Order date – 06 February 2023

Parties: Colour Cottex Pvt Ltd Vs Commissioner of Customs, New Delhi

Facts – 

• The Petitioner, COLOUR COTTEX PVT LTD, had exported garments under 211 Shipping Bills during the period 01.01.2014 to April, 2015. In respect of the said exports, it claimed duty drawback of approximately ₹10,16,78,637/-. Out of only 9 were uploaded on DGFT portal. In those 9 bills only 5 were cleared. The net amount of duty for those five bills be Rs. 26,65,334/-
• It is also stated that search operations on the premises of the petitioner was conducted and found that the petitioner had wrongfully claimed benefit of ‘Focus Market Scheme.’ the Commissioner directed recovery of ineligible Focus Market Scrips of ₹1,58,44,432/- and further imposed a penalty of ₹50,00,000/-.
• The Petitioner tried to file an appeal against the order before CETSTAT but since he was to make a pre deposit of Rs.11,88,000/- his appeal was not entertained.
• The petitioner requested that the amount of duty drawback be adjusted against its liability to make a pre-deposit in terms of Section 129E of the Customs Act, 1962 (hereafter ‘the Customs Act’). 
• Aggrieved, this petition is filed.

Issue –

• Whether drawback amount be adjusted against pre-deposit for appeal ?

Order –

• The Court observed that adjustment of duty drawback against the petitioner’s obligation to make a pre-deposit under Section 129E of the Customs Act is not permissible. The nature of a claim for duty drawback is materially different from the nature of the deposit required to avail a right of the appeal as provided under the Customs Act.
• Further, the Court was of the view that the petitioner’s grievance may be allayed if directions are issued to the respondent to forthwith release the duty drawback in respect of the five Shipping Bills (out of nine shipping bills that were uploaded by the petitioner on 28.07.2015). The petitioner would, thereafter, be at liberty to utilise the funds received for complying with its obligation to make a pre-deposit to maintain an appeal before the CESTAT. 
• The Court directs CENSTAT, not to reject the petitoners's appeal on grounds of pre deposit for a period of four months from the date of judgement.
• The petition is diposed of.