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Union of India Versus Bhandari Powerlines Private Limited

2018 (2) TMI 852 - KERALA HIGH COURT

Drawback u/s 75 of the CA 1962 - the second ingredient copper that goes into the manufacture of their products is procured indigenously from local producers. Since the products exported by the respondent contained copper, the respondent claimed drawback - powers conferred by Section 75(1A) of CA. - Held that: - power u/s 75(1A) is to declare through a notification to be published in the official gazette that the material contained in a particular category of goods exported was imported. The .....

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is entitled to claim that the whole of the copper content in its manufactured product should be treated as “deemed to be imported material”, for the purpose of sub-section (1) of Section 75 of the Act. Availing of the Cenvat credit also does not disentitle the respondent from claiming the above benefit since there is not such restriction in Ext. P7. - Whether it is the “all industry rates” stipulated by Rule 3 of the Rules or what is commonly called “the brand rates” to be fixed under Rule .....

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rate of drawback applicable to the respondent’s product would have to be fixed in exercise of the powers under Rule 6 of the Rules. - Appeal dismissed. - W.A. No. 1899 of 2010 in W.P. (C) No. 21315 of 2005 - Dated:- 7-7-2017 - K. Surendra Mohan and K.P. Jyothindranath, JJ. Shri Thomas Mathew Nellimoottil, SC, for the Appellant. Shri P.R. Srejith, SC and E.K. Nandakumar, Advocate, for the Respondent. JUDGMENT [Judgment per : K. Surendra Mohan, J.]. - Union of India and the other respondents .....

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engaged in the manufacture and export of insulated copper strips and rectangular paper covered conductors. According to the respondent, the two raw materials that go into the manufacture of the above products are insulation paper and copper. The insulation paper required for their manufacture is imported by the respondent. However, the second ingredient copper that goes into the manufacture of their products is procured indigenously from local producers. Since the products exported by the respon .....

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terial that has been used in the goods manufactured, processed or on which any operation has been carried out in India and exported outside India, then, the Central Government may, by notification in the Official Gazette, declare that so much of the material as is contained in the goods exported shall, for the purpose of sub-section (1), be deemed to be imported material. In exercise of the powers conferred by Section 75(1A) a notification, dated 30-5-1991 has been issued by the Central Governme .....

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Central Excise Duties and Service Tax Drawback Rules, 1995 (hereinafter referred to as the Rules for short). The second respondent considered the contentions of the respondent and by Ext. P9 order, held that they were not entitled to any drawback, as claimed by them. It was aggrieved by Ext. P9 that the respondent had filed the writ petition. 3. The writ petition was contested by the appellants. A counter affidavit was filed taking up a contention that, the respondent had not imported copp .....

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are calculated on an average basis by taking into account the average quantity and value of materials used in the manufacture of export products. The respondent had applied under Rule 6 of the Rules for fixation of the drawback rate, commonly referred to as the brand rate of duty drawback, which is dependent on the actual duty incidence suffered on materials used in the manufacture of export produces. Such incidental duty had to be reflected in the duty payment documents. Therefore, it was cont .....

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, quashing Ext. P9. The appellants are aggrieved by the said judgment. 5. According to Adv. Mr. P.R. Srejith who appears for the appellants, the respondent is engaged in the manufacture of insulated copper strips and rectangular paper covered conductors, for the production of which copper rods are used as raw material. According to the learned counsel, copper imported in its raw form or concentrated copper or as copper scrap are converted into copper rods that come in rolls. The said manufa .....

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cture of their products by the respondent. The notification Ext. P7 applies only to cases where copper itself is used as a raw material. It is further contented that, copper is actually imported by the manufacturers of copper rods by paying customs duty or procured indigenously. It is only in the hands of such manufacturers that copper would qualify as a raw material. Since the respondent has procured copper from indigenous suppliers and had availed Cenvat credit for the Central Excise duty paid .....

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It is to promote such indigenous procurement that the concept of deemed import has been introduced by Section 75(1A) of the Customs Act. In the manufacturing activity of the respondent, the indigenously procured copper is consumed and is exported out of India as their finished product, earning valuable foreign exchange for the country. It is to promote such activities that the notification Ext. P7 has been issued. Since the respondent s product does not answer the all industry rates under Rule .....

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der Section 2 of the said Act, to which they are entitled in view of the concept of deemed import introduced by Ext. P7. Therefore, Ext. P9 has, according to the learned counsel, been rightly interfered with by the learned Single Judge and set aside. It is contented that, there are absolutely no grounds to interfere with the judgment in appeal. 7. Heard. 8. As already noticed above, Section 75(1A) confers power on the Central Government to issue a notification in a case where : (i) the .....

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ower therefore is to declare through a notification to be published in the official gazette that the material contained in a particular category of goods exported was imported. The concept of deemed import is to be applied in cases where the conditions stipulated by Section 75(1A) stands satisfied. It is on the basis of such a satisfaction that Ext. P7 notification has been issued. Ext. P7 notification is not under challenge. The opening portion of Ext. P7 is reproduced below : Drawback on Impor .....

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p;            (emphasis supplied) What has been declared by Ext. P7 notification is that, the whole of the material specified in the table annexed hereto as is contained in the goods manufactured in India and exported outside India shall be deemed to be imported material. Therefore, the deeming provision is intended to apply to the whole of the material contained in the goods manufactured. It is clear from the wording of the notificatio .....

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