9911796707
TMI Blog2014 (1) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... ey claimed such drawback on the basis of false declarations. A Show Cause Notice dated 18-9-2008 issued in this regard was adjudicated by the impugned order. 2. The impugned order confirmed demand of drawback amounting to Rs. 1,43,15,400/- held to be erroneously paid in terms of Section 75A(2) of the Customs Act, 1962. Aggrieved by the order the appellants have filed this appeal. 3. The main case of the Revenue is that excise portion of duties paid on inputs used in goods manufactured is refunded through the Cenvat Credit Scheme and this component cannot be again refunded through drawback scheme and to avoid such double refund Government has prescribed a procedure that the exporters claiming excise portion should produce a certificate that Cenvat credit has not been availed on the goods exported. The case of the Revenue is that the appellant should have submitted certificates in forms Annexure-I or Annexure-II prescribed in Circular No. 54/2001-Cus., dated 19-10-2001, but the appellant did not submit such certificates for any of the 369 consignments. The SCN further alleges that the CHA had declared that such certificates were attached to many of the shipping bills and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fraudulently claim the drawback of Central Excise portion which was admissible to them. This fact is further substantiated from the reports of the market enquiry/verification that the exported goods were purely traded goods and the traders who sourced the goods had neither worked as supporting manufacturer nor job worker of the party. With regard to the seized goods i.e. 21428.20 metres of textile of foreign origin valued at Rs. 21,42,820/- the party failed to provide any proof of lawful importation/possession/acquisition of the same. The party was given opportunity to show its bona fide with regard to trading activities of this imported goods which he stated to have imported vide bill of entry No. 615740/07, dated 30-7-2007, the party provided the copies of sale bills and stock register. The entries in the stock register were appearing to have been made in a single day by one person in the undefined manners of maintenance of records especially daily stock account. The sale invoices which are 614 numbers covering the sale of approximately 80,000 yards of textile are surprisingly have not even a single invoice/bill in which name of the buyer is given irrespective of the quantity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty, he is also entitled to avail of CENVAT for inputs procured and used for garment production by job workers. 2. Since the manufacturer or merchant manufacturer whose domestic turnover exceeds rupees one crore has to pay excise duty and can avail of Cenvat credit in respect of inputs used in the manufacture of woven garments, separate drawback rates have been provided with effect from 7-6-2001 for the garments where Cenvat facility is availed or not availed. In case the Cenvat facility is availed, the drawback rate has only Customs allocation and if such facility is not availed, the rate includes both the Customs & Central Excise allocations. It has been brought to the notice of the Board that the customs formations while scrutinising Drawback claims of woven garments exporters are insisting on the production of the certificate evidencing non-availment of Cenvat facility in every case. This is stated to be causing undue hardship to garment exporters-very large number of which are said to be only merchant manufacturer who are basically export oriented and whose domestic clearances are nil or negligible. 3. Export Organisations have, however, represented that in the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufactured by them. 7. Such merchant-manufacturer exporters can be allowed higher drawback on the basis of these declarations 8. The Custom Houses shall get the veracity of the declaration given by the exporters and their supporting manufacturers/job workers, verified at random by the jurisdictional Deputy/Assistant Commissioner of Central Excise on quarterly basis. The criteria for random selection of such declarations to be verified by the Excise authorities, may be formulated by the Commissioner of Customs. If on verification any misdeclaration is discovered, the higher drawback granted by the Customs would be recovered and only lower benefits admitted for future shipments to such exporters. 9. All Chief Commissioners of Central Excise are requested to cause preparation of a list of all duty paying manufacturing and merchant manufacturing units of woven garments, who are availing Cenvat facility. These lists may be circulated to all the major Custom Houses/Air Cargo Complexes/Inland Container Depots from where the exports of garments are effected. 10. Suitable public notices for the trade and standing orders for the staff concerned may be issued at you ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of above declaration. Exporters' Signature & Seal ANNEXURE-II Supporting Manufacturers'/Job Workers' Declaration required for Exports of Woven Garments for availing higher All Industry Rate of Drawback. (Circular No. 54/2001-Cus., dated 19th October, 2001). 