Judgement Update | Drawback cannot be demanded in the absence of machinery provisions and powers under the Drawback Rules

by | Nov 13, 2019

This update is to apprise you about the recent decision of the Punjab & Haryana High Court in the case of Jairath International and another v. UOI, 2019-TIOL-2459-HC-P&H-CUS. In this case, the Court quashed the demand of duty drawback in the absence of machinery provisions and power to reassess exported goods.


In this case, the Court quashed the SCN relying on the decision of Famina Knit Fabs v. Union of India, 2019 (9) TMI 970 (P&H). Our detailed update on the same discussing the reasoning of the Court is enclosed in trail mail to this update.


Importantly, the High Court relied upon the recent decision of the Supreme Court in case of ITC Limited v. Commissioner of Central Excise, Kolkata, 2019-VIL-32-SC-CU (‘ITC Limited’) and observed that the department has no power to reassess a shipping bill which was duly assessed by proper officer at the time of export of goods.


NITYA’s Comments:


This decision is important since it applied the decision of ITC Limited to bar the department to issue show cause notice to demand short payment of duty unless it has challenged the relevant shipping bill / bill of entry. Basis this decision, the importers can challenge demand of customs duty if the department has not challenged bill of entry by way of appeal.