Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  The GSTN has issued an Advisory dated 21.04.2026 about the introduction of an Offline Tool for the Invoice Management System (IMS)  *  CBIC extends due dates for filing of FORM GSTR 3B  for the month of April 2026 *  Interest cannot be imposed in adjudication order, if not demanded/quantified in show cause notice : Allahabad HC *  Wheelchairs with toileting facility eligible for exemption: CESTAT affirms customs duty exemption to importer *  Industries urge GST council to allow inverted duty refunds on input services *  Tamil Nadu GST dept introduced virtual hearing facility for GST appeals under under section 107 of the TNGST act: detailed guidelines  *  CIC urges authorities to implement GST evasion complaint tracking system *  Even if the assessee opts "NO" for personal hearing in form DRC-06 ,The mandatory requirement under section 75(4) to grant opportunity of hearing cannot be waived:Gujarat High Court  *  Glufosinate imports curbs imposed by govt *  Government extends Re-import period for exported cut & polished diamonds *  CIC flags lack of tracking system for tax evasion complaints,urges GST authorities to improve transparency *  No Custodial Interrogation needed in GST fraud case based on documentary evidence already in Department's Possession : Chattisgarh HC *  Orders under section cannot be sustained if passed without considering the taxpayer's objections and without granting a personal hearing:Gujarat High Court *  Mere cancellation of supplier's registration cannot,by itself,justify denial of ITC or cancellation of the recipient's registration:Bombay High Court *  High Court sets aside GST notice citing factual errors and natural justice violations *  Provisional Bank Attachment under Section. 110 of Customs Act Unsustainable Beyond Statutory period without Extension order: Bombay HC orders to defreeze accounts *  Post Clearance MRP Alteration by Distributor Does not attract Differential Customs Duty: CESTAT *  DGFT Expands scope of 'Screws' classification under RoDTEP Scheme  *  E-way bills surze to all time high of 140.6 million in March *  GST Exemption Allowed on Pure Labour Services for Standalone Houses: AAR  *  GST Payable Only on Margin in Second-Hand Car Sales, Subject to Strict Conditions and No ITC Claim: AAR *  DGFT rolls out procedure for allocation of calcined coke *  GST portal update : Pre-deposit amount now editable in Appeals *  J&K HC declared TMT scrap a 'Specified Good' eligibile for GST refunds under Support Scheme  *  Pigmy agents are employees of banks; no GST can be levied on commission  paid to them : Karnataka HC *  DGFT Revises HS Code Description for Screws Under RoDTEP *  GST Registration Cancellation Invalid Without Proper Service of Notice: Allahabad High Court. *  Bengaluru CGST | GST Backlog Appeals Deadline Fixed at June 30, 2026 *  No Time Bar on Refund of Service Tax for Services Not Rendered: CESTAT  Remands Indiabulls Case for Unjust Enrichment Check. *  Supreme Court Holds Renewable Energy Incentive Must Benefit Generators, Not Be Adjusted in Tariff
Subject News *   Delhi HC Quashes Order, Says Reminder Cannot Validate Improperly Served GST SCN *  KARNATAKA HIGH COURT REMANDS GST SHORTFALL MATTER DUE TO ABSENCE OF PERSONAL HEARING   *  CESTAT cancels confiscation and penalties on imported computer cabinet cases: Custom duty restricted to 111 surplus units *  Deposit of tax during search or investigation cannot be treated as 'Voluntary Payment' : Bombay High Court *  Section 76 of the CGST cannot be invoked where the tax has already been duly deposited, even if through another registration of the same entity: Madras High Court *  Sec 74 allows use of material regardless of source; illegality or flaws in section 67 search do not vitiate valid adjudication: HC *  Inter-State transfer of ITC on Amalgamation permissible as given under section 18(3) read with rule 41 of the CGST rules, 2017: Gujarat High Court *  HC: No GST on commisson paid to Pigmy Agents *  IGST refund denial on illegible bill of lading invalid absent chance to furnish docs; merit reconsideration in appeals directed: HC *  ITC is not admissible on GST paid on leasehold rights of land used fpr setting up an air seperation plant: AAAR,Tamil Nadu *  GST: No penalty under Section 74 after voluntary ITC reversal due to non-existent supplier : High Court *  TN AAAR denies GST ITC on Land Lease under Sec. 17(5)(d) for setting up plant and machinery *  GST proceedings quashed as notices sent to old address, despite updated address in registration *  Importer Can’t Be Penalised for Alleged IGCR Procedural Lapses Without Evidence of Departmental Error: CESTAT *  Structured Healthcare Training Not ‘Charitable Activity’, 18% GST Payable: AAR  *  CESTAT As The Appellate Authority For Central Sales Tax Disputes: A Paradigm Shift Under Finance Act, 2023 *   Rs. 25K Cost Imposed On SGST Joint Commissioner for Attaching Bank  Accounts Without Forming Mandatory “Opinion”: Bombay HC *   Ex-Parte GST Order Without Hearing Violates Natural Justice: Karnataka  High Court Quashes Adjudication and Bank Attachment.  *   Retrospective GST Cancellation Can’t Invalidate Genuine Transactions:  Jaipur Commissioner (Appeals) Quashes Rs. 95,670 ITC Demand. *   GST Pre-Deposit Non-Compliance: Allahabad High Court Allows Appeal  Subject to Rs. 30 Lakh Balance Deposit, Recognises Offline Filing. *  Documentary Nature of Evidence: Allahabad High Court Grants Bail in Rs. 32.66 Crore Fake ITC Fraud Case *  Supreme Court Flags Systemic Bias in Army’s Permanent Commission Process for Women Officers *  Re-Determination of Land Compensation Can Be Based on Appellate Court Awards, Clarifies Scope of S. 28-A: Supreme Court. *  Supreme Court Imposes Rs. 5 Lakh Costs On Rent Authority Officer For Acting Beyond Jurisdiction. *  DGGI Meerut | Court Denies Bail to Accused in Claiming Fake ITC And Export Refunds *  Denial of GST Rate Revision Benefit to Contractor Violates Article 14: Rajasthan HC *  GST Registration Cancellation for Non-Filing of Returns: Gauhati High Court Directs Restoration on Compliance. *   Supreme Court Quashes FEMA Adjudication Orders, Revives Proceedings at  Show Cause Stage. *   Higher Rank, Harsher Punishment Justified: Supreme Court Restores Dismissal  of Bank Manager in Misappropriation Case. *   Limitation for Export Refund to Be Counted from Foreign Exchange Realisation,  Not From Export Invoices Issuance: CESTAT  

