TMI Blog2012 (6) TMI 432X X X X Extracts X X X X X X X X Extracts X X X X ..... 35/11-Mum. - A/250/2012/CSTB/C-I - Dated:- 12-4-2012 - Ashok Jindal, P.R. Chandrasekharan, JJ. T. Vishwanathan, Adv. for the Appellant A.N. Sharma, Commissioner (AR) for the Respondent JUDGEMENT P.R. Chandrasekharan:- 1. The appeal is directed against the order-in-original No.31/2010-11 dated 21.03.2011 passed by the Commissioner of Customs, Pune. 2. The appellant M/s. Cummins India Ltd., Pune are manufacturer and exporters of IC Diesel Engines. During the period from May, 2005 to December, 2008, they exported the said goods under advance licence-cum-draw back scheme and from December, 2008 onwards under draw back scheme. 3. The appellant applied for determination and sanction of draw back for the goods exported during May, 2005 to January, 2010 under Rule 6(1)(a) of the Draw Back Rules and the Jurisdictional Commissioner of the Central Excise determined the amount of draw back in respect of the said goods under Rule 6(1)(b) based on the declaration made in the application for fixation of brand rate and draw back was sanctioned and paid to the appellant. Thereafter the department noticed that Diesel Engines are notified under Rule 3 of Draw Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oposed in the show-cause notice nor are they liable to any penalty under Section 114. Their claim for grant of draw back under Rule 7 of the Draw Back Rules was rejected by the adjudicating authority on the ground that the appellant did not make any application in writing to the proper officer seeking determination of draw back under Rule 7 for the goods exported and on the contrary the appellant made an application seeking determination of draw back under Rule 6 and the application so made by mis-declaration was illegal. Accordingly, he rejected the claim of the appellant and confirmed the demand of Rs.12,95,57,132/- under Rule 16 of the Draw Back Rules read with Section 75 of the Customs Act, 1962 and also demanded interest thereon at the rate of 13% per annum, under the afore said provisions of law. He also held that the goods exported by claiming ineligible draw back are liable to confiscation under Section 113(h)(ii) of the Customs Act, 1962 and imposed a penalty of Rs.13,07,99,397/- on the appellant under Section 114 (iii) of the Customs Act, 1962. Hence the appellant is before us. 2. The learned Counsel for the appellant makes the following submissions:- (i) Though t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s suffered on inputs used in the manufacture of export product. The Board has directed the Commissioner to ensure that unintended interpretation of law and procedure should not be taken to deprive the exporters of their substantive benefits. 2.1 The learned Counsel for the appellant relies on the judgement of the Honble High Court of Gujarat in the case of Stovec Industries Ltd. vs. Union of India 2011 (265) ELT 192 (Guj) wherein an identical matter was considered and the Honble High Court in the said case held that mere inadvertent filing of application under a different rule (Rule 6) is not a valid ground for rejection and condoned the delay in filing the application (under Rule 7) and held that change in nomenclature of claim on the ground of limitation is not sustainable. In as much as, the facts involved in their case are identical with that decided by the Honble High Court of Gujarat, the appellant prays for applying the ratio of the above said judgement to their case. 2.2 The learned Counsel also relies on the judgement of the Honble Apex Court in the case of Unichem Laboratories Ltd. vs. Collector of Central Excise - 2002 (145) ELT 502 wherein the apex court was con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, strongly justifies the impugned order. He submits that Rules 3 and 6 of Draw Back Rules are mutually exclusive. If draw back is entitled under Rule 3, then benefit under Rule 6 cannot be claimed. In the instant case the IC Diesel Engines are specified under Rule 3 for sanction of draw back on All Industry Rate basis and, therefore, the appellant cannot claim the benefit under Rule 6 for fixation of brand rate of draw back. He further submits that when their application was submitted to the Jurisdictional Range Superintendent vide letter dated 7.09.2010 had sought a clarification as to why they have applied for fixation of brand rate under Rule 6 when there exists All Industry Rate for the said exported goods. Vide letter dated 24.09.2010, the appellant had replied that the rate of draw back in most of their manufactured and exported engines comes to less than 1.1% which is the rate prescribed under All Industry Rate. Having admitted that the All Industry Rate is more than Brand Rate, they cannot now turn around and say that All Industry Rate prescribed for the IC Engines is less than 4/5th of the brand rate which they are entitled to under Rule 7. He also relies on the judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s nothing which prevents the authority for considering the claim of the appellant under Rule 7. The purpose of draw back is to relieve the burden of the taxes on the export goods and to make our exports competitive in the international market. If this policy objective is to be achieved, then the department has to interpret and implement the rules in a meaningful way so that the exporter gets the maximum benefit eligible as prescribed under the law. It is, in this context, the instruction issued by the CBEC vide letter 06.11.2006 assumes significance. In the said letter the Board, in para 3 to 6, has clarified as follows:- 3. After receipt of Asst. Commissioner (Drawback)s letter the issue has been re-examined by the Board. As conveyed earlier, the brand rate of duty drawback is granted in terms of Rule 6 and 7 of the Drawback Rules in cases where the export product does not have any All Industry Rate of duty drawback or where the All Industry Rate of duty drawback notified is considered by the exporter as inadequate to compensate the duties or tax suffered on inputs used in the manufacture of export product. However, all the conditions and guidelines including the time limit pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of law and procedure are not taken to deprive the exporters of their substantive benefits. 5.1 A perusal of the above clarification issued by the CBEC which is binding on the departmental officers clearly shows that draw back claims should not be rejected merely on the ground that they have been filed under Rule 6 and not under Rule 7. This instruction of the Board clearly applies to the facts of the present case. Therefore, we are of the view that the adjudicating authority should have considered the claim made by the appellant under Rule 7 if they had satisfied the eligibility under the said Rule. 5.2 The decision of the Honble High Court of Gujarat in the Stovec Industries Ltd. (cited supra) deals with the issue herein squarely. In the said case, the appellant had exported Printing Machine and claimed brand rate of draw back under Rule 6 of the Draw Back Rules. Their claim was rejected on the ground that All Industry Rate was fixed in respect of the product exported. The appellant pleaded that their application be considered under Rule 7. The said claim was rejected on the ground that the request is hit by time limitation and the Honble High Court held as follows:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tead of Rule 6 of the Customs and Central Excise Duties Drawback Rules, 1995, without raising the question of limitation. Thus we find that this judgement would apply squarely to the facts of the case under consideration before us. 5.3 The reliance placed by the Revenue on the Chemical and Fibres of India Ltd. (cited supra) does not the help their case for the reason that in that case it was found that the claim under Rule 7 of the Draw Back Rules could not be considered in as much as the appellant did not satisfy that the All Industry Rate fixed under Rule 3 was less than 4/5th of the eligible draw back under Rule 7. It was on this ground the honble apex court rejected the Boards Circular for sanction of draw back under Rule 7. In the instant case, the learned adjudicating authority has not considered the appellants claim under Rule 7 and has given a finding that the appellant does not satisfy the condition under Rule 7, without giving a positive finding the appellant is not eligible for draw back under Rule 7. He cannot out-rightly reject the claim of the appellant as being not eligible for benefit under Rule 7 without examining and considering their claim.. Similarly, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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