TERAI OVERSEAS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) BY this Writ petition the petitioner has challenged the impugned order whereby the application for giving benefit of drawback duty has been rejected. It has got chequered history which I feel the same to be reiterated for proper appreciation of the facts and controversy involved in this matter.

(2.) IN the year 1985 -86 the writ petitioner undertook to export various textiles goods namely Polyester ladies long coats, neckties etc. to Russian customer. It is the case of the writ petitioner that the goods in question were exported to the Russian customer namely M/s. Soyuz Trade International, Moscow, T.F.C. Magnet Ogorskayastal under five several Bills of Lading. The goods in question are described as 10000 pieces of Polyester Ladies Long Coats, 5000 pieces vel vet ladies dress, 36000 pieces of gents neckties, 7500 pieces of gents neckties and 2000 pieces gents long coats. At the time of despatch of the aforesaid goods for export the Customs Authority duly cleared the same and allowed to export. After that the shipment was effected. It is stated by the petitioner that payment as against the aforesaid exports were received under irrevocable Letter of Credit, as the value thereof in the Foreign Exchange have been realised by invocation of letter of credit. Shortly thereafter an application under Section 75 of the Customs Act 1961 was made claiming benefit of drawback duty for the goods which are excisable and which were used for manufacturing of the aforesaid exported goods. The authority concerned, however, initially refused to entertain the application, later the same was compelled to be received through the intervention of the Court by passing orders in Writ Jurisdiction. The application was rejected by the appropriate authority and an appeal was taken out against that order The Appellate authority set aside the order and remanded back to the authority concerned. Even thereafter, mis application was not disposed of, so the writ petitioner once again came to this Court for getting the application heard and decided on merit. On that writ petition late Justice B.M. Mitra (as His Lordship then was) was pleased to pass an order on 28th May, 1999 directing the original adjudicating authority to dispose of the case within a period of two months from the date of communication of the aforesaid order. It was observed by His Lordship while disposing of the said case that the said authority would keep in mind the reference of Judicial pronouncement of which mention has been made in the said order because according to the opinion of this Court the said reference will throw much light which will radiate a great area of the controversy which has been attempted to erupt in this proceedings. Apart from the aforesaid directions there are other observations recorded by His Lordship. It is observed further by His Lordship in the aforesaid order that the export is complete as soon as the ship leaves the territorial water and thereafter no other consideration can cloud the issue of factum of accomplishment of exports. Notwithstanding the aforesaid observation and recording His Lordship was pleased to direct the authority concerned to decide the same in their own way. In the context as aforesaid, the impugned order has been passed by the authority concerned preceded by a show cause notice as to why the application for giving benefit of drawback duty should not be rejected on various grounds which is amongst others and in summary form, is that the consignee concerned did not receive the goods, so there was no export and no delivery of goods, so to say, and in true sense the charges against the writ petitioner is that this was a fraudulent export. In the show cause notice various materials have been disclosed with a liberty to the writ petitioner to have inspection and copies thereof. The writ petitioner gave reply to the same and the authority concerned admittedly gave hearing and decided this matter in his own way. On the aforesaid factual background of this case Mr. Mullick assails this impugned order saying that the issuance of show cause notice for deciding and disposal of the application of this nature is unheard of under the law or the procedure laid down in the Customs Act and Rules. His client has made an application for getting benefit of drawback duty. There is no provision to issue a show cause notice. It could have been disposed of either by rejecting or by allowing on merit. There is no warrant to issue such show cause notice. This exercise according to Mr. Mulick, on part of the concerned authority is ultra vires the provision of the Customs Act, so to say, without jurisdiction. He also contends that the authority concerned rejected a claim on the premise dehors the provision of law and the conclusion arrived at is patently conflicting with the ratio and the principles decided by the Supreme Court of India reported in : 1988(35)ELT241(SC) . He also draws my attention to the provision of Section 75 and cor responding rules thereunder and submits that it is not the authority or jurisdiction of the authority concerned to examine whether the export has been effected really or not. The authority concerned is to examine as to whether the goods have been entered for export and in respect of which an order permitting clearance and loading thereof for exportation has been made under Section 51 by the proper officer. So he is to examine those areas only nothing more or less. But the authority concerned sadly enough, has undertaken such exercise which is not permissible under the aforesaid section. The said authority has adopted such improper procedure that amounts to breach of principles of natural justice. He contends that the Customs Authority has cleared for export and there is no dispute that the consideration of the aforesaid goods have been received. The allegations of non -receipt of the goods by the consignee is of no consequence in view of the aforesaid Supreme Court decision. Apart from as above Mr. Mullick submits that the authority con cerned has relied on those documents which are no evidence for his conclusion that there was fraudulent export or rather it is a device of mock export in order to get advantage of the drawback duty. Therefore, reasons given by the appropriate authority is not correct. These reasons are no reason and in fact no prudent man can come to such a conclusion exercising power and jurisdiction as provided under Section 75 of the said Act. Therefore, he concludes by citing a decision of the Supreme Court reported in : 1983ECR2151D(SC) paragraphs 8,9 and 10 that existence of alternative remedy by way of appeal against this order is no bar at all as it is a case of violation of principle of natural justice and further a case of without jurisdiction. This court in exercise of power under Article 226 is competent enough to come to such conclusion. So the order is liable to be set aside and the matter should be remanded to the appropriate authority to decide the question as to the quantum of the amount to be ascertained for giving draw back duty treating there was an export in fact and without questioning the genuineness of the transaction.

(3.) HIS further contention is that upon proper investigation it was found that the consignee did not receive the goods. Indian High -Commission at London at the request of DRI investigated into the matter. Appropriate department of Russian Government has reported that the goods were not received by the consignee. So in substance, there was no export though the consideration has been received. He submits that no person can take the benefit of a fraud and the fraud can be detected and set at right at any time whenever it is drawn to the attention of the Court. In support of this proposition he has relied on three decisions of the Supreme Court reported in 2000 JT Vol. III 152, JT 1997 SC P. 135 and JT 1993 (6) SC 33.