 20-9-1996, the differential amount already disbursed is recoverable, as the clarification now is in contradiction with the earlier clarification vide letter 10-4-1996 that ceiling can be applied for pending claims of drawback. He, accordingly, sought clarification as to whether the recovery is to be made in respect of claims finalized by applying clarification vide letter dated 20-9-1996 retrospectively. In response to the said letter, the Commissioner-Drawback by a letter dated 4th March, 1997 replied that in paragraph 3 of the clarification dated 20-9-1996 it has been specifically stated that the pending drawback claims should be finalised in light of this clarification. Therefore action has to be taken in the light of the said clarification wherever necessary.