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TMI Blog2011 (2) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... ecise four questions and we have examined the references and heard learned counsel for parties at considerable length for reaching this day to pass orders on such references :- Common four questions in TRC 1, 2 & 4/2005 "1. Whether the CEGAT has committed an error in holding that the Order-in-Original is bad as it allowed duty Drawback as per the Board Circular No. 67/1998, read with Board Circular No. 74/1999 CUS? 2. Whether the CEGAT was right in allowing the Appeal and awarding the Drawback as per All Industry Rates against the provision of Notification 67/1998, Board Circular No. 67/1998 and 74/1999? 3. Whether the respondent was eligible for Drawback as per All Industry Rate or Brand Rate? 4. Whether the order of the CEGAT runs contrary to the Rules, Circulars, Notifications and Procedures as prescribed under the Customs Act, for allowance of duty Drawback by the respondent?" Additional question in TRC No. 3/2005 : "Whether the CEGAT was right in holding that the non-mentioning of the goods being manufactured by EOU/EPZ, does not amount to mis-declaration in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to reference Nos. TRC 1/2005, TRC 2/2005, TRC 3/2005 and TRC 4/2005, as we find we are not receiving any worthwhile assistance from the counsel appearing for the parties in these references and we are not able to answer the references. List these matters on 7-1-2010 as requested by Sri K.N. Mohan, learned standing counsel appearing for the department. Furnish a copy of this order to Sri K.N. Mohan, learned standing counsel appearing for the department for ensuring compliance." "DVSKJ/NAJ : 7-1-2010 Sri K.N. Mohan, learned Junior standing counsel appearing for the Central Excise and Customs Department, has filed a memo indicating the circumstances under which the Commissioner of Customs, Bangalore, is unable to be present before the court today and that Mr. N.K. Gupta, Joint Commissioner of Customs who is in charge of the Legal Cell of the Department is present before the court. Even after hearing the learned standing counsel on behalf of the revenue and also Mr. N.K. Gupta, Joint Commissioner of Customs, we are not in a position of appreciate as to under what circumstances and against what duties that had been suffered by the respondent-assessee and against what excise dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation/circulars, enabled by the Central Government, duty drawback is allowed on the export on certain products, both on excise duty and customs duty that has been realised by the Governement. List this matter on 4-2-2010 as requested by the Commissioner. Commissioner to be present on the next date of hearing. Furnish a copy of this Order to Mr. K.N. Mohan, learned junior standing counsel appearing for the appellant." "DVSKJ & NAJ : 4-2-2010 Sri K.N. Mohan, learned junior standing counsel appearing for the appellant-Commissioner of Customs, has placed before us written submissions, on behalf of the appellant along with Board Circulars No. 24/2001-Cus., No. 19/2005-Cus. and No. 31/2000-Cus. and extract of Section 74 to Section 76 of the Customs Act, 1962 (52 of 1962). 2. We are still not very convinced as to the manner of working of the provisions of Section 75 and Section 76 of the Act, to allow duty drawback in respect of exported goods and in whose hands, to what extent and in what circumstances, particularly, having regard to the limitation imposed in terms of Rule 3 of the Customs and Excise Duties Drawback Rules, 1995, in terms of proviso to this Rule, Sub-rule (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 010 In terms of our order dated 4-2-2010, reading as under : ORDER Sri K.N. Mohan, learned junior standing counsel appearing for the appellant-Commissioner of Customs, has placed before us written submissions, on behalf of the appellant along with Board Circulars No. 24/2001-Cus., No. 19/2005-Cus. and No. 31/2000-Cus. and extract of Section 74 to Section 76 of the Customs Act, 1962 (52 of 1962). 2. We are still not very convinced as to the manner of working of the provisions of Section 75 and Section 76 of the Act, to allow duty drawback in respect of exported goods and in whose hands, to what extent and in what circumstances, particularly, having regard to the limitation imposed in terms of Rule 3 of the Customs and Excise Duties Drawback Rules, 1995, in terms of proviso to this Rules, Sub-rule (1) and (3) read in conjunction with Rule 6, Rule 8, Rule 11, Rule 13 and Rule 15 of the said Rules. 3. Even the submission made by the Commissioner have not cleared our doubts as to whether an exporter who has not himself either imported the raw material and exported goods and an importer who has not paid customs duty at the time of import, can also claim the duty drawback ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. 2. Mr. Pramod Kumar, Under Secretary in the Ministry of Finance, who is presently working as Technical Officer in Central Excise and Customs, Duty Drawback Division, is present before the Court. 3. Mr. Kumar has, to some extent, educated us about the duty drawback scheme, the background in which the duty drawback scheme has been introduced and as to the manner of its working, particularly in the present global context and with the agreements and the understanding that have evolved in the wake of World Trade Organisation overseeing the international trade and practices and acting like a big brother over all member states. 