Availing a concession under Notification 27/02 exempts the importer from paying the entire customs duty, and thus, the importer is not entitled to any drawback under Section 74 of the Customs Act, 1962.

JUDGMENT :

K.R. SHRIRAM, J.

1. The petition was admitted on 7th June 2007 and certain reliefs were granted. As against demand of Rs.41,60,403/- made by the department, petitioner has paid a sum of Rs.17,33,415/-. There is a balance amount of Rs.24,26,988/- which according to respondents, as stated in the affidavit in reply, payable with interest is still outstanding. There is no rejoinder filed denying this.

2. Petitioner is a public limited company engaged in the import and export of goods and services and is a recognized export house. Status of petitioner, we are informed, as on date is unchanged. Petitioner was awarded a contract by Gas Authority of India Limited (GAIL) for the purpose of laying a pipeline for their project titled “Dahej-Vijapur Gas Pipeline”. For undertaking the above project, petitioner imported various capital goods required for laying of the pipeline and these capital goods were imported through Mumbai/Nhava Sheva Ports during the period July 2003, November 2003 and January 2004. These capital goods were imported by petitioner on lease from one M/s. Matts European Pipeline Rental, BV, Holland and JSC Krasnodargazstroy, Russia. At the time of importation, petitioner had paid customs duty of Rs.57,17,488.20 after availing benefit of Notification No. 27/02-Cus dated 1st March 2002 (hereinafter referred to as Notification 27/02).

3. Upon completion of the project/contract awarded by GAIL, petitioner re-exported the capital goods under various shipping bills during the period February and April 2004. The fact that petitioner had imported availing benefit of Notification 27/02 or has re-exported these capital goods is not disputed. Upon re-exporting these goods, petitioner claimed drawback under Section 74(2) of the Customs Act, 1962 (the said Act) read with Notification No. 19/1965 dated 6th February 1965 as amended by Notification No. 154/1969-Cus dated 8th November 1969 and Notification No. 45/1970-Cus dated 2nd May 1970 (hereinafter referred to as Notification 19/1965). The drawback claimed was the customs duty that petitioner had paid on importation. All requisite documents mentioned in the Re-Export of Imported Goods (Drawback of Customs Duties) Rules, 1985 (hereinafter referred to as Drawback Rules) was submitted to claim the drawback. Petitioner, by a letter dated 28th December 2004, also gave detailed written submission justifying the claim for drawback under Section 74 of the said Act. After considering the submission of petitioner, respondent no. 3 passed a speaking order dated 11th January 2005 granting a drawback of Rs.9,04,190/- of customs duty paid on the capital goods re-exported under cover of the shipping bills dated 23rd March 2004 and 5th April 2004. In respect of duty paid at the time of importation on goods covered under other shipping bills, no speaking order was passed before granting the drawback. In total, petitioner was given a drawback of Rs.41,60,403/- with or without a speaking order. The worksheet that was provided to petitioner while calculating the drawback shows that the drawback was sanctioned considering the period of usage as more than six months but less than one year and, therefore, drawback at the rate of 70% of the duty paid at the time of importation was sanctioned.

4. About seven months later, petitioner received from respondent no. 3 four separate demand notices, all dated 11th July 2005, proposing to recover the drawback granted to petitioner on the following ground:

“Your Attention is invited to the fact that Notification No. 27/02-Cus has been issued for the purposes of allowing temporary imports of leased machinery, equipments and tools for execution of a contract and re-export within 6 months (extendable upto one year) on payment of retainable customs duty, i.e., the customs duty minus the amount of drawback. This means the customs duty paid by you at the time of