KANUBHAI ENGINEERS LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) IN this unusual case, the machinery imported by the petitioner on being found to be defective was re-exported within the warranty period and the foreign supplier replaced the defective machinery by a new one, but the petitioner was required to pay customs duty twice, one at the time of first clearance and another at the time of clearance of the replaced machinery. As the Customs authorities declined to entertain the refund application filed under section 27 of the Customs Act and have also rejected duty drawback claimed under section 74 of the Customs Act the petitioners have approached this Court by filing this writ petition.

(2.) THE facts relevant for the present petition are that on 10/02/1987 the petitioner imported a Crankshaft machine from Germany and cleared the same on payment of duty of Rs. 2,27,871/ -. Thereafter, the said Crankshaft was found to be defective and the foreign supplier agreed to take back the machine and substitute it by a new one. The petitioners on obtaining necessary permission from R. B. I. , re-exported the said machine on 18/07/1987. The new machine supplied in lieu of the defective machine arrived at bombay sometime in January, 1988. On 25/01/1988 the petitioners filed a bill of entry and cleared the said replaced Crankshaft machine on payment of duty of Rs. 2,37,637/ -.

(3.) ON 10/06/1988, the petitioners made an application under section 27 of the Customs Act seeking refund of duty of Rs. 2,27,871/- paid at the time of first clearance. By a letter dated 15/11/1988, the Assistant Collector of Customs (Refund Department) informed the petitioners that the claim for refund of duty under section 27 was not admissible and advised the petitioners to approach the drawback department for refund. Accordingly, the petitioners filed their claim on 5/07/1989 seeking duty drawback under section 74 of the Customs Act. The petitioners furnished all the relevant documents called for by the adjudicating authority. Thereafter by an order in original dated 17/10/1989, the Assistant Collector of customs rejected the drawback claim inter alia on the ground that the machinery re-exported was under a free shipping bill and not under the duty drawback shipping bill, that the identity of the machinery re-exported was not established and that the examination of the re-exported machinery was not carried out under the supervision of the Assistant Collector of Customs and the prevailing market value (PMV) of the machinery was not certified to be fair as required under section 76 of the Customs Act.