4. It is very obvious that our country, though a sovereign republic, has yielded to the overseeing influence and is playing tune to the dictates of such Organisations whether or not such organisations are concerned for our people or for our society nor are they familiar with the social conditions that prevail in our country. 5. Be that as it may. Though it appears to be the reality of the day and it is in this background Mr. Pramod Kumar has explained to us the working of the duty drawback scheme in our country in terms of Sections 75 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n these two rates and exporter being entitled to claim duty drawback depending upon the applicability of one of the two rates; that the controversy between the parties in these references are while the revenue contends that brand rate of duty drawback, the version of the brand rate of duty drawback, the version of the assessee on the other hand is, it should be of all industry rate of drawback. However, on this aspect of the matter, learned counsel for the revenue joins issue to contend that definitely it is not that revenue concedes; that the assessee was entitled to claim brand rate of duty drawback. While the matter is heard in part, Sri Naresh Thakkar, learned counsel requests for some accommodation to look up to other statutory provisions, notifications and circulars with reference to the statutory provisions which have been made up to date relating to allowing of duty drawback and requests the matter to be listed on 28-6-2010. Our experience in these tax reference cases is that the maters are not getting concluded even after several hearings. The duty drawback scheme, under the provisions of Customs Act, 1962, is the subject matter of examination in these cases and it has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the particular case relating to each reference. 2. We find, there are four references, though the export period was between 1-4-1998 to 31-3-1999, as claimed by the respondent the inputs having been procured by the respondent from different sources and having effected the exports during different periods in respect of separate claims for allowing duty drawback, therefore it is very essential that the facts in respect of each reference will have to be placed before this Court, one case cannot be decided on facts prevailing in some other case. 3. In spite of this matter being heard on several earlier occasions and being taken up specially today, and as per the request of Mr. Naresh Thakkar, learned Counsel appearing for the respondent assessee, we have not been able to conclude this matter not only for want of assistance to enlighten legal position, but also for want of basic facts which are not forthcoming and submission of Mr. Naresh Thakkar, learned Counsel for the respondent, who has been virtually requested to assist the Court not only as a counsel for the respondent assessee, but also to assist us as Amicus Curiae to educate us on the legal position, which, Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stoms, who has sought through these references answers to the questions posed by him to provide necessary papers which has not been provided to this court, even as admitted by learned Standing Counsel. While, we deprecate the dismal state of affairs prevailing at the office of the commissioner of customs, Queens Road, Bangalore-560 001, Karnataka, in not assisting us to answer the four references and to take a decision. We cannot help but point out to the commissioner of customs that it is his duty to provide necessary assistance and material, which is neither forthcoming in this reference nor in the other three references, we can only express our anguish at the sorry state of affairs. 8. We are therefore constrained to direct the Commissioner of customs to be present before this Court on the next date of hearing and also to ensure that the original documents be mad available and as requested by Mr. Mohan, learned Junior Standing Counsel for the revenue, we grant time till 27th August 2010, for filing commensurate paper book culled out from the original records and also the papers filed and available before the adjudicating authority, as also the appellate authority, which s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al had submitted a statement of case as prepared and forwarded by the Tribunal, we find the statement of case sent to this Court by the Tribunal lacks necessary and basic facts for answering the questions under reference. We are expressing our dismay at the haphazard and careless manner in which the Tribunal has forwarded the statement of case without indicating the facts of the particular case relating to each reference. 2. We find, there are four references, though the export period was between 1-4-1998 to 31-3-1999, as claimed by the respondent the inputs having been procured by the respondent from different sources and having effected the exports during different periods in respect of separate claims for allowing duty drawback, therefore it is very essential that the facts in respect of each reference will have to be placed before this Court, one case cannot be decided on facts prevailing in some other case. 3. In spite of this mater being heard on several earlier occasions and being taken up specially today, and as per the request of Mr. Naresh Thakkar, learned Counsel appearing for the respondent assessee, we have not been able to conclude this matter not only for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice Tax, appearing on behalf of revenue in these references submits that paper book could not be filed as these cases had been entrusted to him by way of transfer of the brief from another Counsel. 