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2016 (3) TMI 796 - BOMBAY HIGH COURT

2016 (3) TMI 796 - BOMBAY HIGH COURT - 2016 (337) E.L.T. 354 (Bom.) - Entitlement for Custom duty drawback in terms of Notification No. 26/2003-Cus (N.T), dated 01.04.2003 - Export of zinc but not entitled to claim drawback on account of excise - Finished goods were removed under bond without payment of duties, covered under the provisions of Rule 2(f) of the Notification dated 01.04.2003 and, therefore, All Industry Rates under Drawback Scheme is not admissible contended by the Department - Hel .....

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d that the Petitioners have availed of the benefits under Rule 19(2) ibid, the question of availing any drawbacks in terms of said Notification would not arise at all. Therefore, as the petitioners has availed the said benefits and removed exported excisable goods without payment of duty from the factory, the question of availing of any drawback in terms of the said Scheme is not at all justified. - Decided against the petitioner - Writ Petition No. 227 of 2009 - Dated:- 2-2-2016 - F. M. Reis An .....

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ended by the Petitioner are that the Petitioners are 100% EOU and are engaged, inter alia, in the manufacturer of zinc oxide which is mainly used in the tyre and paint industry and for that purpose, they have a factory at Plot no. 23, GDDIDC, Phase-III-A, Sancoale Industrial Estate, Zuarinagar, Goa. It is further their case that zinc oxide is covered under serial no. 28.06 of the draw back schedule notified under Section 75 of the Customs Act, 1962 read with Customs and Central Excise Duties Dra .....

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when Cenvat is availed, only Customs Portion of drawback rate is admissible. The Petitioner, accordingly filed three Shipping Bills dated 14.08.2004, 21.08.2004 and 03.09.2004 for export of zinc oxide under claim for drawback under Sr. no. 28.06 of the Drawback Schedule. The goods were duly examined and passed for export by the Customs and were exported and the sale proceeds in Foreign Exchange was received through the negotiating Banks. The goods exported were manufactured by using the inputs r .....

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y Notification dated 01.04.2003. The Customs Authorities, according to the Petitioners, raised objections with regard to the admissibility of the drawback on export of zinc oxide made by the Petitioners and therefore the Petitioners had submitted a detailed reply with regard to the objections and also explained in detail during the personal hearing about the eligibility of the Petitioner for such drawback. In response to follow up for the sanction of the Petitioner drawback claim, the office of .....

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ustoms component. It was further contended that the restrictions imposed, if any, in Notification dated 01.04.2003 is about the applicability of the specific rate in goods of specified rate comprising of Customs as well as Central Excise Duties. The Petitioner contended that they were constantly reminding the Customs Authority with regard to their claim under the said drawback scheme. By letter dated 10.11.2005, the office of the Commissioner of Customs, returned to the Petitioner their drawback .....

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titioners that since goods were exported without payment of duty, draw back cannot be sanctioned in view of Para 2(f) of the proviso to Notification no. 26/2003-Cus (N.T) dated 01.04.2003. The Petitioner thereafter contended by another letter addressed to Respondent no. 5 that it is duty bound to follow the Board's instructions contained in the Circular dated 20.04.2001 and 21.03.2005 and requested Respondent no. 5 to sanction and disburse the long outstanding legitimate claim. But, however, .....

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f) to the Notification dated 01.04.2003. The Respondent no. 5 did not make any reference to the Board's two circulars dated 21.03.2005. The Respondent no. 5 took the same view as taken in his letter dated 16.02.2006 and rejected the draw back claim filed by the Petitioners. It was further held by the Respondent no. 5 that as per the Notification dated 01.04.2003 vide proviso 2(f), the AlL Industry Rate of drawback is not applicable to export of a commodity or product if such commodity or pro .....

