TMI Blog2004 (3) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... aking into account the deemed import content of the said export product as per the Standard Input-Output Norms (SION) and determine basic custom duty and surcharge thereof payable on such deemed imports. It also provided that the value addition achieved by export of such product should be taken into account while determining the rate of duty credit under the Scheme. The DEPB Scheme clarified that the exports made thereunder shall not be entitled for drawback. It appears that the Central Board of Excise and Customs (for short, "the Board") vide its Circular No. 68/97, dated 2-12-1997 extended brand rate of drawback scheme under DEPB scheme. It was done so because the exporters made representations to the effect that wherever fibre goods exported by them were not liable to central excise duty, the exporters were unable to avail of Modvat Credit of additional customs duty (CVD) paid in cash on imported inputs, or excise duty paid on indigenous inputs, utilised in the production of export goods and that the duties suffered by them were not fully compensated to them at the time of export. Acting on these representations of the exporters, the Board decided that the exports made under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1998. 3.Circular No. 68/97-Cus., dated 2-12-1997 shall stand amended as above. Other provisions of that Circular shall be applicable to the products consideration herein......" 3.It is not in dispute before us that in so far as the petitioner was concerned, it was not eligible for payment of brand rate of drawback under the Circular No. 68/1997 as it was able to avail Modvat credit. Vide Circular No. 68/97 the condition precedent for eligibility for payment of brand rate of drawback was non-availability of Modvat credit and since the petitioner was availing of Modvat credit it was not eligible for payment of brand rate of drawback. With effect from 16th December, 1998, the petitioner was unable to avail of Modvat credit in view of the notifications issued by the Ministry of Finance, Government of India. For the subject exports for the period from September, 1999 to January, 2001, it is petitioner's case that as it did not avail Modvat credit, it was eligible for payment of brand rate on drawback vide Circular No. 39/1999 and in fact for some of the shipping bills the petitioner did receive payment of brand rate of drawback fixed by the Directorate of Drawback against excise dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 39/99-Cus., dated 25-6-1999 shall stand corrected to the extent mentioned above in the preceding paragraphs and other conditions of the said two circulars shall continue to apply. All pending brand rate applications for5. exports made under DEPB Scheme against DEPB-cum-Drawback shipping bills may be processed/disposed of accordingly. Decisions in respect of past exports made6. against DEPB-cum-Drawback shipping bills, where brand rate of drawback has already been granted, shall be examined separately and suitable instructions shall follow. Suitable instructions/Standing Order may7. be issued for the guidance of Trade/field staff." 4.To complete the narration of facts we may notice here that the deemed Modvat Credit Scheme was introduced by Notification No. 29/1996, dated 10th September, 1996 inter alia in respect of yarn and processed fabrics. Vide this notification, the manufacturer of processed fabrics as well as exporters were entitled to deemed Modvat credit. Thus, as exporters of processed fabrics got DEPB under the DEPB Scheme and deemed Modvat credit vide Notification No. 29/1996. By virtue of Notification No. 44/98, dated 10th December, 1998 the compounded levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amended with retrospective effect so as to take away vested right conferred on the petitioner. The learned Counsel also submitted that in respect of the drawback claims which had already been completed, and drawback had been given pursuant to the earlier circular, the drawback cannot now be rejected or claimed back under the subsequent Circular No. 39/2001. The learned Counsel submitted that the subsequent Circular No. 39/2001 is not clarificatory. It is so because the circular No. 39/1999 does not state that drawback would be given only after SION did not cover the inputs. Rather circular shows that it was issued to make available brand rate of drawback, over and above the DEPB where Modvat credit was not available. According to the learned Counsel, by the Circular No. 39/2001, there is total change in the stand taken in the earlier Circular No. 39/1999 and totally new conditions have now been imposed for the first time. Such circular can never be clarificatory or retrospective in nature. In support of his submissions, the learned Counsel relied upon : (1) Gandhi Sons ors v. Union of India, 2002 (81) ECC 261; (2) Eicher Motors Ltd. v. Union of India, 1999 (106 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anomaly which crept into the system through misconstruction of Circular No. 68/97 and the extent EXIM policy provisions. 