1. Description of the Goods : 2. Invoice No. and Date : 3. Name and address of the Exporter along with the name of the Jurisdictional Central Excise Commissionerate/Division/Range : 4. Name of the Supporting Manufacturer (s)/Job worker (s) along with the name of the Jurisdictional Central Excise Commissionerate/Division/Range : 5. Address of the Manufacturing Unit(s)/Job Work Premises : We, M/s.______________, the supporting manufacturers/job workers, hereby, declare that - (a) are not registered with Central Excise authorities, (b) &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty from the jurisdictional Central Excise authorities. 4. It has been decided that instead these manufacturer exporters and merchant-exporters with a supporting manufacturer shall be required to give a self-declaration that such manufacturer-exporters or the supporting manufacturers are not registered with Central Excise and that they do not avail/have not availed Cenvat facility. The form of self-declaration is enclosed. 5. It is also clarified here that as regards such manufacturer-exporters and supporting manufacturers who are registered with Central Excise, the fact of non-availment of Cenvat facility can be confirmed from ARE-I which these exporters shall be furnishing. Therefore, in case of registered manufacturer-exporters and merchant-exporters with registered supporting manufacturers the earlier practice of acceptance of ARE-I shall continue. 6. Suitable public notices for information of the Trade and standing orders for guidance of the staff may kindly be issued accordingly. 7. The receipt of this Circular may kindly be acknowledged. It is argued that paras 3, 4 and 5 of the above circular it is clear that the circular is not applicable to merchan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty drawback in the case of individual exporters for individual consignments. 3. From the above it may be noted that the concept of All Industry Rate of duty drawback is that the rates are determined taking into account the average duties paid on the inputs and in determining the rates, the average (weighted average) consumption of imported/indigenous inputs of a representative cross-section of exporters is taken into account. In view of this, it is not open to the field officers to question as to how the rate has been determined in the case of individual export goods and to probe whether certain exempted inputs have been used in the manufacture of the same. Accordingly, it is clarified that All Industry Rate of duty drawback is to be allowed in the cases referred to above. 4. Suitable Public Notices for information of the Trade and Standing Orders for guidance of the staff may be issued. Difficulties faced, if any in implementation of the Circular may be brought to the notice of the Board. Kindly acknowledge receipt of this Circular." The appellant relies heavily on this Circular and argues that SCNs of the type impugned in this proceeding should not have been issued. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2008-2009. The Committee in its report for the year 2008-2009 has recommended that the merchant-exporters who source their export goods from the market should be given higher rate of drawback without any declarations as "they have to purchase the products from the manufacturer after excise clearance i.e. after payment of excise duty. Therefore as far as merchant-exporters are concerned, the full drawback rate has to be made available to him for neutralization of excise duty paid when clearing the goods from the manufacturer's premises". The Committee has further remarked that "in case of manufacturer exporters there could be a possibility of double benefit if he were to claim both Cenvat benefit as well as full duty drawback. Therefore, the only cases for checking whether Cenvat has been availed or not, can conceivably pertain to manufacturer-exporters and not to merchant-exporters". 5. The report of the Drawback Committee has been examined in the Board. The goods available in the market are deemed to be duty paid goods. Hence they bear an element of central excise duty, which needs to be reimbursed, if such goods are exported. Ideally, the terminal central excise duty p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xporters shall have to declare at the time of export, the name and address of the trader from whom they have purchased the goods. They shall also have to declare that no rebate (input rebate and also the final product rebate) shall be taken against the Shipping bills under which they are exporting the goods. The merchant-exporters who purchase goods from traders may therefore furnish the declaration, at the time of export, in the format annexed with this circular. This is issued in supersession of para (vi) of Circular No. 64/98-Cus., dated 1-9-1998. 8. The Custom Houses shall get the veracity of such declarations verified at random and recover excess drawback in case the verification reveals that the declaration filed by the exporter was false or double benefit has been availed of. 9. Suitable public notice for information of the trade and standing order for the guidance of staff may be issued accordingly. Difficulties if any, noticed in implementation of this circular may be brought to the notice of the Board. 