7. That cannot be an excuse for depriving the Court the relevant case papers and documents and getting papers. It is the responsibility of the Commissioner of customs, who has sought through these references answers to the questions posed by him to provide necessary papers which has not been provided to this court, even as admitted by learned Standing Counsel. 8. While, we deprecate the dismal state of affairs prevailing at the office of the commissioner of customs, Queens Road, Bangalore-560 001, Karnataka, in not assisting us to answer the four references and to take a decision. We cannot help but point out to the commissioner of customs that it is his duty to provide necessary assistance and material, which is neither forthcoming in this reference nor in the other three references, we can only express our anguish at the sorry state of affairs. 9. We are therefore constrained to direct the Commissioner of customs to be present before this Court on the next date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g or cooperating with the court for the proper disposal of these matters. It is also causing inconvenience to the respondent and its counsel due to the prolonged hearings of the reference cases, as the learned counsel for the respondent, it appears, is based at Mumbai making trips to Bangalore only for the purpose of appearing in these reference cases at the instance of Commissioner. In the circumstance, we impose a nominal cost of Rs. 5,000/- this time, payable to the respondent-assessee by the petitioner in these cases, but if adjournment are sought or become necessary again on the next date of hearing, petitioner will have to bear the actual cost incurred by the respondent. List these mattes on 17-9-2010, as requested by Sri Bhaskar, learned standing counsel for the petitioners and Sri Naresh Thacker, learned Counsel appearing for the respondent-assessee." "DVSKJ & NAJ : 17-9-2010 Mr. Ajay, learned counsel appearing for the respondent-assessee requests accommodation for two weeks as the arguing counsel Mr. Naresh Thacker is unable to come to Bangalore as he has laid down due to indisposition at Mumbai. Sri Ravindra, learned Additional Solicitor General appearing for the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration carried out and to verify by actual check or otherwise the statements made in support of the claim for drawback. (d) For the manner and the time within which the claim for payment of drawback may be filed; Which enables the central government to make rules for effectuating the provisions of sub-section (1), providing for duty drawback, Sri Raveendran, learned ASG, appearing for the petitioners, request the matter to be taken up for further hearing on 12-11-2010 to enables the petitioners to once again look into the law and to apprise the court as to the legal position of allowing duty drawback even when the factum of goods having suffered duty earlier, is either not established or is not established as a fact before the customs authorities, as it is the version of the revenue in this case that the assessee has not fulfilled this requirement and if we have to properly and effectively answer the questions posed for our answered in these references, both the legal position and the factual position should be clear and definite. As requested by both sides, list the matter on 12-11-2010 for further hearing." "DVSKJ/NAJ : 12-11-2010 We have heard Sri R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Raveendra, learned Additional Solicitor General submits that relevant material relating to duty drawback allowed in respect of all DTAs after the year 1995, when duty drawback rules got amended to bring it in conformity with the World Customs Organisation, will be placed before the Court, affirmed on oath by a competent officer of the Ministry of Finance and requests for time till 19-11-2010. List these matters on 19-11-2010 for further hearing". "DVSKJ/NAJ : 19-11-2010 Sri Raveendran, learned Addl. Solicitor General, appearing for the petitioners, has placed before the court an affidavit for Sri Banibrata Bhattacharya, Commissioner of Customs, Bangalore, said to be in compliance with the order passed by this court on 12-11-2010. While certain facts relating to M/s. Lela Scottish Lace Ltd. and M/s. L.T. Karle & Co., Unit-III, are made part of the affidavit and it is also deposed that the irregularities and malpractices indulged in by these two companies were detected by the preventive unit of Bangalore customs and based on such information, cases had been booked at Chennai Air Cargo, Chennai Seaport and Tuticorin port in respect of both these companies, but the other similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has placed before the court the affidavit of Mr. Pramod Kumar, Technical Officer (Drawback), Central Board of Excise and Customs, Department of Revenue, Minsitry of Finance, New Delhi, in response to the direction that has been issued by this court on 19-11-2010 to place before the court the information regarding the amounts of duty drawback that had been allowed by the Central Government in favour of the Domestic Tariff Area Units who had claimed duty drawback in respect of goods which had been got manufactured in 100% export oriented units, but nevertheless exported either through such export oriented units on behalf of the DTA units, or got back by the DTA units and have exported the goods from their own premises. This information was called for as it was the submission on behalf of respondent assessee by its learned counsel Mr. Naresh Thacker, that the respondent will be able, not only to sustain the order of the tribunal in allowing such duty drawback in favour of the respondent - assessee, not only on the strength of the interpretation given to the notification governing the issue, but also as a matter of routine and on a regular basis, such units had enjoyed the benefit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the submissions by both sides. Registry is directed to list this matter on 7-1-2011 and since orders from the Hon'ble Chief Justice may be sought for the time at which the matter to be listed and list the matter accordingly." 