TMI Blog2022 (9) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... vat facility has been availed, is the same. Whether rate of duty drawback given in column B; which envisages a situation where cenvat credit has been availed of, concerns only the customs duty component? - HELD THAT:- The answer to this conundrum is found in the notes and conditions appended to notification no.92/2012-Customs (N.T.) dated 04.10.2012 and notification no.98/2013-Customs (N.T.) dated 14.09.2013. Although the 04.10.2012 notification was superseded by the 14.09.2013 notification as the Central Government, it appears, carried out a fresh determination of rates of drawback, the notes and conditions more or less remained the same. Since AIR for duty drawback in respect of the goods in issue is available and the rate stipulated in columns A and B of the schedule is the same, the condition stipulated in the 2013 Circular, that duty drawback on customs duty would be available only upon fixation of brand rate, which, in turn, is based on actual duty- paid documents, cannot apply to the petitioner. The said condition contained in the 2013 Circular is otiose insofar as the petitioner is concerned. The petitioner is right, that the restriction against the claim of conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... broad backdrop in which the instant writ petition has been instituted in this Court. Background: 4. The petitioner is a manufacturer and exporter of pharmaceutical products. The petitioner claims that it has been in this business for over 15 years and has resultantly gained the status of a two-star export house. The petitioner also avers, an aspect which is not disputed, that it converted its Domestic Tariff Area ( DTA ) unit into a 100% Export Oriented Unit ( EOU ) w.e.f. 28.09.2012. 4.1. The conversion of the DTA Unit into 100% EOU, according to the petitioner, has been physically verified and certified by the jurisdictional central excise authority. 5. After the conversion to 100% EOU unit had taken place, the petitioner claimed duty drawback qua custom duty component, on the premise that deemed export had taken place. 5.1. An application, in this behalf, was filed on 08.04.2013. Via this application, the petitioner claimed the duty drawback benefit for the period ending in September 2012, amounting to Rs.38,35,686/-. 5.2. The Assistant DC, however, had a different view and consequently, via order dated 10.05.2013 rejected the petitioner s claim. The princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18.02.2014 (Kept in abeyance) Yes 21.04.2014 July 2013 September 2013 71,41,078/- 21.05.2014 (Kept in abeyance) Yes 25.09.2014 October 2013-June 2014 93,99,853/- N/A No 24.06.2015 July 2014- March 2015 1,00,25,567/- 19.08.2015 (Kept in abeyance) Yes 8. The record shows that the petitioner had, in fact, made a consolidated representation, about its grievance concerning the failure of respondent no.3/Development Commissioner ( DC ), to extend duty drawback for the period spanning between 01.07.2012 and 31.03.2015 via communication dated 12.10.2015. 8.1. It is the petitioner s case that this communication was forwarded to respondent no.2/Director General of Foreign Trade ( DGFT ), as well. 9. The consolidated representation did not gain any traction and was rejected by the Deputy DC vide impugned order dated 26.04.2016. 9.1. Being aggrieved, on 11.07.2016, the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcular No.24/2001 dated 20.04.2001, read with Circular No.13/2014-Cus dated 18.11.2014, issued by Department of Revenue, Ministry of Finance, Government of India, New Delhi [in short, DOR ] to buttress the petitioner s claim that where duty drawback is claimed vis- -vis the custom duty component based on AIR, no evidence is required to be furnished, vis- -vis actual duty suffered on imported or indigenous goods used, in the manufacture of subject goods. 13. It was, thus, contended that the aforesaid notifications were binding on the DGFT and the DC, having regard to the provisions of Rule 3 and 4 of the Customs Excise and Duty Drawback Rules 1995 [in short, 1995 Rules ] read with paragraph 8.3.6 of the HBP. The contention was that the provisions of the aforementioned notifications would apply mutatis-mutandis to deemed exports, as well. 14. In support of the aforementioned submissions, reference was made to the judgment of the Bombay High Court in W.P. 7210/2017, dated 27.04.2018, titled Sarla Performance Fibers Ltd v. Union of India. Submissions on behalf of the respondents: 15. On the other hand, Ms Shiva Lakshmi, in opposition to the reliefs claimed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, with respect to duty paid on inputs purchased locally, then to that extent, central excise duty on inputs/components gets compensated. 