TMI Blog2016 (6) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... ner - SPECIAL CIVIL APPLICATION NO. 8025 of 2015 With SPECIAL CIVIL APPLICATION NO. 2753 of 2016 - - - Dated:- 6-5-2016 - MR. AKIL KURESHI MR. A.Y. KOGJE JJ. For the Petitioner: Mr Paresh M Dave With Mr Paritosh Gupta Advocate Mr JC Patel with Mr Dhaval Shah, Advocate For the Respondent: Mr Devang Vyas, Advocate for the respondent(s) no. 1 Mr YN Ravani, Advocate (s) no. 2 Ms Maithili D Mehta, Advocate For the respondent(s) no. 1 ORAL JUDGMENT (PER : MR.AKIL KURESHI) 1. In these petitions, facts somewhat differ. However, legal controversy being common, we have heard them together. We may notice facts from each petition. 2. In Special Civil Application No.8025/2015, the petitioner has challenged an order dated 9.10.2014 by which the Government of India allowed the revision petition of the department and set aside the order of Commissioner (Appeals) dated 11.7.2013. The petitioner is in the business of manufacturing goods which are exported by the petitioner. For the purpose of the manufacturing activity, the petitioner imports various inputs and raw materials. The petitioner imported various items such as polyethylene, adhesive epoxy, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form, should be exported out of the country and therefore the basic customs duty paid through debittal of DEPB scrip should be eligible for the brand rate of drawback. In this regard I find that the instant contention of the appellant is acceptable. Just because no clarification has been issued for getting drawback in respect of basic customs duty it does not mean that the brand rate of the drawback is not available in respect of basic customs duty. Clarifications are warranted when there is ambiguity. Excepting non availability of clarification from the Board, New Delhi, in respect of the basic customs, duty, the lower adjudicating authority has not pointed out as to how and under which provisions of the law the same is not required to be granted. 3. The department challenged the order of Commissioner (Appeals) before the Government by filing the revision petition. The revision petition was allowed by impugned order dated 9.10.2014. Reference was made to the notification no.97/2009 dated 11.9.2009 which provided that an importer shall be entitled to avail the drawback or CENVAT credit of additional duty leviable under section 3 of the Customs Tariff Act against the amount de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Shri Ravani and Shri Bhatt for the department opposed the petitions contending that the claim of drawback of an exporter must be examined within the statutory provisions and Government of India notifications and the policy, which do not permit drawback on imports made under DEPB and other similar export incentive schemes. In case of imports made under DEPB scheme, the customs duty is exempted. Goods therefore, not having suffered the customs duty, upon export of the final product, drawback would not be available. Our attention was drawn to the decision of Division Bench of this Court in case of Gujarat Ambuja Exports Ltd. v. Government of India reported in 2013 (289) ELT 273 (Guj), in which in the context of chargeability of education cess, this Court had examined the provisions contained in DEPB scheme. Reliance was also placed on the Government of India circular no.3/99 dated 3.2.1999 in which it was clarified that brand rate of drawback is admissible only against cash payment of duties and debit of duties under DEPB scheme on import of goods being in the nature of availment of exemption of duty under the Customs Act, drawback would not be available. 7. The short questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit, 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 chests 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 Bimplipatam jute or mesta fibre) yarn, twist, twine, thread, cords and ropes; (iv) If the said goods, being packing materials have been used in or in relation to the export of (1) jute yarn (including Bimplipatam jute or mesta fibre), twist, twine, thread and ropes in which jute yarn predomin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms, dated the 10th September,2004, drawback at the rate equivalent to Central Excise allocation of rate of drawback specified in the said Schedule 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 Export and Import Policy and the Foreign Trade Policy; (d) manufactured or exported by any of the units situated in free trade zones or export processing zones or special economic zones; (e) manufactured or exported availing the benefit of the relevant Export and Import Policy and the Foreign Trade Policy; 11. We may also refer to the Board circular no.41/2005 dated 28.10.2005 since much debate on this circular has taken place in the orders passed by the authorities. The relevant portion of the said circular reads as under : Subject : Eligibility of brand rate of duty drawback where inputs used in the manufacture of export products are imported availing of DEPB Clarification Regarding The undersigned is directed to invite your attention on the above mentioned subject and to state that an i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s duty is debited under DEPB. 13. It can thus be seen that the benefit of duty drawback is available in terms of section 75 of the Customs Act, 1962 as provided in the Drawback Rules as specified by Government notifications from time to time. Section 75 in plain terms enables the Government of India to issue notification allowing drawback of the duty on export of goods or inputs utilised for manufacture of export goods. The drawback would be relatable to duty of customs chargeable under the Act on such imported materials. 14. As noted, in exercise of powers under section(2) of section 75, the Drawback Rules of 1995 have been framed. In terms of rule 3 of the said Rules of 1995, drawback is allowed on export of goods at such rates as may be determined by the Central Government. Under further proviso to rule 3 however, such drawback would not be available in various categories specified therein. None of these categories include the payment of customs duty on the goods through DEPB scrip. In other words, rule 3 does not prohibit a claim of drawback as per the specified rates if the duty on the imported goods is not paid in cash but by surrendering credit in the DEPB s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, be incorrect to state that the imports made in such fashion have not suffered the customs duty. 17. As noted, neither section 75 nor the Rules of 1995, prohibits entitlement of drawback when the basic customs duty has been paid through DEPB scrip. To read such limitation through the clarification issued by the Government of India in various circulars which principally touch the question of eligibility of draw back, when additional duties have been paid through DEPB would not be the correct interpretative process. 18. We may recall, in the circular dated 28.10.2005 it was clarified that hitherto additional customs duty paid in cash only was adjusted as CENVAT credit or duty drawback and the same paid through debit under DEPB was not allowed as duty drawback. However, with effect from 1.9.2004, Foreign Trade Policy provided that additional customs duty/excise duty paid in cash or through debit under DEPB shall be adjusted as CENVAT credit or duty drawback as per the rules. It was in this background provided that additional customs duty paid through debit under DEPB shall also be allowed as brand rate of duty drawback. Thus, the Foreign Trade Policy removed restrict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. To disqualify such payment for the purpose of duty drawback would indirectly amount to denying the benefit of the export incentive scheme itself. 21. Judgement of this Court in case of Gujarat Ambuja Exports Ltd(supra), was rendered in different background. The question there was chargeability of education cess which was calculated at the rate of 2% on the aggregate of duty of customs levied and collected by the Central Government. In this background, question arose where the imports are made under DEPB scheme, would education cess be applicable. Noticing that subject to adjustment in DEPB scrip, the imports are made exempt from payment of duty, it was held that there cannot be education cess on such imports. The issue in the present case is vastly different. 22. Likewise, the decision of learned Single Judge of Madras High Court relied upon by the counsel for the Revenue in case of Associated Autotex Ancilliaries P.Ltd. v. Joint Secretary, MF reported in 2007(211) ELT 368(Mad), did not concern the present controversy. In the said case, it was held that modification by circular dated 28.10.2005 would be prospective and the clarification of brand rate of duty drawback w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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