Comments

Print   |    |  Comment

PJ/CASE STUDY/2010-11/19
01 September 2010

Admissiblity of Drawback - delay in filing supplementary claim

 

PJ/Case Study/2010-11/19

 

 

Case Study

 

Prepared By:

Sukhvinder Kaur, LLB [FYIC]

Mayank Palgauta

And Parag Ghate

 

Introduction:

 

The excise duty and customs duty paid on inputs is refunded to the exporter of finished product by way of ‘duty drawback’. The object of the relief afforded by the Drawback being to enable the goods to be disposed of in the foreign market and for this the Govt. gives maximum benefits to the Exporter. But may this benefit be prevented on the account of mere procedural lapse made by the Exporter. This issue is being discussed in this case study.

 

Relevant Legal Provisions:

Rule 15(1) of the Customs and Central Excise Duties Drawback Rules, 1995: -

15. Supplementary claim. - (1) Where any exporter finds that the amount of drawback paid to him is less than what he is entitled to on the basis of the amount or rate of drawback determined by the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, he may prefer a supplementary claim in the form at Annexure III :

Provided that the exporter shall prefer such supplementary claim within a period of three months, -

(i) where the rate of drawback is determined or revised under rule 3 or rule 4, from the date of publication of such rate in the official Gazette;

(ii) where the rate of drawback is determined or revised upward under rule 6 or rule 7, from the date of communicating the said rate to the person concerned;

(iii) in all other cases, from the date of payment or settlement of the original drawback claim by the proper officer.

Provided further that the aforesaid period of three months may be extended by the Assistant Commissioner of Customs or Deputy commissioner of Customs for a further period of nine months on being satisfied that the exporter was prevented by sufficient cause from filling his supplementary claim within the aforesaid period of three months.

M/s Fine Art & Exports v/s Assistant Commissioner, Jodhpur

[Order-in-Appeal No. 24(CB) Cus./JPR-II/2010, Dated: 22.07.2010]

 

Brief Facts:

 

-        Appellant exported Handicraft items during the period 4.4.2007 to 21.6.2007, under claim for drawback.

 

-        The rates of duty drawback were revised retrospectively vide Notification No. 68/2007-Customs (NT) dated 16.7.2007.

 

-        Accordingly, appellant filed supplementary Drawback claim on 5.11.2007 in respect of export made during the period 4.4.2007 to 21.6.2007.

 

-        The Adjudicating Authority rejected the claim by issuing a letter on the ground of time bar.

 

-        Being aggrieved, appellant filed appeal before the Commissioner (Appeal).     

Appellant’s Contention:

 

¨                    Appellant contended that the supplementary drawback claim filed under Rule 15 of Customs, Central Excise Duties and Service Tax Drawback Rules, 1995, was to be filed within 3 months from the issuance of date of Notification. The Notification was issued by the Board on 16.07.2007 and the appellant have filed the supplementary drawback claim on 5.11.2007 i.e. after delay of only 20 days.   

 

¨                    Appellant submitted that the time period of 3 month for filing of supplementary drawback claim has been prescribed under Rule 15 (1). Reference was made to proviso to Rule 15(1) which provided for extension of further period of 9 months by the Assistant Commissioner of Customs after expiry of 3 months for sufficient cause. It was contended that they had given the reason for delay in filing of supplementary drawback claim but the Adjudicating Authority have not considered their submission and simply passed the impugned order.

