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TMI Blog2012 (10) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... Duties Drawback Rules, 1995 (for short hereinafter referred to as 'the Rules'). The second appellant is a 100% EOU. 3. By Circular No. 67/1998-Cus., dated 14-9-1998 to utilize the idle capacity of EOU/EPZ units, the EOU/EPZ units in textile, ready-made garments, agro-processing and granite sectors were permitted to undertake job work from the DTA units, provided the finished products produced by such EOU/EPZ units were exported directly from EOU/EPZ unit itself and these goods are not sent back to the DTA units. The Central Government in exercise of the power conferred by Rule 3 read with Rule 4 of the Rules in supersession of Notification No. 22/1997, dated 30-5-1997 issued Customs Notification No. 67/1998, dated 1-9-1998 determining the rates of drawback as specified in the table annexed thereto. The Drawback was to be paid subject to the conditions specified in the General Notes thereto. 4. The first appellant approached and engaged the second appellant, a licenced and registered 100% EOU Unit for manufacture of ready-made garments. The first appellant supplied raw materials and all other inputs to the second appellant for manufacture of ready-made garments. The seco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t aside the order-in-original by his order dated 28-1-2004. The Department preferred a revision petition in terms of Section 129DD before the Joint Secretary Government of India, Ministry of Finance, Department of Revenue, New Delhi. 6. The revisional authority by his order dated 15-12-2008 set aside the order of the Appellate Commissioner and restored the order-in-original. Aggrieved by the same, the appellants preferred Writ Petitions before this Court in W.P. Nos. 5905 & 6482/2009 [2009 (243) E.L.T. 658 (Kar.)]. The said Writ Petitions came to be rejected on the ground that under Notification No. 67/98, dated 1-9-1998, the first appellant did not fall within the category of 'exporter' who can claim the benefits under the notification and therefore the revisional authority was justified in denying the Duty Drawback and accordingly he dismissed the Writ Petition. Aggrieved by the same, the appellants are before this Court. 7. It is the case of the appellants that first appellant also claimed Duty Drawback, for exports made from Tuticorin Port. In an identical issue raised by the Department, there also the Adjudicating Authority had denied the benefit of Duty Drawback. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were directly taken from the second appellant Unit to Port of export and the goods are exported and consequently foreign exchange is earned to the country. Now the question for consideration is, as the first appellant manufactured goods in EOU Unit and thus exported the goods, is he not entitled to Duty Drawback under Section 75 of the Act. If he is entitled to Duty Drawback, is it at the All Industry rate or at Brand rate Drawback rate. In this regard it is necessary to look into the statutory provisions contained in the Act. Chapter 10 of the Act deals with Duty Drawback. Section 74 deals with Duty Drawback allowable on re-export of duty-paid goods. However, Section 75 deals with Drawback on imported materials used in the manufacture of goods, which are exported. It reads as under : "Section 75. Drawback on imported materials used in the manufacture of goods which are exported. - (1) Where it appears to the Central Government that in respect of goods of any class or description manufactured, processed or on which any operation has been carried out in India, being goods which have been entered for export and in respect of which an order permitting the clearance and loading thereo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Government may make rules for the purpose of carrying out the provisions of sub-section (1) and, in particular, such rules may provide - (a) for the payment of drawback equal to the amount of duty actually paid on the imported materials used in the manufacture or processing of the goods or carrying out any operation on the goods or as is specified in the rules as the average amount of duty paid on the materials of that class or description used in the manufacture or processing of export goods or carrying out any operation on export goods of that class or description either by manufacturers generally or by persons processing or carrying on any operation generally or by any particular manufacturer or particular person carrying on any process or other operation, and interest if any payable thereon: (aa) for specifying the goods in respect of which no drawback shall be allowed: (ab) for specifying the procedure for recovery or adjustment of the amount of any drawback which had been allowed under sub-section (1) or interest chargeable thereon: (b) for the production of such certificates, documents and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 (52 of 1962) and the rules made thereunder, or of the Central Excise Act, 1944 (1 of 1944) and the rules made thereunder, or of the Finance Act, 1994 (32 of 1994) and the rules made thereunder, 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: Provided further that no drawback shall be allowed - (i) if the said goods, except tea cheats used as packing material for export of blended tea, have been taken into use after manufacture; (ii) if the said goods are produced or manufactured, using imported materials or excisable materials or taxable services in respect of which duties or taxes have not been paid; or (iii) on jute batching oil used in the manufacture of export goods, namely, jute (including Bimlipatam jute or mesta fibre), yarn, twist, twine, thread, cords and ropes; (iv) if the said goods, being packing materials have been used in or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int 1. - As per Para 4 of the above circular Govt. has permitted that EOUs to utilise their idle capacity by undertaking job work of DTA unit subject to the condition that the goods so manufactured should be sent directly to the port and not to be set back to DTA. (i) Modalities to be followed in implementing the above. (ii) Confirmation that DTA shall be the exporter who will file regular DBK shipping bill and that the DBK should be eligible for full all industry rate of drawback for such export. Reply (i) In case of EOU undertaking job work and such goods being exported, the existing procedure for removal of goods for export from an EOU to gateway ports shall be followed in this case also. (ii) The owner of the goods shall file the shipping bill and not the EOU unit (job worker). The benefits, if any, of the export shall accrue to the owner of the goods." 13. In the Circular No. 74/99, dated 5-11-1999 dealing with manufacture of goods in EOU Unit as job work and Drawback, it is stated as under: "It has been brought to the notice of the Board that there is a lack of clarity as to who will file the Shipping ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Circular 67/98 was issued only to enable EOU Units to overcome the problems which they were facing, so that, instead of keeping their machinery idle, they were permitted to accept job work so that the capacity is utilized and they are able to over come the recession in the world market. It is by virtue of the said Circular, the EOU undertook the job work. The Circular makes it very clear that if the idle capacity of EOU/EPZ Units is utilized and the textile, ready-made garments, agro-processing and granite sectors undertakes job work from the DTA Units, then the finished products produced by such EOU/EPZ Units will have to be exported directly from EOU/EPZ Unit itself and these goods will not be sent back to the DTA. The reason is obvious. The appellant's product does not belong to EOU. It belongs to DTA and in fact export is done in the name of DTA. Once DTA exports the manufactured goods and if they have paid duty on raw materials, then, under Section 75, they are eligible for Duty Drawback. The said right conferred in the statute cannot be taken away by issuing circulars, which runs counter to these statutory provisions. Similarly the Circular 31/2000 where it is stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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