16.1. Therefore, the petitioner would have to give a declaration in terms of paragraph 8.5 of FTP, read with Public Notice No. 35, dated 01.03.2011, that it has not availed and will not avail cenvat credit, in respect of inputs and components used in supplies, if it is to claim duty drawback against deemed exports. Since this is not the case as per the petitioner s own stand, it is not entitled to duty drawback on deemed exports. 17. Thus, in a nutshell, where cenvat credit is taken, in that case as well, basic customs duty can be claimed, albeit, based on the brand rate of duty drawback, which is founded on the evidence concerning payment of actual duty. 17.1. This option, under Column B of the AIR Duty Drawback Schedule issued by DOR, can be availed only for physical exports. For this purpose, reference was made to paragraph 8.5 of the FTP. Analysis and Reasons: 18. Before we get into the nitty-gritty of the arguments advanced by the learned counsel for the parties, it may be relevant to note certain provisions of the FTDR Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the adjudicating authority, the power to prefer an appeal to the Central Government. Likewise, Section 16 confers the power of review on the Central Government, concerning any decision or order of the Director General or any decision or order made by an officer subordinate to him. 22.1.(c) Section 19 confers on the Central Government, the power to make rules for carrying forward the provisions of the FTDR Act. 23. In the instant case, the FTP was brought into force on 27.08.2009 and remained valid till 31.03.2014. Therefore, the policy ring-fence (in a figure of speech) which is drawn for issuance of notifications, inter alia, is the FTP formulated by the Central Government, with the advice of the DGFT. 23.1. Therefore, what one needs to examine is the provisions of the FTP, insofar as they concern deemed exports. 23.2. Chapter 6 of the FTP, inter alia, deals with EOUs. Insofar as supplies from DTAs to EOUs are concerned, they are treated as deemed exports. This is evident on a bare perusal of paragraph 6.11(a) of the FTP. The same is extracted below: Entitlement for supplies from the DTA 6.11 (a) Supplies from DTA to EOU / EHTP / STP / BTP units will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xxx xxx xxx (b) Deemed Export Drawback. xxx xxx xxx [Emphasis is ours.] 24.4. The aforesaid clause is required to be read with Clause 8.4. of the FTP, which establishes that the supply of goods, inter alia to an EOU, makes it amenable for being accorded the benefit of duty drawback: Benefits to the Supplier 8.4. Following table shows the benefits available to different categories of supplies as mentioned in Para 8.2 above. In respect of such supplies supplier shall be entitled to the benefits listed in paragraphs 8.3(a), (b) (c) of the Policy, whichever is applicable. Relevant sub-para of 8.2 Benefit available as given in Para 8.3, whichever is applicable (a) (b) (c) xxx xxx xxx xxx (b) Yes Yes Exemption xxx xxx xxx xxx [Emphasis is ours.] 24.5. This brings us to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26. Therefore, what we need to examine at this juncture is the following: (i) First, does paragraph 8.5 of the FTP envisage extension of duty drawback on customs component, vis- -vis deemed exports in circumstances where Cenvat credit has been availed by the claimant? (ii) Second, where AIR of duty drawback is available, is the claimant obliged to seek fixation of brand rate? (iii) Third, whether the claimant is required to submit duty-paid documents for fixation of brand rate? This eventuality will come into play only if the claimant is obliged to seek fixation of brand rate to claim duty drawback. 26.1. As noted above, a perusal of para 8.5 read with paragraphs 8.1, 8.2, 8.3 and 8.4. of the FTP would show that: (i) Deemed exports referred to those transactions in which goods supplied do not leave the country and the payment for such supplies is received, either in Indian rupees or in free foreign exchange. (ii) Inter alia, supplies made to EOUs are regarded as deemed exports under the FTP, provided the goods are manufactured in India. (iii) Amongst other benefits, deemed exports are eligible for duty drawback. (iv) Insofar as duty drawback is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on actual duty paid documents, is beyond the provisions of the FTP and HBP and hence, should be ignored, if not, struck down. 26.4.