ORDER
1. The petitioner is said to have been founded in the year 1868 as a trading venture. They are engaged in the export of high quality finished leather. The Government of India introduced a scheme of duty drawback in respect of customs and excise duties paid on materials used in the manufacture of goods which are exported. The said scheme was given a statutory character by the Customs and Central Excise Duties Drawback Rules, 1971 (hereinafter called as the Drawback Rules). Rule 3 of the Drawback Rules provides for the allowance of drawback on the export of goods specified in Schedule II of the Drawback Rules at such rates as may be determined by the Central Government. The Central Government considers the average rates of duties prevailing at the industry level and fixes the rate, which is called as 'All Industry Rate'. Rule 7 of the Drawback Rules says that where the manufacturer finds that the rate fixed by the Central Government under Rule 3 of the Drawback Rules is low and is less than three-fourth of the duties paid on the materials or components used for the production or manufacture of the goods, the manufacturer may apply for fixing an appropriate amount or rate of drawback, stating all the relevant facts. On such application, the Central Government conducts an enquiry and allows payment of drawback at such other rates, as may be determined by the Government. This is called the brand rate in common parlance. During the years 1979-82, 1982-83 and 1983-85, the petitioner found that the All Industry Rate was very low compared to the duties paid on the materials by the petitioner. They, therefore, applied on 5-10-1981 for the period from 1-6-1979 to 31-5-1982, on 26-7-1982 for the period from 1-6-1982 to 31-5-1983, on 20-8-1983 for the period from 1-6-1983 to 31-5-1984 and 18-7-1984 for the period from 1-6-1984 to 31-5-1985.
2. The petitioner had to send a reminder on 27-11-1984 and the Central Government directed the petitioner to contact the fourth respondent for verification of the data and the documents filed by the petitioner. For such verification, by order, dated 28-5-1985, different rates of drawback were allowed. So far as the petitioner is concerned for the said period a total sum of Rs. 28,63,726.97 p. was allowed for the period 1979 to 1985. Out of the said duty drawback, a sum of Rs. 18,60,018.77 p. was towards customs duty and the balance towards excise duty.
3. In February, 1987, the fourth respondent informed the Leather Manufacturers and Exporters Association that they had information regarding the excess claim made by the leather exporters for the period 1979-85. The Directorate of Revenue Intelligence, was instructed to verify the claims made by the exporters. The petitioner by their letter, dated 13-7-1987 stated that they were in possession of the relevant documents and that they would substantiate their claim for brand rate of duty drawback. The petitioner again wrote a letter on 12-10-1987 stating that the brand rate had been applied only after proper verification. On 7-1-1988 the petitioner again agreed to produce all the documents to substantiate their claim. By order, dated 9-2-1988, it was declared that the earlier order, dated 28-5-1985 granting brand rate for the goods exported from 1-6-1979 to 31-5-1982 shall be treated as withdrawn. It was also stated that the respondents had necessary information that the data filed by the petitioner did not reflect the actual consumption of the various inputs. There was also lack of proof regarding the duties specified by the petitioner. Similarly, orders were passed on 9-2-1988 for the periods from 1-6-1982 to 31-5-1983 and 1-6-1983 to 31-5-1985, withdrawing the brand rate. It seems that some of the exporters had admitted the factum of inflating the claims. But, the petitioner says that they had submitted the correct data. The petitioner therefore wrote on 20-2-1988 that they had not admitted any of the irregularities.
4. The process of re-verification commenced with a letter, dated 11-3-1988. The respondents also proceeded to recover the entire sum of Rs. 28,10,149.35 p. paid to the petitioner as drawback for the period from 1-6-1979 to 31-5-1985. Since the said amount is being withheld, the petitioner has been agitating for an appropriate opportunity to reconsider the entire issue. By a letter, dated 23-10-1990, the petitioner was advised to meet the third respondent on 23-11-1990. By a communication, dated 12-12-1990, the petitioner was advised that they were not entitled to the brand rate for the years 1979-1985. The petitioner submitted an Appeal on 13-3-1991, but there has been no reply. It is under these circumstances that the petitioner has come forward with this writ petition, seeking for the issuance of a writ of certiorarified mandamus to quash the order, dated 18-12-1990 and the connected order dated 9-2-1988 and to direct the respondents to release the total amount of duty drawback to the extent of Rs. 28,10,149.35 p. for the period from 1-6-1979 to 31-5-1985.
5. In support of the writ petition, the following grounds are used :
(1) Without proper re-verification, there was no justification for withdrawing the brand rate allowed to the petitioner, on the basis of sufficient data;
(2) The principles of natural justice have been violated because no opportunity was given to the petitioner to substantiate their claim;
(3) No sufficient reasons are given for denying the brand rate to the petitioner and that the entire order is based on mere suspicion;
(4) The petitioner had not conceded any irregularity on their part;
(5) The re-verification report submitted by the Directorate of Revenue Intelligence was not furnished to the petitioner;
And
(6) In any event, it is contended that proportional concession should have been given to the extent that the petitioner was able to produce records for the sufferance of duty on the inputs which were used for the export of certain finished leather products.
