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Subash Woollen Mills (P) Ltd. Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1985)LC682Tri(Delhi)
AppellantSubash Woollen Mills (P) Ltd.
RespondentCollector of Customs
Excerpt:
.....in this case) had to be mixed together at the top stage in order to spin the blended terry wool yarn. (v) the appellants prayed that drawback was a piece of beneficial legislation and its provisions should be interpreted liberally.5. the department's representative stated that the record did not show that the appellants had made the required declaration alongwith their shipping bills. the undated carbon copy of declaration submitted by the appellants could not prove that the required declaration had been made at the time of shipment. the appellants had not submitted this carbon copy of declaration before the lower authorities. the four printed declarations on the shipping bills were the usual type of declarations which did not serve the purpose of the further specific declaration.....
Judgment:
1. The issue involved in these 9 appeals is common, they arise out of one consolidated Order-in-Appeal and related to the same appellants.

They were, therefore, heard together and are being disposed of through this combined order.

2. The main Appeal No. 805/79-D was dismissed for default by the North Regional Bench on 16-5-1983. No order restoring this appeal is on record. However, the proceedings show that thereafter the appeal was transferred to Special Bench 'D' and it was taken up on merits by the said Special Bench on 17-8-1983. The Department's Representative stated that in view of these proceedings he would not object to the appeal being considered as restored. The Bench agreed with him and held that the appeal should be deemed as having been restored. Hearing of the appeals on merits proceeded thereafter. 2A. The facts in brief are that the appellants exported Terry Wool Rumals to Saudi Arabia under claim for Drawback in respect of the following 3 ingredients of the goods : 3. The Assistant Collector allowed their claims for Yarn Contents but rejected the claims for Wool and Synthetic fibre contents on the ground that payment of such Drawback under Item 2503(C) of the Drawback Schedule was contingent upon the declaration being made at the time of shipment that the Synthetic fibre content in the export goods was duty paid virgin fibre and not the fibre obtained from fibre wastes, yarn wastes or fabric wastes and that the woollen yarn used was worsted but that the appellants had not made such declaration at the time of shipment. At the appeal stage, the appellants produced before the Appellate Collector a circular dated 8-6-1977 from the Wool & Woollens Export Promotion Council, issued on the recommendation of the Textile Commissioner, which stated that wherein the Textile Committee Certificates the count of yarn shown was more than 21 BWS, it should be taken as worsted yarn made oat of wool tops and mention of the words "Worsted yarn made out of wool tops" should not be insisted upon. The Textile Committee Certificates in the present case showed the count of yarn as 39 to 42, i.e., higher than 21 BWS. The Appellate Collector, in view of the evidence produced, allowed the Drawback in respect of the wool content but upheld the rejection of the claim in respect of the synthetic fibre contents. The appellants . then filed a consolidated Revision Application to the Central Government for pursuing their Drawback claim for the synthetic fibre content. The said Revision Application, on transfer to this Tribunal, has been taken up as the subject appeals.

4. The appellants made a grievance that the Assistant Collector had rejected their claims without granting them a hearing. But they themselves added that they did not want remand of their cases to the Collector but wanted this Bench to decide their appeals on merits. They put forth the following arguments in support of their claims : (i) The four printed declarations on the Shipping Bill should suffice for the purposes of the declaration required under Item 2503(C) of the Drawback Schedule also.

(ii) The appellants had attached further declaration under Item 2503(C) with their Shipping Bills. They produced a carbon copy of one such declaration said to have been attached with a Shipping Bill. The carbon copy bore the Customs Stamp but without any date.

(iii) In any case, the appellants had submitted the required declaration in specific terms later along with their Drawback claims. It was the Customs House practice to accept such declarations submitted after the shipment. To support their contention, they submitted a copy of the proforma of deficiency letter of the Customs House usually sent to Exporters in connection with their Drawback claims. It was put to the appellants that the proviso to Entry No. 2503(3) specifically required the declaration to be made at the time of shipment and not after the shipment. The appellants stated that the requirement of the proviso was directory and not mandatory.

(iv) The Rumals exported were made out of Yarn of very high fineness, almost double the limit of 21 BWS specified in the Export Promotion Council's circular. The yarn of such high fineness could not be obtained from old and used fibres. The Appellate Collector had already accepted this argument in respect of the wool contents.

By the same logic it should be accepted for synthetic fibre contents also. The process of manufacture was such that wool and synthetic fibre (Polyester in this case) had to be mixed together at the top stage in order to spin the blended Terry Wool Yarn.

(v) The appellants prayed that Drawback was a piece of beneficial legislation and its provisions should be interpreted liberally.

5. The Department's Representative stated that the record did not show that the appellants had made the required declaration alongwith their Shipping Bills. The undated carbon copy of declaration submitted by the appellants could not prove that the required declaration had been made at the time of Shipment. The appellants had not submitted this carbon copy of declaration before the lower authorities. The four printed declarations on the Shipping Bills were the usual type of declarations which did not serve the purpose of the further specific declaration required under Entry 2503(C). The proforma of deficiency letter relied on by the appellants was a standard proforma designed for general use.

When the entry expressely required the declaration to be made at the time of shipment, such declaration made after the shipment did not fulfil the prescribed requirement. It was put to the Department's Representative that wording of proviso in Entry 2503(C) was that the Drawback on account of Synthetic Fibre Contents "may" be admissible only if the required declaration was made at the time of shipment and further that Rule 15 of the Drawback Rules empowered the Central Government to condone, if it was otherwise satisfied, the omission to make the declaration at the time of shipment. The Department's Representative stated that in the context of the proviso, the word "may" should be read as "shall". He further stated that the power to relax the various provisions under Rule 15 was vested only in the Central Government and that this Tribunal was not empowered to exercise such powers. He added that such relaxation could be granted only in those cases where certain provisions could not be followed by Exporters due to circumstances beyond their control. There was nothing to show that the present appellants were prevented from making the required declaration at the time of shipment due to any circumstances beyond their control. He stated further that Drawback was, no doubt, a beneficial legislation but the benefit accrued only on observance of prescribed conditions. It was finally put to the Department's Representative that the Appellate Collector had allowed the Drawback for wool contents in spite of the prescribed declaration not having been made at the time of shipment. The Department's Representative replied that the Appellate Collector had acted erroneously in doing so.

6. We have carefully considered the matter. Going strictly by the record, we agree with the Department's Representative that the appellants had not made the prescribed declaration in so many words at the time of shipment. However, the description of the goods in the shipping documents and their further details of count etc. in the Textile Committee Certificates attached with their Shipping Bills left no room for doubt that the export goods were of such high fineness as could not be manufactured out of old, used and waste fibres. We accept the appellants' plea that Terry Wool blended yarn of such high fineness could be spun only by mixing the virgin wool tops and virgin polyester tops together before spinning. We also agree with the appellants that Drawback is an export promotion measure and its provisions ought to be interpretated in the proper perspective. We hold that in substance the declaration required under Entry 2503(C) of the Drawback Schedule could clearly be inferred from the description and high fineness of the goods available in the shipping documents. We note that the Appellate Collector also held similarly when she allowed the Drawback claim for the wool contents.

7. Accordingly, we allow all the 9 appeals and direct that consequential Drawback for the Synthetic Fibre contents in the goods exported should be granted to the appellants.


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