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Issues: Waiver of pre-deposit of drawback amount and penalty due to non-admissibility of drawback on exported goods.
Analysis: The appellant filed an application seeking waiver of pre-deposit of drawback amount and penalty totaling Rs. 84,525/-, as the drawback claimed on exported knitted fabrics was disallowed. The reason cited was that the job worker to whom the inputs were sent was non-existent, and the inputs, namely cotton yarn, were not excisable and did not attract Central Excise duty, making the drawback inadmissible. The appellant contended that payments to the job worker were made after deducting TDS, supported by necessary certificates. They argued that the findings of non-duty payment were based on the job worker's unavailability at the given address, which could not be verified. They asserted that the job worker was operational during the goods' manufacturing and export, challenging the sustainability of the impugned order. The Revenue, however, countered by stating that the evidence of TDS deduction was not presented before the lower authority and was only introduced for the first time at the Tribunal. They emphasized that the cotton yarn used as input did not bear any duty, thus rendering the drawback impermissible under the Customs, Central Excise Duties, and Service Tax Drawback Rules, 1995. The appellant also cited financial hardship due to being a small unit, highlighting the undue burden of depositing the amount. In line with the applicable rules, the Tribunal found that no drawback could be allowed if the exported goods were manufactured using materials on which duty had not been paid. Since it was established that the raw material used was not excisable and did not undergo Central Excise duty, the appellant's failure to provide evidence of duty payment led to the conclusion that a total waiver was not warranted. However, considering the financial hardship expressed and the Revenue's interest, the Tribunal directed the appellant to deposit 50% of the confirmed amount within six weeks. Upon compliance, the pre-deposit of the remaining drawback and penalty amounts were waived, with recovery stayed during the appeal's pendency, with a reporting deadline set for 29-9-2009.
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