6. Since the principal grievance of the petitioner was that the reverification report had not yet been furnished to the petitioner, I had directed a copy of the report to be furnished to the learned Counsel for the petitioner, so that he could make his arguments on the basis of the said report. Accordingly, a copy of the report was furnished to the petitioner and a supplementary affidavit has been filed by the petitioner on 17-4-1995. A reply affidavit has also been filed by the petitioner on 9-12-1991. I have perused the re-verification report and I find that the counter affidavit of the respondents is more or less on the same line as that of the re-verification report. I will first deal with the counter affidavit of the respondents sworn to on 28-11-1991. It is pointed out that the respondents came to know that several leather exporters had not furnished correct data in regard to the consumption of the inputs. Further, the consumption of the raw materials/inputs had been inflated with the sole purpose of claiming a higher drawback. It was under these circumstances that an investigation was made through the Collector of Customs, Madras. It was on the basis of the materials collected in the investigation that the order, dated 9-2-1988 was passed withdrawing the brand drawback. I will now set out the specific points on which the impugned orders had been passed :
(a) The consumption of chemicals as per Bill of materials had been worked out on the basis of unit area of leather of 1000 sq. ft. The petitioner had been manufacturing the finished leather both for export and for domestic consumption. There were no records to show as to how much raw materials had been used for manufacturing finished leather exclusively meant for export. Therefore, the pattern of consumption adopted by the petitioners could not be accepted;
(b) There were different varieties of leather and as such the pattern of consumption would also be different depending upon the size, thickness and quality etc. Therefore, there must be some proof of consumption of raw materials and there should have been evidence in the shape of stock card/bin card effected from the stores. No such documents were produced by the petitioner;
(c) The petitioners had used the chemical called 'Wattle Extract', which was not only imported but also procured indigenously. There was no proof regarding the consumption of the imported 'Wattle Extract'. Equally, there was no proof to check the consumption from the issue of stock card/bin card from the stores;
(d) The petitioners did not maintain separate records for the use of imported raw materials in direct relation to the export of the finished leather. In other words, the petitioners were not able to show that imported chemicals were in fact used in the actual quantity of goods exported;
(e) In DBK II statement, the higher amount of import duty was shown as against the actual input duty paid. The following Bills of Entry proves the complaint of the respondents :
----------------------------------------------------------------------S.No. Bill of entry Amount of duty Amount as shown inNo. and date collected as shown in their statementthe Bill of EntryRs. P. Rs. P.----------------------------------------------------------------------1. D.1430/26-6-1979 1,17,736.00 2,61,962.602. D.572/11-7-1979 1,17,969.60 2,62,483.103. D.1255/22-6-1979 1,13,394.00 2,52,301.65---------------------------------------------------------------------- (f) In some cases, the petitioners had produced cash bills for indigenously procuring chemicals. They did not produce the CP-1 documents to prove the actual duty paid in respect of such indigenously procured chemicals. The claim was made by the petitioners on a notional basis relating to the tariff rate of duty. Such a procedure is totally unacceptable because the tariff rate may not be the actual rate applied in a particular case, having regard to the specific exemptions available to the importers;
And
(g) There were no records to prove the fact that the export products had been manufactured only out of the imported chemicals or inputs. In other words, there must have been proof to show that a certain percentage of the imported chemicals used in the finished leather and the percentage of non-imported chemicals or inputs used in the finished leather.
7. The above points are called out from the counter affidavit of the respondents. The re-verification of the petitioners' records were undertaken by the Madras Zone of the Directorate of Revenue Intelligence. On the basis of the re-verification report, the brand rate was withdrawn and the petitioners were advised to adopt the All Industry Rate. In response to the request of the petitioner, dated 11-9-1990, the Chairman, Central Board of Excise and Customs, New Delhi did grant a personal hearing to the petitioners through the Commissioner, Drawback, Ministry of Finance. The meeting was held on 23-11-1990 and the entire case was discussed at length. It is, therefore, contended that the principles of natural justice had been fully complied with and that the impugned orders are not liable to be struck down on that ground.
8. I will now refer to the re-verification report itself to find out whether there were any additional grounds for withdrawing the brand rate of drawback.
9. The only significant addition to the points already noticed is the reference to the Annexures 4 to 6 to the re-verification report. Annexure 4 refers to 73 items said to have been consumed during the period 1979-82. Of this, 42 items were verified with respect to the documentary evidence produced by the petitioners and remarks have been made against each item as to why the claim should not be accepted. Similarly, Annexure 5 refers to 37 items, out of the 74 items consumed in the year 1982-83. Annexure 6 refers to all the 75 items said to have been used in the year 1983-1985. It is, therefore, idle on the part of the petitioners to contend that proper re-verification had not been made before withdrawing the brand rate of drawback. It is also pointed out that the discrepancies in the said Annexures were pointed out to the petitioners and that they had endorsed the same in the respective Annexures. Their reply to the above discrepancy was not acceptable and in fact, they did not have the required documents to explain the discrepancies.
