MEHUR METAL INDUSTRIES Vs. GOVERNMENT OF INDIA

JUDGEMENT

(1.) These petitions under Article 226 of the Constitution involve an interpretation of the Customs and Central Excise Duties (Drawback) Rules, 1971 - hereinafter referred to as the "Rules".

(2.) A proper appreciation of the issues arising requires the setting out of this background. The Minerals and Metals Trading Corporation of India Ltd. (MMTC) had imported prime quality stainless steel sheets into the country. It paid customs duty of Rs. 45 per kg. on the sheets. A certain quantity of the goods were purchased by petitioners at Rs. 51.00 per kg. Petitioners utilised the sheets for manufacture of utensils and exported the finished product. The Central Government, acting under rule 3 of the aforementioned Rules, had fixed 80 paise per kg. as the drawback rate. Pleading that the same was far low, petitioner pleaded for a raise under rule 7. The plea was accepted and the rate raised to Rs. 60.30 and Rs. 60.80 per kg. on two different lots exported. At a later date, the Government reduced the drawback rate to Rs. 44.85 per kg. The reason given for the slashing was that the price paid to the MMTC was below even the landed cost. Petitioner's protests not having yielded a result, it challenges the reduction and its follow-up in these two petitions. The factual matrix and the points requiring decision being almost identical, it will be convenient to dispose the petitions under a common judgment.

(3.) Petitioners contend that the rules require the rate of drawback to have a nexus with only one factor, viz., the duty chargeable at the time of import. What price the exporter paid to the importer for the acquisition of the imported material is irrelevant to the fixing and revision of the rate or amount of drawback. The Central Government had no right to adjust an alleged excess of drawback received by petitioners towards its later claims. The said Government required to be corrected by appropriate writs solicited in these petitions.