(d) The petitioner, thus, contends that the incorporation of such a condition in the 2013 Circular by the DGFT takes it beyond the role assigned to the DGFT, which is to implement the policy and interpret the provisions of the Foreign Trade Policy. Since the formulation of the policy i.e., Foreign Trade Policy or providing of procedures for imports and exports is a role assigned by the legislature to the Central Government, the DGFT cannot usurp that role and thus, add conditions in the garb of providing clarifications. 26. 4.(e) In this context, it would be relevant to advert to the relevant part of para 8.3.3 of the HBP. Where All Industry Rate of Drawback is not available or same is less than 4/5th of duties actually paid on materials or components used in production or manufacture of the said goods, an application in ANF 8 along with prescribed documents may be made to RA or DC, for fixation of brand rate... [Emphasis is ours.] 27. It is apparent that the AIR duty drawback schedule published by the DOR is, inter alia, available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/2012-Customs (N.T.) dated 04.10.2012 and notification no.98/2013-Customs (N.T.) dated 14.09.2013. Although the 04.10.2012 notification was superseded by the 14.09.2013 notification as the Central Government, it appears, carried out a fresh determination of rates of drawback, the notes and conditions more or less remained the same; in particular, condition no.6, which reads as follows: (6) The figures shown under the drawback rate and drawback cap appearing below the column Drawback when Cenvat facility has not been availed refer to the total drawback (customs, central excise and service tax component put together) allowable and those appearing under the column Drawback when Cenvat facility has been availed refer to the drawback allowable under the customs component. The difference between the two columns refers to the central excise and service tax component of drawback . If the rate indicated is the same in both the columns, it shall mean that the same pertains to only customs component and is available irrespective of whether the exporter has availed of Cenvat or not. [Emphasis is ours.] 28.1. A perusal of condition no.6 would show that if the rate indicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not sustain the challenge laid to it, by the petitioner. Consequentially, we are inclined to strike down the impugned order dated 26.04.2016, as well. 29. Before we conclude, it must be noted that the petitioner, insofar as its first application dated 08.04.2013 is concerned, has taken the position that the approach adopted by the office of the Assistant DC in its reply dated 10.05.2013, was not in consonance with the provisions of the HBP. 29.1. A perusal of the communication dated 10.05.2013 shows that the claim made in the first application [immediately upon conversion of the petitioner's unit from DTU to 100% EOU], was rejected by the office of the Assistant DC by adopting the following rationale: We did not find any provision to consider the claim of DBK/deemed Export benefits prior to bonding of premises as EOU. The goods on which you have claimed DBK were received in the unit prior to declare[sic: declaring] it as EOU 29.2. The petitioner has assailed this approach adopted by the respondents of denying deemed export drawback on raw materials/inputs which remained unutilized with the then-existing DTA unit at the time of its conversion into a 100% EOU, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilized goods which were available with the existing DTA unit and were transferred to the 100% EOU, upon conversion. Apart from the letter dated 10.05.2013, there is no response to the petitioner, regarding this stand, by the respondents. 29.6. Having regard to the language of para 6.36.1 of HBP, we are of the view that the petitioner is right, that the restriction against the claim of concession in duties and taxes applied only vis- -vis plant, machinery and equipment that had already been installed. Thus, the fact that the petitioner was allowed to carry forward the advance authorization to the converted unit i.e., 100% EOU and thereafter fulfil the outstanding export commitment would, in our view, as correctly argued on behalf of the petitioner, furnish a clue that duty drawback for such goods should extend qua unutilized goods, which were available at the time of conversion of the DTA unit into a 100% EOU. 30. We also note that insofar as 17.11.2016 is concerned, it proceeds on the basis that no appeal would lie under Section 15(1) of the FTDR Act, as the order of the Deputy DC dated 26.04.2016 was not an order passed by adjudicating authority. Having said that, the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