7.Mr. R.V. Desai, the learned Senior Counsel appearing for the respondents, in the light of the aforesaid stand taken in the reply affidavit supported the Circular No. 39/2001 by submitting that by this circular the doubts about brand rate of drawback in respect of exporters under DEPB have been clarified and dispelled. He contended that in the light of the EXIM policy, 1997-2002, if the Circular No. 68/97 is read, the brand rate of drawback was allowed in the cases where (i) the CVD was paid in cash, and (ii) Central Excise duty in respect of non-SION inputs was paid and no Modvat (Cenvat) was availed and that is what has been clarified by the Circular No. 39/2001. The learned Senior Counsel, relying upon the judgment of the Supreme Court in Union of India v. Aflon Engineering Corporation, 2000 (122) E.L.T. 334 (S.C.) = (2001) 10 SCC 677 submitted that the clarification made by the Board vide Circular No. 39/2001 must be read having been in existence from the date the Circular No. 68/97 was issued. 8.In the EXIM policy for the period 1997-2002 the DEPB schem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds thus : "Circular No. 68/97-Cus., dated 2-12-1997 (From F.No. 605/145/97-DBK) Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Various representations have been received1. from Trade/Exporters that wherever final goods exported by them are not liable to Central Excise duty, in such cases, the exporters are unable to avail of Modvat credit of Additional Customs Duty (CVD) paid in cash on imported inputs, or excise duty paid on indigenous inputs, utilised in the production of export goods: and thus the duties suffered by them are not fully compensated to them at the time of export. In view of the above, the issue has been2. examined and it has been decided that the exports made under D.E.P.B. Scheme of those products which cannot avail Modvat credit of the Additional Duty of Customs (CVD) paid in cash on imported inputs or excise duty paid on indigenous inputs since no excise duty is payable on the export goods, will be eligible for payment of Brand Rate of Drawback to be fixed by the Directorate of Drawback against Additional Customs Duty/Excise Duty suffered on inputs, on submission of proof of payment of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deemed Modvat credit scheme came to an end with effect from 16th December, 1998. In the backdrop of introduction of compounded levy scheme on textile fabrics, again various representations were received by the Board. The Board examined the issue afresh and decided that exports made under DEPB scheme of those products which cannot avail Modvat credit of the additional duty of customs (CVD) paid in cash on imported inputs or excise duty paid on indigenous inputs will be eligible for payment of brand rate of drawback. This was applicable to export of re-rolled steel and processed fabrics. Having considered two circulars viz. 68/97 and 39/99 and impugned Circular No. 39/2001, we are unable to accept the submission of the Senior Counsel appearing for the respondents that Circular No. 39/2001 is clarificatory in nature and the Circular Nos. 68/97 and 39/1999 have to be read in that light. The Circular No. 39/2001 is not clarificatory but is a fresh look of the matter in the light of some doubts having arisen and the double benefits being taken by the exporters under the Circular Nos. 68/97 and 39/99. The fresh look of the matter by the Board reflected in the Circular No. 39/2001 see ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that circular issued by the Board under Section 37B of the Central Excise Act is effective from the date of the notification or publication. We have no hesitation in holding that the Circular No. 39/2001 has to be effective from the date it was issued and published. In other words, the Circular No. 39/2001 has to be held to be prospective and cannot be made applicable with retrospective effect. 15.The judgment of the Supreme Court in Aflon Engineering Corporation relied upon by Mr. Desai, the learned Senior Counsel for the respondents cannot be applied in the facts and circumstances of the present case. Paragraph 11 of the said report upon which strong reliance has been placed by the learned Senior Counsel reads thus : The 1971 notification did not elaborate"11. or specify as to what would be regarded as a rigid plastic sheet. In order that there should be no ambiguity as to what is to be categorised as a flexible or rigid material the explanation was inserted in 1978. It is rightly not being contended that the Central Government could not have included the explanation at the time when the notification was first promulgated in 1971. The Central Government could at that very f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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