10. There is one other aspect which is to be noticed in dealing with the contention of the petitioner is that as many as fourteen exporters who were involved in the withdrawal of brand rate of drawback, had agreed that they did have the necessary supporting documents to claim brand rate. Out of the nine other exporters, who had initially proposed to support their claim by producing documents, eight of them later on expressed their inability. It was only the petitioners, who alone challenged the withdrawal of brand rate by contending that they could produce the documents. Ultimately, the re-verification done by the Madras Zone of the Revenue Intelligence discloses that the documents produced by them were not at all sufficient to support their claim for brand rate. The above facts clearly establish the fact that the respondents did not proceed on the basis of any concession. The concession related only to the 22 exporters, who had expressed their inability to produce documents. So far as the petitioner is concerned their case was fully gone into on the basis of the records and not on the basis of any concession. The contention in this regard is therefore without substance.
11. In the supplementary affidavit filed by the petitioner, it is admitted that a copy of the re-verification report, dated 27-12-1988 had been furnished to the counsel for the petitioners, but the Annexures had not been furnished. It is their complaint again that the petitioners are prejudiced by the violation of principles of natural justice. It is also pointed out that the report should have been given [to] them at the earliest point of time or at least during the hearing of the case. In my opinion, this contention cannot be accepted. I have already pointed out that the petitioners had endorsed their signature in the Annexures 4 to 6 in respect of the discrepancies noticed by the respondents. The principles of natural justice cannot be extended in a mechanical manner without reference to the facts of each case. Even in Maneka Gandhi's case : [1978]2SCR621 , the Supreme Court found that a post-decisional hearing would satisfy the principles of natural justice. In other words, the principles of natural justice only require that the affected person should not be prejudiced in putting forth his or her explanation. Where therefore, opportunities had been given to the petitioners so as to able them peruse the re-verification report and file their pleadings, it cannot be said that the impugned order is still liable to be quashed. In other words, one cannot use the principles of natural justice as a mechanical formula for setting aside the orders passed-after considerable deliberation so long as fair play and justice had been kept in mind by the Authorities.
12. The reply affidavit then proceeds to state that all the documents had been verified much earlier before the grant of brand rate of drawback. Therefore, there was no need or necessity to make a re-verification after a lapse of a considerable time, when especially many of the documents had been supplied. In respect of the Bills of Entry, the petitioner himself says that they had to look for collateral evidence to prove the requirements. Regarding the absence of stock cards/bin cards, it is contended that the claim of the petitioner had been verified twice and that therefore, the petitioner could not be expected to produce documents after seven years. There is yet another contention that in respect of Wattle Extract procured locally, it was pointed out that the Wattle Extract were of Tanzanian and Kenyan origin. But the petitioner overlooks the point that the complaint of the respondents is that there was no proof to show the percentage of imported Wattle Extract used or the inputs used for the finished leather, which was actually exported. The explanation that separate accounts were not maintained because of the peculiar nature of the trade is certainly not acceptable. One other contention raised in the reply affidavit is that the amount of drawback claimed in respect of Central Excise Duty was negligible and therefore even if such discrepancies had been noticed under Central Excise Duty, there was no case for withdrawing the brand rate of drawback in respect of customs duty. Lastly it is contended that there was no technical assessment by the Directorate of Revenue, Intelligence. The last two points do not appeal to me, when action is taken on an overall basis.
13. I have carefully considered all the points raised in the pleadings as well as the arguments of the respective counsel. One has to keep in mind the essential principle of allowing drawback. It is a scheme meant for encouraging exports. Therefore, in respect of the goods imported which are exclusively used for the production of the articles meant for export, the Government of India wanted to give a concession by returning a percentage of the import duty levied on the imported items. Therefore, while granting a concession, the Authorities are entitled to look for proper proof to grant the concession. In other words, there is no proof to show the sufferance of import duty, which had gone into the export of finished leather. The petitioners cannot have any grievance because they are bound to pay the duty on imported items. I am only trying to point out that strict proof is necessary when a person is claiming a concession. I am satisfied on the basis of the averments in the counter affidavit and the re-verification report especially the Annexures 4 to 6 that the respondents had taken pains to verify the correctness of the claim of the petitioners for the brand of brand rate of drawback. Here again, it has to be remembered that under Rule 3 of the Drawback Rules. All Industry Rate of Drawback had been allowed to the petitioners. It is only the subject claim of brand rate under Rule 7 of the Drawback Rules, which column, the brand rate which had been earlier allowed was found to be on the basis of the inflated claims. In proceedings under Article 226 of the Constitution of India, it is not possible to examine the issue in a more detailed manner because the Court does not have the necessary expertise to mathematically decide the issue. So long as a proper enquiry had been held and adequate opportunities had been furnished to the petitioners, no interference by this Court is called for.
14. For all the above reasons, I am not inclined to grant any relief in this writ petition and the writ petition is accordingly dismissed. No costs. Consequently, W.M.P. No. 11750 of 1991 is also dismissed.