6. There are two aspects which are required to be cleared before merits of the submissions and respective versions of parties can be considered. Firstly, Sri N.R. Bhaskar, learned senior Central Government standing counsel appearing for the Commissioner of Customs has drawn our attention to Misc. Cvl. 17563/2010 filed under Section 151 of Code of Civil Procedure read with Section 130A of the Customs Act for expunction of remarks contained in the orders passed by this Court on 3-8-2010 and 27-8-2010. The application is supported by the affidavit of Sri Banibrata Bhattacharya, the Commissioner of Customs, Bangalore, at whose instance references were made to this court. 7. The sum and substance of the affidavit is that presence or absence of the Commissioner of Customs before this court on some of the dates when this court had directed the Commissioner of Customs to be present was neither deliberate nor intentional but due to exigencies of work and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons contained in the orders passed by this court are not intended to reflect the performance of any individual. It is a reflection on the system, the entire administrative set-up and functioning of particular department and ministry as it is experienced in our system and society; the letharginess and irresponsibility permeates of government functioning and things are taken for granted and seldom government machinery is functioning on sound managerial functioning, more often the interest of state has suffered because of this don't care attitude or irresponsible acts of different officials at different levels. It is but natural for this Court to comment when this court has duty to perform the functions, in context of the references to be answered. The Tribunal having not performed of its duty of forwarding a proper, correct, full statement of facts, it became inevitable for this court to depend upon the Commissioner and the department at whose instance references are made. Even that is also not forthcoming that this court has made such observations at that point of time. Accordingly, the Tribunal submitted a statement of case and has referred first four questions, which are common to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be further examined and opined by the Tribunal or even if the Tribunal thinks so if the High Court on further application under very section by the aggrieved person seeks a direction to the Tribunal to refer particular question and if the High Court finds that question does merits examination by the High Court and a direction to be issued to make reference being a provision analogous to the present appeal previsions, which is one provided by the legislature on or after passing of Finance Act of 1999, the ratio is equally applicable to the references made under the very statutory provisions but for the earlier period and therefore, submission that a reference at the instance of revenue is not maintainable and there is no need for this court to go into the merits of references, for answering them and the orders passed by the Tribunal should be left undisturbed. 16. Sri N.R. Bhaskar, learned senior Central Government standing counsel appearing on behalf of the applicant-Commissioner of Customs submits that the ratio of judgment in the case of Commissioner of Central Excise, Belgaum v. Fluid Dynamics Pvt. Ltd., is not applicable to the facts and circumstances of the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per this order are the very questions which are being directed by this court to be referred by the Tribunal for our answers. Therefore, there is no question of the preliminary objection coming in the way our examining merits of the present references. 19. If at all the assessee was not agreeable for this course of action, the grievance or cause of action arose when this court had directed that references be made and that order having not been questioned and further having been allowed to become final, it is not open to the assessee to rise such preliminary objection at this stage. Therefore, this preliminary objection is rejected. 20. The brief facts for the purpose of appreciating the questions required to be answered are :- The respondent is recognised as a Domestic Tariff Area Unit (for short, 'DTA Unit') and a submitted by Sri Naresh Thacker, from the year 1992 to 1997 (relevant period), the assessee claiming to have exported goods manufactured out of duties suffered inputs had claimed benefit of duty drawback made available to a person claiming to have exported goods manufactured out of duties suffered inputs had claimed benefit of duty drawback made available t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 5% Modvat credit which they cannot other wise avail. This removes the disability of 5%, which was making inputs costlier to exporters. Central Excise portion of All Industry Rates of Drawback equivalent to 5% of the total Central Excise allocation even where the Modvat