HINDUSTAN LEVER LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) By the above Petition, filed under Article 226 of the Constitution of India, the Petitioners take exception to the order dated 30.9.2005 passed by the Respondent No.2 abovenamed by which order the applications filed by the Petitioners for fixation of brand rate of drawback for export of tea were rejected and the letters dated 19.01.1987 and 20.01.1987 which were the revocation letters issued in respect of brand rate letters No.(Bom.305) dated 4.4.86 and brand rate letter (Cal57) dated 22.7.86 were confirmed and resultantly recovery of the draw back amount with appropriate interest was ordered.

(2.) The factual matrix involved in the above Petition can be stated thus :The Petitioners are inter alia engged in the activity of manufacture and export of various goods. The said activity of export is carried out by the Petitioners in its capacity as a trading house where under the Petitioners obtain duty paid goods and subject the said goods to process of manufacture as understood in excise law and then export it to various countries. The Petitioners at the relevant time, were in the activity of export of tea which was classifiable under TI3 of the first Schedule to the Central Excises and Salt Act, 1944 (the Excise Act for brevities sake). Under the scheme of levy of excise, Tea was required to bear duty of excise first at the garden stage and then at the packing stage after it was blended and packed. The Petitioner obtained Tea from gardens which was blended, packed and exported. The Central Government under Rule 12A of the Central Excise Rules was empowered to grant a rebate when finished goods were exported. Such rebate was in respect of duties of excise paid on raw materials used in the manufacture of such finished goods. In exercise of powers conferred by the said Rule 12A, the Central Government issued Notification No.166/81 dated 23.9.1981 directing that rebate of duty of excise @ 0.40 per kg. shall be allowed in respect of tea falling under TI3 which was used in the manufacture of blended tea if it is exported out of India. The said notification was amended by Notification No. 193/03 dated 23.7.1983 whereby instead of a rebate of 0.40 per kg. the rebate was allowed of the whole of duty of excise paid on tea at the garden stage. By Notification No.9/85 dated 1.2.1985 the Central Government rescinded the above Notification No. 166/81.

(3.) In addition to power to grant rebate under Rule 12A, the Central Government is empowered under Section 75 of the Customs Act, 1962 and Section 37 of the Excise Act to grant draw back. In exercise of these powers the Central Government had framed, at the relevant time, the Customs and Central Excise Duties Drawback Rules, 1971. The machinery to grant said drawback was provided under the said Drawback Rules. Thus, either the Central Government grants the rebate under Rule 12A in respect of duties of excise paid on raw materials used in the manufacture of finished goods which are exported or allows a drawback in respect of such duty which is paid on raw materials. The underlying objective is that in respect of export of finished goods no excise duty will be recovered in respect of raw materials used in the manufacture of such finished goods and in case such duty is recovered, the same shall be refunded as drawback. In view of the withdrawal of Notification No.166/81 by Notification No.9/85, the Petitioner on 31.5.1985 submitted an application for drawback to the Collector of Customs and Central Excise, Pune for fixation of drawback rate in respect of export of tea effected by the Petitioners. By the said application, the Petitioners claimed drawback in respect of duty paid at the garden stage and various packings of the blended tea. The said application of the Petitioners was considered by the Respondent No.1 and the same was sent for verification by the Customs/Central Excise Department and after perusing the verification report the Respondent No.1 had allowed drawback at the rates which was conveyed to the Petitioners vide letter dated 4.4.1986 issued by the Respondent No.1. Thereafter Respondent No.1 issued a clarification to the effect that rate of drawback per one Metric Tonne shall be in respect of net weight of tea content. During the period February 1985 to November 1985, the Petitioners exported substantial quantities of tea and earned valuable foreign exchange to the tune of approximately Rs.10.20 crores. In view of the drawback rate fixed by the Respondent No.1, in terms of the Drawback Rules, the Petitioners were entitled to the drawback amount of Rs.47,72,525/which was after scrutiny and verification, granted and paid to the Petitioners.