Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Article Section
Home Articles Customs - Import - Export - SEZ Mr. M. GOVINDARAJAN
← Previous Next →

‘DUTY DRAWBACK’ CANNOT BE EQUATED WITH ‘REBATE OF DUTY’

Submit New Article
 

Discuss this article

‘DUTY DRAWBACK’ CANNOT BE EQUATED WITH ‘REBATE OF DUTY’
By: Mr. M. GOVINDARAJAN
September 21, 2017
  • Contents

Rule 2(a) of Customs, Central Excise and Service Tax Drawback Rules, 1995 defines the term ‘drawback’ in relation to any goods manufactured in India and exported, as the rebate of duty or tax, as the case may be, chargeable on any imported materials or excisable materials used or taxable services used as input services in the manufacture of such goods.  A drawback may be allowed on the export of goods at such amount, or at such rates, as may be determined by the Central Government.

Where any goods are produced or manufactured from imported materials or excisable materials or by using any taxable services as input services, on some of which only the duty or  tax chargeable thereon has been paid and not on the rest, or only a part of the duty or tax chargeable has been paid; or the  duty or tax paid has been rebated or refunded in whole or in part or given as credit, under any of the provisions of the Customs Act, 1962 and the rules made there under, or of the Central Excise Act, 1944 and the rules made there under, or of the Finance Act, 1994 and the rules made there under, the drawback admissible on the said goods shall be reduced taking into account the lesser duty or tax paid or the rebate,  refund or credit obtained.

The issued to be discussed in this article with reference to the decided case law is whether the drawback is equated with the rebate of duty.

In ‘Commissioner of Central Excise, Thane-II V. K. K. Chempro  (India) Private Limited’ – 2017 (9) TMI 701 - BOMBAY HIGH COURT  the respondent had filed 15 applications for determination of the rate of drawback for silicon fluid R-335 exported by them.  The Deputy Commissioner held that the applications of the respondent are not maintainable since the industry rate of drawback had already been fixed in respect of goods which are squarely covered under Heading 391002 of Drawback Schedule.

The respondent, being aggrieved on the order of the Deputy Commissioner, filed an appeal before the Commissioner (Appeals).  The main ground on the appeal is that neither the deficiency memo nor any personal hearing was given to the respondent to defend its case and the rate of drawback applied for was proper and correct.  The Commissioner (Appeals) rejected the appeals of the respondent.

The respondent, being aggrieved on the order of the Commissioner (Appeals), filed appeal before the Tribunal.  The Tribunal remanded the matter back to the Adjudicating Authority to consider the applications for drawback filed by the respondent under Rule 7 instead of Rule 6 of the Drawback Rules.

The Revenue, being aggrieved on the order of the Tribunal, filed the appeal before the High Court.  The Revenue raised the following substantial questions of law for the consideration of the High Court-

  • Whether in the facts and circumstances of the case and in law the CESTAT, Mumbai is correct in passing an order without jurisdiction?
  • Whether in the fact and circumstances of the case and in law, CESTAT, Mumbai is correct in making an observation that there is no bar on entertaining appeal against the order of the Commissioner (Appeals) despite thesection 35B(1)(b) of the Central Excise Act, 1944?
  • Whether in the facts and circumstances of the case and in law the CESTAT, Mumbai is correct in remanding the case back to the adjudicating authority, by giving directions to consider the applications under Rule 7 instead of Rule 6 of the said Rules, as filed by the assessee?

The Revenue contended the following before the High Court-

  • The term ‘drawback in relation to any goods manufactured in India and exported’ has been defined in Rule 2 as the rebate of duty or tax, as the case may be, chargeable on any imported materials or excisable materials used or taxable services used as input services in the manufacture of such goods;
  • The definition of ‘drawback’ it is apparent that drawback is equated with ‘rebate’ of duty;
  • Section 35B(i) provides that no appeal shall lie, if such order relates to a rebate of duty of excise of goods exported to any country or territory outside India or an excisable materials used in the manufacture of goods which are exported to any country or territory outside the India;
  • The impugned order of the Tribunal is without jurisdiction and therefore the same should be set aside.

The respondent contended that an appeal will lie to CESTAT from an order of the Commissioner (Appeals) relating to drawback.

The High Court heard the arguments of both side.  The High Court analyzed the provisions of Rule 18 of Central Excise Rules, and Rule 2 of drawback rulesRule 18 of Central Excise Rules, 2002 provides that where any goods are exported, the Central Government may, by notification, grant rebate of duty paid on such excisable goods or duty paid on materials used in the manufacture or processing of such goods and the rebate shall be subject to such conditions or limitations, if any, and fulfillment of such procedure, as may be specified in the notification.  Therefore the High Court considered that  since rebate of duty is separately provided it cannot be equated with drawback under Rule 2 of drawback Rules.   The High Court further held that there is no bar in entertaining an appeal against the order of Commissioner (Appeals) determining the duty drawback.  The High Court dismissed the appeal filed by the Revenue.

 

By: Mr. M. GOVINDARAJAN - September 21, 2017

 

 

Discuss this article

 
← Previous Next →
what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map || ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version