has been claimed, will be allowed as drawback. No longer any need to produce certificate regarding non-availment of modvat availed in respect of export of handloom products, handicraft including handicraft of brass artware, finished leather, grey fabrics and other export products which are unconditionally fully exempt from Central Excise duty. Major Changes in Rates (1) A cap/maximum limit has been imposed on products having drawback rate above 10%. (2) The Description of handloom products has been revised to include all varieties of madeups. It will resolve any classification disputes at the cutting edge. (3) The All Industry Rates of Drawback in the case of exports of garments from EQUs/EPZ units restored which were earlier deleted in sept.'97. (4) 6 more items added to the list of 747 items. (5) &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt only in adjudicating orders giving rise to reference numbers 2 & 3 and had chosen not to levy penalties in adjudication orders leading to reference numbers 1 & 4. 28. These orders were the subject matters of further appeals by the assessee before the Tribunal. The Tribunal found merit in the appeals and allowed all four appeals in terms of four different orders passed in different appeal numbers. It was the turn of the revenue to get aggrieved by the orders passed by the Tribunal and the revenue invoked the provisions of Section 130A of the Customs Act and sought for directing the tribunal to refer the questions posed by them for the opinion of the High Court by filing four different applications, through C.P. Nos. 1138, 1139, 1141 & 1144 of 2003. These applications came to be allowed by the Division Bench of this Court as per four different orders passed on 8-10-2003 in C.P. No. 1138/2003, C.P. No. 1139/2003, C.P. No. 1141/2003 and in C.P. No. 1144/2003 of the same, the Tribunal has drawn up four references. 29. The questions referred for our answers, though are four in number, which are common to all the four references and with one additional question in TRC No. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or incorrect interpretation of the Notification No. 67 of 1998; that while the notification does come in the way of the goods manufactured in a 100% EOU claiming the benefit of duty drawback on being exported by a DTA when the goods was manufactured in the 100% EOU by availment of its idling period and spare manufacturing capacity, nevertheless for the purpose of understanding as to who is the manufacturer, for whose benefit the goods were manufactured etc., the DTA unit having supplied the raw material for getting manufactured finished products and finished products though manufactured inside a 100% EOU should nevertheless be taken as having been manufactured by the DTA unit itself. Such goods even as per the finding of the customs officials were admittedly removed from the 100% EOU on the basis of transshipping bills filed in sealed letters were being sent by proper officer stationed at the EOU to the proper officers at the ports, it should be deemed to be an export effected by a DTA unit and therefore on a combination of these two inferences, the resultant position is that goods were manufactured on behalf of DTA and goods were exported by a DTA unit itself; there are no reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Tribunal has committed a grave error in law in restoring the duty drawback in favour of the assessee in respect of the so-called exports of goods, which the assessee had claimed to have secured and manufactured in the 100% EOU and EPZ on job work basis; that the Tribunal has virtually proceeded to grant orders in favour of the assessee on assumptions and presumptions; that it is not for the tribunal to call in aid a fiction to infer that the goods though actually and factually manufactured by 100% EOU or EPZ, it should be taken to be one as manufactured by a DTA, in the light of the trade parlance that had prevailed in the industry, as is found in para-5 of the Tribunal's order. 36. Reference is made to the decision of the Supreme Court in the case of Chemicals & Fibres of India Ltd. v. Union of India [1991 (54) E.L.T. 3 (S.C.) - paras 8 to 11], to drive home the concept of duty drawback and also a decision of a learned Single Judge of this court in the case of Karle International v. Commissioner of Customs, Bangalore [2009 (243) E.L.T. 658 (Kar.)]. 37. It is also the submission of Sri Raveendran, learned ASG appearing for the Revenue, that in the wake of Board C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efit available in terms of Section 67A of the Customs Act or in terms of the statutory provisions of rules and notification made in terms of the rules. 40. It is therefore submitted that for the period during which these notifications held the field, assuming that the assessee had got its goods manufactured and exported through such units and assuming that inputs for the purpose of production of goods exported had suffered customs duty at some point of time, in view of the embargo in terms of the notifications, duty drawback had been wrongly availed by the assessee while filing shipping bills and it has been subsequently noticed and rightly the adjudicating officer denied and called upon the assessee to return the amount. The Tribunal on its total misunderstanding of the scope of Notification No. 67/1998 dated 1-9-1998, modified by Customs Notification No. 31/1999 dated 20-5-1999 has allowed the appeals. The findings recorded by the Tribunal for allowing the appeals as indicated in the appeals are required to be modified and answered on the touchstones of the notifications. 