10. Receipt of this Circular may kindly be acknowledged." It is argued that paras 5 and 6 of the above Circular makes it clear that certificates as per C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Regarding. It has come to the notice that there is no uniformity in regard to interpretation of General Note 11 of Notification No. 22/97-Cus. (N.T.), dated 30-5-1997 [erstwhile Notification No. 49/96-Cus.(N.T.), dated 20-10-1996] regarding All Industry Rates of Drawback. It also appears that declarations by the Merchant-Exporters have been accepted regarding non-availment of Modvat. With a view to standardising the application of General Note 11, the following guidelines regarding acceptance of Certificate may be followed in future :- (i) In the case of manufacturer-exporter, the. Asstt. Commissioner of Customs may, if necessary, require such exporter to obtain a Certificate from the Asstt. Commissioner of Central Excise, in whose jurisdiction the factory of production is located, to the effect that no Modvat credit has been availed on any of the inputs used in the manufacture of such export product. (ii) In the case of goods exported under claim for rebate of Central Excise duty, or Bond, the provisions of General Note 11(ii) shall continue. (iii) In the case of Merchant-exporter(s) where the name and address, inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without AR-4 Form, which are not unconditionally exempt from Central Excise duty or are dutiable, the manufacturer-exporters under Central Excise control shall produce a certificate twice a year (one in the beginning of the Financial Year, i.e., First Quarter and once around January-March, i.e., Last Quarter) from the Asst. Commissioner of Central Excise in whose jurisdiction the factory of production is located to the effect that no Modvat credit has been availed on any of the inputs used in the manufacture of export product clearly indicating the name of the manufacturer-exporter and the export products instead of producing such certificate for each and every shipment. For any new commodity (other than those mentioned in the certificates) a fresh certificate should be obtained by the manufacturer-exporters regarding non-availment of Modvat credit in respect of inputs used in the new commodity. (iii) (a) Where the export goods being exported by the manufacturer-exporter are unconditionally exempt from the Central Excise duty, a self-declaration of the exporter regarding non-availment of Modvat may be accepted. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nputs used in the manufacture of the export goods, in such cases the merchant-exporters should not be asked to produce a separate certificate regarding non-availment of Modvat credit in his own favour, (vi) In the case of merchant-exporter who procures the export goods from the open market, the benefit of All Industry Rates of Duty Drawback shall be restricted to the Customs allocation only, if any. Export goods purchased from the market shall be treated as having availed the Modvat facility and are not entitled to the Central Excise allocation of the All Industry Rate of Drawback." 9.4 Further the ld. DR draws attention to the last sentence of para 7 of circular 16/2009 (para 6.4 above) which makes it clear that the circular is in supersession of earlier circulars clearly implying that earlier circulars were to the contrary. He also draws our attention to the word "henceforth" used in para 7 of the Circular (see para 6.4 above) and argues that the circular clearly shows that the practice earlier was to the contrary. 9.5 He also submits that the appellant had availed the drawback by giving false declarations that they were attaching the required certificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant is being singled out for such treatment. This argument is relevant not in the sense whether a wrong can be corrected in the hands of one when others go scot free but in the context that there was a bona fide belief because of the circulars from 2001 onwards that they were eligible for the impugned drawback.
14. We are not inclined to confirm such huge liability for past periods based on Circulars which were in the knowledge of the department and which were not implemented. We would like to rely more on the legal provisions. The only legal provision relied upon is Rule 3 of the Drawback Rules. We agree with the interpretation to this Rule given by the Board in Circular 16/2009-Cus. The argument that this interpretation is applicable from date of issue of Circular 16/2009-Cus. is repugnant to logic because the Rule has remained the same except for amendment on 13-7-2006, to take care of incidence and rebate of Service Tax. So we are not inclined to rely on the word ""used in para 7 of this circular and uphold this demand.
15. In the facts and circumstances of the case the impugned order is set aside and appeal is allowed.
(Pronounced on 14-9-2011) X X X X Extracts X X X X X X X X Extracts X X X X
|