 

¨                    Appellant contended that revised drawback was being given automatically so they were of the view that the revised drawback will be given as per revised rate automatically but later on it was came into notice that only in EDI system it was given automatically and not in the system where shipping bills were filed manually, and said shipping bills were filed manually, therefore they could not filed the claim within three months.

 

¨                    Appellant further submitted that there is a prescribed hierarchy to be followed in respect of any query on the part of department. An order passed without issuing any show cause notice is as such not viable and is liable to be quashed. It was contended that mere issuance of letter seeking reasons for delay in filing the supplementary claim and thereby rejecting the claim is against natural justice. In this regard, reliance was placed on the decision given in case of Commr. of Cus., Hyderabad versus Golconda Engineering Enterprises Ltd. [2007(218) E.L.T. 625(Tri.-Bang.)]. It was contended that the facts and circumstances of the above citation were similar to the appellant’s case. Therefore, by applying the ratio of the above case, the impugned order rejecting supplementary drawback claim should be set aside.

 

¨                    Further, reliance was placed on the case of Dr. Balabhai Nanavati Hospital and Nanavati Hospital Medical Research Centre versus Union of India [2009(233) E.L.T. 442(Bom.)] wherein it was held that Letter is not a show cause notice and order passed was set aside as it amounted to breach of principles of natural justice. A similar view was expressed in the case of J.J.M. Medical College versus Director General of Health Services [2006(193) E.L.T. 401(Kar.)] wherein it was held that show cause notice should be issued before taking any action.

 

¨                    Appellant further referred to Board’s Circular No. 39/2007-Cus dated 09.10.2007 wherein it was clarified that there is no need for exporters under EDI system of Customs Houses to file supplementary drawback claim under Rule 15 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 because it will generate lot of avoidable work for the exporters and for the Customs Houses. It was further specified in the circular about the requirement of filing the supplementary claim in respect of manual shipping bills.

 

¨                    Appellant accordingly contended that it is very well known that the circulars are clarificatory in nature and this circular truly reflects the intention of the government to provide maximum benefits to the exporters with minimum formalities by exempting the exporters under EDI system from filing the supplementary claim. As such exemption should have been provided in case of manual system also but it has not been done. However, the exporters under manual system should not be denied from filing the claim on account of mere delay of few days. The intention of the government on one side is to provide incentives and maximum benefits to the exporters while it is denying benefits to some exporters due to mere procedural lapses on the other side. 

 

Issue Involved:

The issue to be decided was:

Whether the supplementary claim of Drawback filed after a delay of 20 days from the prescribed time-limit was sustainable as the rates of drawback had been increased vide Notification No. 68/2007-Cus (NT)?

 

Reasoning of the Commissioner (Appeal):

Ø             The Commissioner (Appeal) considered the provisions of Rule 15 of the Drawback Rules of 1995 and held that Rule 15 stipulates that where any exporter finds that the amount of drawback paid to him is less than what is entitled to on the basis of the rate of drawback determined by the Central Government, they may prefer a supplementary claim with a period of three months from the date of publication of revised rate and this period may be extended by the Assistant Commissioner for a further period of nine months. Thus, the supplementary claims could be filed within three months from 16.07.2007.

 

Ø             On the facts of the case, it was found that the appellant had filed the said claims on 05.11.2007 i.e. after a delay of 20 days from the permissible period of three months.

 

Ø             The Commissioner (Appeal) considered the explanation for delay given by the appellant.

 

Ø             The Commissioner (Appeal) held that it is well settled law that legitimate benefit cannot be deprived on the basis of procedural lapses.

 

Ø             Reliance was placed on the judgment of the Apex Court in the case of MST Khatiji & Others [1987 (28) ELT 185(SC)] wherein it was held as under:

 

“Condonation of delay – Liberal approach needed”.

 

Ø             Further, reliance was placed on the decision given in the case of Shantilal & Bhansali [1991 (53) E.L.T. 558 (G.O.I)] wherein it was held that

 

“Export – Rebate on export – Procedural lapses and technical deficiencies to be condoned so long as there is substantial compliance with the provisions”

 

Ø             Thus, the Commissioner (Appeal) followed the ratio of said decisions and considered the fact that export of goods was not in dispute and was satisfied with the ground of delay given by the appellant that they were of the view that revised drawback was being given automatically, but later on it was noticed that it was only in EDI system not in manual system and questioned shipping bills were filed manually.

 

Ø             Accordingly, the Commissioner (Appeal) condoned the delay in filing of supplementary claim.

 

Decision of the Commissioner (Appeal):

Impugned order set aside. Appeal allowed.

 

Conclusion:

 

The Commissioner (Appeal) rightly condoned the delay of mere 20 days in filing of supplementary claim in the case of the appellant when there was a genuine reason for delay. Mere delay of 20 days could be condoned when the proviso to Rule 15(1) provided for extension of time limit and when the Assistant Commissioner was given the power of extending the time limit. Thus, a substantial benefit available to the assessee cannot be denied on procedural aspects.

 

********

 

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com