41. On the other hand, Sri Naresh Thacker, learned counsel appearing or the respondent-assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how the notification cannot deny in any way the benefit of duty drawback to the assessee. The object of the notification which has to be understood in the manner as contended by the revenue, would defeat the benefit of duty drawback in terms of Section 75 of the Customs Act. 44. Mr. Naresh Thacker, learned counsel appearing for the assessee has also contended that circular issued by the Customs Department in the context of two notifications and particularly Notification No. 31/1999 operates against the revenue to contend to the contrary the contents of circular to deny the benefit of duty drawback in favour of the assessee for the principle of estoppel operates against the revenue, particularly in a situation where duty drawback had been initially allowed in favour of the assessee and has been withdrawn by re-opening of assessment as per the adjudicating orders passed by the Commissioner. 45. It is also submitted that in the scheme of things it has to be inevitably preumed that inputs which had been gone into manufacture of export products had suffered customs and excise duty. As the very purpose of Section 75 of the Customs Act is to provide for reimbursement of such d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded by finding one way or the other. 51. Accordingly, we examine the other questions. The real question though is distributed in the three questions viz., common question in TRC Nos. 1, 2 and 4 of 2005, is one which can be put into one question as to whether the Customs Notification No. 67/1998 read with circular of even number and customs notification No. 74/1999 read with circular of even number, would come in the way of an assessee like the respondent - a DTA unit - from claiming the benefit of duty drawback available to a domestic exporter in terms of the provisions of 75 of the Act. 52. There is no dispute that Section 75 is the statutory provision which enables the benefit of duty drawback in respect of good exported and depending upon the nature of inputs, the rate of duty drawback allowed and the circumstances under which duty drawback is permitted and of course which are all made subject to the rules made under sub-section (2) of Sections 75 of the Act. there is no dispute with regard to the contents of sub-section (1) of Section 75 of the Act and therefore no further need for our examination of this statutory provisions. However, sub-section (2) of Section 75 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of sub-section (1) of Section 75 of the Act, as is indicated as to what conditions in the ending part of the sub-section (1), reading as under : ".....the central government may, by notification in the official gazette, direct that duty drawback shall be allowed in respect of such goods, in accordance with and subject to the rules made under sub-section (2). 54. In terms of the power vested in the central government under sub-section (2) of Section 75 of the Act read with Section 37 of the Central Excise Act, 1944, the central government has made the Customs and Central Excise Duty Drawback Rules, 1995. 55. In the context of the dispute relating to the entitlement of duty drawback when once the statutory provision imposes an embargo, in fact a total embargo, form claiming any drawback in respect of goods if they are all goods brought into existence under certain circumstances and using certain inputs is to be found in the second proviso to sub-rule (1) of Rule 3 of the Drawback Rules, reading as under : 3. Drawback - (1) Subject to the provisions of - (a) the Customs Act, 1962 (52 of 1962) and the ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reduced rates of drawback applicable to the export made against quantity based advance licences have been specified, the said rates shall also be applicable for the exports made against quantity based advance licences issued on or before 31st March, 1995; (c) manufactured and/or exported by a unit licensed as hundred per cent export oriented undertaking in terms of the relevant provisions of the Import and Export Policy in force; (d) manufactured and/or exported by any of the units situated in the Free Trade Zones/Export Processing Zones. (e) manufactured and exported in terms of clause (b) of sub-rule (1) of Rule 12 of the Central Excise Rules, 1944. (f) manufactured and/or exported in terms of clause (b) of sub-rule (1) of Rule 13 of the Central Excise Rules, 1944. (g) manufactured and/or exported availing of the facility under the Duty Entitlement Pass Book Scheme as contained in paragraph 7.25 read with paragraph 7.29 of the Export and Import Policy 1st April, 1997 - 31st March, 2002; Provided that nothing contained under clause (a) to (g) shall prohibit payment of drawback at a particular rate/amount if it has been specifically authorised un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake it very clear that the benefit of duty drawback in respect of goods manufactured at a 100% EOU or EPZ unit is not available when such goods are exported as benefit of duty drawback is available only when the inputs of goods manufactured for exporting had suffered duty i.e. customs duty when imported and even assuming that some part of it has suffered excise duty. 61. Though an attempt was made on behalf of the respondent-assessee by Sri Naresh Thacker, learned counsel, by pointing out that the export whether through a 100% EOU or EPZ or by them as goods had reached the customs port directly from