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ot arise at all. It was also held that there was no mention in any of the Circular/Notifications cited by the Petitioners that under the given circumstances, Customs allocation of All Industry Rate of drawback can be paid. It was further held that the reference to the Circular dated 06.10.2003 which refers to proviso 2(e) is about rebate under Rule 18 of the Central Excise Rules and is not applicable in the goods where the input for manufacturer of export products are procured duty free and wher .....

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Commissioner (Appeals) Central Excise & Customs by Order dated 15.09.2006, rejected the Appeal filed by the Petitioner by upholding the Order in Original dated 02.05.2006 passed by the Respondent no. 5. By the said Order, the Respondent no. 3, inter alia, held that since the Petitioners have availed the benefit of Rule 19 of the Central Excise Rule 2002, they are not entitled for drawback rates as specified in the Table. The Petitioners thereafter filed a Revision Petition against the said .....

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fact of back door entry into drawback schedule which is not available in the case. It was further held that the explanation and consequences in the Order in original and the order in appeal are precisely legal and proper when seen through the principles of "Interpretations of statutes" as laid down by the Apex Court in a number of Judgments. It was further held that the claim of Petitioners of Customs portion of All Industry Rate of drawback is not legal and proper. It was further held .....

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2003, it clearly reveals that duty drawback cannot be availed, inter alia , if such commodity or product is manufactured or exported in terms of Sub-Rule (2) 9of Rule 19 of the Central Excise Rules of 2002. It was further pointed out that the Petitioners did not dispute that the goods exported were manufactured by using the input received indigenously as per Rule 19(2) of the Central Excise Rules 2002 as can be seen from para 11 of the Petition. It was further pointed out that the Petitioners ca .....

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n rejoinder was also filed by the Petitioners, inter alia, disputing the contentions of the Petitioners. 6. We have heard the learned Counsel appearing for the Petitioners as well as the learned Counsel appearing for the Respondents. 7. The main contention of the Petitioner is that the Petitioner is entitled for Customs drawback as, according to them, merely because they are not entitled to claim drawback on account of excise, it would not by itself disentitle the Petitioners from claiming drawb .....

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no exported goods should suffer tax and it had always been the intention of the Government not to levy any tax or duty on the goods exported out of India. It was further pointed out that the contention of the Respondents that the Petitioners' claim deserves to be rejected on the ground that the proviso 2(f) of the Notification implies that drawback is not available to the Petitioners which has availed all benefit of Rule 19(2) of the Central Excise Rules of 2002 is totally misconceived. It i .....

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l Government may declare that so much of material as is contained in the goods exported shall be deemed to be imported material for the purpose of granting drawbacks. It is further submitted by Mr. Singbal learned Counsel appearing for the Petitioner, that in Section 75 of the Customs, Central Excise Duties and Service Tax Drawback Rules of 1995, are to be neutralized in respect of goods manufactured for export and exported out of India. It is further submitted that the said goods provide for fi .....

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, refund or as Cenvat credit, in such cases, the Exporters are eligible only for customs duty component of drawback and not entitled for Central Excise portion of the drawback rate. Learned Counsel has thereafter taken us through the Circulars and the impugned Orders to point out that the impugned Orders deserves to be quashed and set aside and the claim of the said drawback has to be included. 8. On the other hand, Shri C. A. Ferreira, learned Counsel appearing for the Respondents, has supporte .....

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rovisions of Section 75 of the said Act would not be applicable in the present case. Learned Counsel also submitted that the Petitioners have not paid any amount towards Customs Duty. Learned Counsel as such submits that there is no infirmity in the impugned Order and, consequently, the Petition deserves to be rejected. 9. We have considered the submissions of the learned Counsel and we have also gone through the records. The facts of the case suggests that the subject matter of the present case .....

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ntitled to the drawback sought in respect of the three shipping bills in terms of the Notification dated 01.04.2003 and the proviso to Rule 2(f). All Industry Rates of drawback is not applicable to exporters of the Commodity or products manufactured in terms of sub-Rule (2) of Rule 19 of the Central Excise Rules 2002. It was further held that the Circular dated 06.10.2003 was not applicable to the facts of the present case. The Order was thereafter challenged by the Petitioners before the Appell .....

