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1967 Supreme(Del) 85
High Court Of Delhi
H.S MEHRA - Appellant
Versus
UNION OF INDIA - Respondent
Civil 191D of 1963
Decided On : 04/28/1967
Prakash Narain, S.S.Chadha
Drawback of duty is not available under Section 42 of the Sea Customs Act, 1878, on goods which have been subjected to a process of manufacture and exported after such manufacture.
Headnote:
CUSTOMS ACT - DRAWBACK - GOODS IMPORTED FOR MANUFACTURE AND EXPORT - GOODS EXPORTED AFTER MANUFACTURE - DRAWBACK UNDER SECTION 43B - NOT ENTITLED TO DRAWBACK UNDER SECTION 42.
Fact of the Case:
The petitioner imported silk under a license subject to the condition that the goods would be utilized only for consumption as materials or accessories in the license holder's factory and that no portion thereof would be sold or permitted to be utilized by any other party. The petitioner re-exported the goods after they had been made into table covers and embroidered in India and claimed drawback of duty under Section 43b of the Sea Customs Act, 1878.
Finding of the Court:
The court held that the petitioner was not entitled to drawback under Section 42 of the Sea Customs Act, 1878, as the goods imported had been subjected to a process of manufacture and, therefore, the silk imported constituted "any material of a class or description used in the manufacture of such goods" within the meaning of Section 43b of the said Act.
Issues: Whether the petitioner was entitled to drawback under Section 42 of the Sea Customs Act, 1878, on the goods exported after they had been made into table covers and embroidered in India.
Ratio Decidendi: The court held that Section 42 of the Sea Customs Act, 1878, applies only to goods which are capable of being identified and which are re-exported in the same form as they were imported. In the present case, the goods imported had been subjected to a process of manufacture and, therefore, were not capable of being identified as the same goods that were imported. The court also held that Section 43b of the Sea Customs Act, 1878, applies to materials of any class or description which are imported and used in the manufacture of goods that are exported. In the present case, the silk imported was used in the manufacture of table covers, which were exported. Therefore, the petitioner was entitled to drawback under Section 43b of the Sea Customs Act, 1878.
Final Decision: The petition was dismissed with no order as to costs.
(1) "the licensee shall produce a bond duly guaranteed by a scheduled bank for 100 per cent. of the C I. F. value of the imports undertaking to export the finished goods viz: textile fabrics or pieces thereof made of silk after they have been embroidered in India with silver thread to the extent of Rs 6,556
(2) The licensee shall export within 8 months of the import of the material covered by this license Rs 6556. 00 worth of finished goods aas mentioned in 1 above
(3) The licensee shall export the same imported material duly embroidered in India with silver thread and the entire yardage 1296 yards imported against this licence should he exported "
( 2 ) THE petitioner re-exported the goods after they had been made into table covers and embroidered in India and by the shipping bill claimed drawback of duty under Section 43b of the Sea Customs Act, 1878. The petitioner claims that the Customs authorities kept two samples of the silk imported and also of the table covers made of that silk at the time of its export and were satisfied that the petitioner had re-exported the entire imported silk represented by the finished goods and, therefore, allowed the export The petitioner had also been required to execute a bond in favour of the Government of the value of 100 per cent of the imported cost duly guaranteed by a schedule bank guaranteeing the re-export of the finished goods including the entire imported material within six months of the importation. The said bond was duly furnished by the petitioner and after the reexport the Assistant Controller (Export Promotion Call) cancelled the same by letter dated 23rd November 1961 In the said letter it was inter alia stated
"i write to confirm that the bond executed by you on 6-7-1960 has been cancelled on the basis of your export of 1277 yards of textile fabrics (imported under licence No. E 839248/59 dated 14-12-1959) embroidered in India valued Rs 6. 385 leaving a balance of 19 yards valued Rs. 171 "this shortage of 19 yards represented the samples taken by the Customs authorities. The customs authorities allowed drawback under Section 43b of the said Act but by letter dated 9th November. 1961. the petitioner requested the Assistant Collector (Drawbacks) Madras to review the claim and entertain the same ander Section 42 of the said Act By order dated 18th November 1961, the Assistant Collector of Customs refused to consider the claim under Section 42 and observed:
( 3 ) THE claim tiled by you for drawback of duty on the above mentioned goods at the time of export were only under Section 43b, Sea Customs Act. As such they were finalised at the rates of drawback prescribed under that section of the Sea Customs Act. The amounts of drawback paid to you are hence in order"
( 4 ) THE petitioner filed an appeal before the Collector of Customs which was dismissed by order dated l2th January, 1962. The Collector rejected the appeal on two grounds:
1. "the claim under Section 42 of the Sea Customs Act was not made and established prior to shipment;" and
2 "the goods has undergone process of manufacture after import and hence are not Identifiable. "
(3) Mr Chadha, the learned counsel for the petitioner argued that a mere mistake in the statement of a particular provision of the Act namely. Section 43b instead of Section 42, should not have disentitled the petitioner to the relief and that on the admitted facts of the case the petitioner w