their units and therefore it should be taken or deemed that export is by a DTA unit itself, this argument is not of much significance for the simple reason that disqualification in terms of the clauses (c) and (d) of Note-2 of the notifications, are attracted even when the exported goods is merely manufactured in a 100% EOU or EPZ irrespective of the goods being exported either by a 100% EOU or EPZ or DTA unit in any other manner and on its own. 62. The argument that the provisions of Section 75 of the Act being one for conferring a benefit and an understanding of such provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. To this effect is the view taken by the courts including the Supreme Court and the interpretation to be placed in respect of an exemption provision is well settled in law, for use to either to get confused or to take a contrary view and to put the matters beyond any semblance of doubt or controversy we may safely refer to and rely upon the observations contained in the judgment of the Supreme Court in the case of Commissioner of Central Excise, Chandigarh-I v. Mahaan Dairies [(2004) 11 SCC 798 = 2004 (166) E.L.T. 23 (S.C.)] and reading as under : "8. It is settled law that in order to claim benefit of a Notification a party must strictly comply with the terms of the Notification. If on wordings of the Notification the benefit is not available then by stretching the words of the Notification or by adding words to the Notification benefit cannot be conferred....." This view is reiterated by the Supreme Court in the subsequent cases also and as indicated in the case of Tata Iron & Steel Co. Ltd. v. State of Jharkhand & Others [(2005) 4 SCC 272] and observed that : Eligibility clause, it is well settled, in relation to exemption notification must be given a strict meaning. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or for the purpose of allowing a duty drawback or refund of the levy is in respect of the goods identified in particular form and the assessee like instant assessee comes into the pictures only for the purpose of convenience of collection. 70. Likewise, the benefit of duty drawback is in respect of goods exported if a particular goods has fulfilled the requirement of exemption provision and strictly in terms of exemption provision. On a close and detailed examination of the relevant notification, we find that there is absolutely no scope for manufacturer like the respondent DTA unit to claim the benefit of duty drawback in respect of goods manufactured and exported are manufactured at an 100% EOU or EPZ so long as the customs Notifications 67/1998 and 31/1999 hold the field and govern the allowing of duty drawback. 71. Though submission were made at the Bar for some time with regard to the entitlement for claiming duty drawback, what is popularly known as brand rate, but in terms of the statutory provision, the duty as had been actually suffered and which has paid and is made good by the assessee claiming drawback to that extent is a possibility in terms of the latter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above. In our considered opinion, there is no need to further discuss the details of the judgment in L.T. Karle case, more particularly as the judgment is only of persuasive value and we have, with respect, unable to agree with the reasoning and the line of logic found in judgment of L.T. Karle. 75. Question No. 4 arises in TRC No. 2 and 3 of 2005 and it relates to the justification or otherwise of the levy of penalty on the assess on the premise that it amounted to misdeclaration or suppression for the claim of duty drawback which was otherwise not available to the respondent-assesee. 76. Rather strangely even the adjudicating authority had levied penalty only in two orders, whereas in other two orders, it is silent. Be that as it may, at this stage, it is not for us to re-examine or go into this question, but we shall rest content with answering of this question and we find that while the original authority took an empathic view that the non-declaration of the factum of goods being manufactured or got manufactured at a 100% EOU or EPZ unit did amount to a misdeclaration particularly as on the reading of the relevant portion of the order of the Tribunal, dealing with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso there is no other allegation of mis-delcaration of material facts about description, value and quantity of the goods under export, the penal clause under Section 114(iii) as invoked and applied on the exporter and the other appellant viz., M/s. LSLL cannot be upheld. we find the reasoning given by the Tribunal for reversing the view taken by the adjudicating authority to be very strange to comment in a mild manner, as the reasoning is no reason and does not stand to logic or relevant to the facts. 77. It is the respondent-assessee-DTA unit - which claimed the benefit of duty drawback. It was the duty of the assessee to have placed all facts and figures relating to the manner in which it acquired the goods, where goods were manufactured, what amount of duty was paid or had been suffered on the inputs used for manufacture of goods exported and under what specific provisions the duty drawback was being claimed. 78. It is well known in tax parlance that it is the responsibility of person claiming an exemption to place all necessary supportive materials to disclose all relevant facts and to claim the benefit. A non-mention here and suppression there or even omission to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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