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dated 01.04.2003 and, therefore, All Industry Rates under Drawback Scheme is not admissible. The learned Appellate Authority further noted that in terms of the proviso to the Notification dated 01.04.2003, it clearly points out that such drawback is not admissible in cases in which the Commodity is manufactured or exported in terms of sub Rule (2) of Rule 19 of the Central Excise Rules of 2002. If was further noted that in terms of the said Notification dated 01.04.2003, as per proviso 2(f) All .....

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came to be upheld as noted at paras 6, 8 and 11 thus: "6. Govt. notes that in this case the applicant have availed facility under Rule 19(2) of the Central Excise Rules, 2002 and thereafter the All Industry Rate Drawback under S S No. 28.06 is claimed and admissibility of which is to be decided in the light of prohibition under Clause 2(f) of the Notification no. 26/2003-Cus (N.T) dated 01.04.2003. The applicant vide their submissions as interpretation of various Notifications/Circulars (Su .....

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2) of the Central Excise Rules, 2002 for (procurement/utilization of inputs) in manufacturing of the product/commodity and All Industry Rate DBK Scheme for claiming Export benefits of Customs portion of that very product/commodity. Such specific provisions are nowhere provided in any of the statutes under reference. The plea of the respondents that actual duty suffered and actual consumption patterns are not to b looked into and they are entitled for Customs allocation in DBK schedule by way of .....

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ace with the Order in original of lower authority and Order in Appeal under reference." 10. Rule 19(2) of the Central Excise Rules 2002 reads thus: "Rule 19. Export without payment of duty. - (1) Any excisable goods may be exported without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, as may be approved by the Commissioner. (2) Any material may be removed without payment of duty from a factory of the producer or the manufactu .....

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ks claimed by the Petitioners towards Customs Duty cannot be refused. Para 11 of the Petition reads thus: "11. The goods exported were manufactured by using the inputs received indigenously as per Rule 19(2) of Central Excise Rules 2002 and no rebate was claimed against any inputs or the final products exported as the export was under Bond. Availing of Cenvat also would not have any adverse effect on drawback rate sin ce the drawback entitlement against export of zinc oxide is "All Cus .....

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thus: "2. The rates of drawback specified in the said Table shall not be applicable to export of a commodity or product if such commodity or product is- (a) manufactured partly or wholly in a warehouse under section 65 of the Customs Act, 1962 (52 of 1962), (b) manufactured or exported in discharge of export obligation against an Advance Licence issued under the Duty Exemption Scheme of the relevant Export and Import Policy: Provided that where exports are made against Advance Licences iss .....

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d in the said Table shall be admissible subject to the conditions specified therein: (c) manufactured or exported by a unit licensed as hundred per cent. Export oriented unit in terms of the provisions of the relevant Import and Export Policy. (d) manufactured or exported by any of the units situated in free trade zones or export processing zones or special economic zone; (e) manufactured or exported by availing the rebate of duty paid on materials used in the manufacture or processing of such c .....

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of the Export and Import Policy 2002-2007, notified under Section 5 of the Forign Trade (Development and Regulation) Act, 1992 (22 of 1992), read with paragraph 4.37 of the Hand Book of Procedures (Volume 1) issued in pursuance of the provisions of paragraph 2,4 of the said policy and that shall remain in force until 31st March, 2007." 13. On going through the said relevant clauses, we find that the view taken by the authorities below that the Petitioners cannot avail of the Customs drawbac .....

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e Notification in specific situations which have been specified therein. As such, nothing further can be read into such Notification as contended by Mr. Singbal, learned Counsel appearing for the Petitioners. It is well settled that the taxation and fiscal statutes have to be strictly construed. The Courts cannot read words into such proviso. The exercise submitted by Mr. Singbal, learned Counsel appearing for the Petitioners, to bifurcate the nonapplicability of the said Notification into the c .....

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