Gujarat HC in the case of Messrs Mahalaxmi Rubtech Ltd. Versus Union of India

Case Covered:

Messrs Mahalaxmi Rubtech Ltd.

Versus

Union of India

Facts of the Case:

By this writ application under Article 226 of the Constitution of India, the writ applicant, a company, has prayed for the following reliefs:

“(A) That Your Lordships may be pleased to issue a writ of mandamus or any other appropriate writ, direction or order striking down circular No.36/2010­Cus dated 23.9.2010 (i.e. para 3(a) of this Circular) as ultra vires Section 149 of the Customs Act, 1962 and also ultra vires Articles 14 and 19(1)(g) of the Constitution of India;

(B) That Your Lordships may be pleased to issue a writ of certiorari or a writ of mandamus or any other appropriate writ, order, or direction quashing and setting O/O No.AHM­CUSTOM­000­COM­007­19020 dated 30.09.2019 passed by the Principal Commissioner of Customs, Ahmedabad, the 2nd respondent herein, with a direction to this respondent to pay a drawback of Rs.11,18,458/­ to the petitioner.

(C) That Your Lordships may be pleased to issue a writ of mandamus or any other appropriate writ, direction, or order directing respondent No.2 herein to pay interest to the petitioner under Rule 14 of the Drawback Rules on the drawback amount of Rs.11,18,458/­.

(D) Pending hearing and final disposal of the present petition, Your Lordships may be pleased to direct the 2nd respondent herein to pay to the petitioner principal amount of drawback aggregating to Rs.11,18,458/­ on the terms and conditions that may be deemed fit by this Hon’ble Court.

(E) An ex­parte ad­interim relief in terms of para 17(D) above may be kindly be granted;

(F) Any other further relief as may be deemed fit in the facts and circumstances of the case may also please be granted.”

Observations:

In the present case, no verification whatsoever of the goods or any examination of the exported goods is required, because the claim for Drawback is at the All industry rate, which is the common and general rate fixed by the Central Government for all exporters of the goods in the country. If the writ applicant herein had been claiming Drawback at
the special brand rate, then the amendment of shipping bills by allowing conversion into Drawback shipping bill may not be possible only on the basis of the documentary evidence which was in existence at the time the goods were cleared for export. For fixing brand rate, the examination of the goods and also verification of the goods as well as inputs, raw materials, input services, etc. used for such goods would be necessary; and such verification would be impossible once the goods have been exported. But for Drawback at All industry rate, the only requirement would be to consider the export documents where the description, quantity and value of the goods have been recorded and verified as well as assessed by the Customs Officers while allowing clearance of the goods for export. On the value so assessed by the Customs officers, the calculation of Drawback at All industry rate is only an arithmetical exercise, which could be easily done on the basis of the documentary evidence (i.e. the export documents like shipping bill and export invoice) which was in existence when the goods were cleared for export.

The Decision of the Court:

In view of the aforesaid discussion, we hold that the impugned circular to the extent of para 3(a) is ultra vires Articles 14 and 19(1)(g) of the Constitution of India as also ultra vires Section 149 of the Customs Act, 1962.

As a result, this writ application succeeds and is hereby allowed. The impugned order passed by the Principal Commissioner of Customs, Ahmedabad is hereby quashed and set aside. It is declared that the writ applicant is entitled to the drawback of Rs.11,18,458/­ being the principal amount with statutory interest as provided in Rule 14 of the Drawback Rules.

The requisite amount shall be paid to the writ applicant within a period of four weeks from the date of receipt of the writ of this order.

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