Agra Footwear Manufacturers and Exporters vs Union of India

We have heard Sri Bharatji Agarwal, the learned Senior Counsel assisted by Sri Sushil Kumar Srivastava, Sri B.P. Singh Dhakray and Sri Shakti Singh Dhakray for the petitioners and Sri Siddarth Shukla, the learned Counsel for the respondent. The petitioners are footwear manufacturers and were availing industry rate of drawback on the export of their goods under Rule 19 of the Central Excise Rules, 2002 read with the Customs, Central Excise Duties and Service Tax Drawback (Amendment) Rules, 2006.

It transpires that the Additional Commissioner, Central Excise, Kanpur issued a modus operandi Circular No. 1 of 2013, dated 9-5-2013 to all the Central Excise Officers inviting the attention to a decision in the Customs and Central Excise, Kanpur v. International (citation) Corrugators, in which it was held that the clearance of packing material to the manufacturer exporters are not to be treated as domestic clearance and that these clearances were to be treated as export. The said circular requested the department to bring the circular to the notice of the staff in field formation so that necessary action is taken therein.

Based on the circular, the petitioners have received notices asking certain information and further intimating the petitioners that they are not eligible for all industry rate of drawback.

The petitioners have filed the present writ petition contending that the Additional Commissioner of Central Excise, Kanpur has no authority of law to issue such modus operandi circular and that circular/notification, if any, could only be issued by the Board under Rule 19(3) of the Central Excise Rules, 2002.

In this regard the petitioners have made representation to the Finance Ministry as well as to the Central Board of Excise and Customs. In this regard, the Joint Secretary, Ministry of Finance, by a letter dated 15-6-2013 has commented that the modus operandi circular dated 29-5-2013 issued by the Additional Commissioner was issued without informing or intimating the Ministry. Sri Bharatji Agarwal, the learned Senior Counsel, contended that from this, it is clear, that the authority had no jurisdiction to issue such a circular.

In the light of this submission, we have perused the representation given to the Central Board of Direct Taxes where we find that the petitioners have asked for clarification from the Board to remove the doubts in the matter and to stop the effect of the modus operandi Circular No. 1 of 2013 as well as to protect the interest on footwear export industries.

The counter affidavit reveals that the petitioners'' representation are pending consideration. The respondents have also contended that the modus operandi circular is only advisory in nature. In the light of the stand taken by the respondents, we dispose of the writ petition directing the Central Board of Excise and Customs to decide the representation of the petitioners, dated 28-5-2013 and representation dated 23-10-2013 (Annexures 3A and 4 to the writ petition), by a reasoned and speaking order within a period of four months from the date of the production of a certified copy of this order.