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2023 (10) TMI 452 - MADRAS HIGH COURTReversal of Duty Drawback - Advance Licence and duty drawback are mutually exclusive or not - goods imported duty free under advance licence scheme can be utilized in the manufacture of goods exported under duty draw back (All Industry Rate) or not - Rule 3(1) of the Customs and Central Excise Duties Drawback Rules 1995 r/w General notes No.2(b) to the Notification No. 26/2003 Cus (NT) dated 01.04.2003. HELD THAT:- Circular No.19/2005 dated 21.03.2005 concedes to the position that duty drawback is sought by manufactures who use exempted/duty free inputs. The rates in such cases are the AIR. To be noted that Clause 4.1.14 of FTP does not specifically talk of either Brand rate or AIR and thus, it is the submission of the assessee that it would apply only to those cases where brand rates apply. This is for the reason that it is only in such cases that a bifurcation of the individual components and consequent apportionment would at all, be possible - A perusal of the Circular makes it clear that AIR duty is to be allowed in full in cases where a portion of inputs would qualify to be non-duty paid. Thus, the absolute position under the 1995 Rules has stands modified somewhat by clause 4.1.14 of FTP and Circular No. 19/2005. The substantial questions of law are thus answered in favour of the assessee and adverse to the revenue - The Circular proceeds on the basis that the inputs that are duty exempt constitute only a fraction of the over-all inputs used, as otherwise, the very purpose of the DD Scheme would become redundant. Abuse of the position, as recognized even under Circular No.19/2005 is not an impossibility. In the present case, there is a finding of fact by the Tribunal to the effect that the indigo blue used in the goods claiming duty drawback, is only a fraction. This finding of fact has not been challenged as perverse in this appeal and has become final. Thus, our answer to the questions of law is premised on this factual finding - Appeal dismissed.
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