2006 (4) TMI 444 - Commissioner - Central Excise

Summary

Issues:
- Eligibility for brand rate of drawback on indigenous inputs used in exported goods under DEPB Scheme.
- Relevance of Board's Circulars and EXIM Policy provisions.
- Production of original shipping bills as a requirement for brand rate application.

Issue 1: Eligibility for brand rate of drawback on indigenous inputs:
The appeal involved a case where the appellants, manufacturers and exporters of SS Designer Pots, applied for brand rate of drawback. The dispute arose when a show cause notice was issued to reject the application, citing ineligibility due to the use of inputs specified in Standard Input and Output Norms (SION) and non-production of original shipping bills. The key argument by the appellants was that they were not availing Cenvat credit on the inputs, making them eligible for brand rate of drawback. The judgment emphasized that the DEPB Scheme allowed duty drawback for excise duty paid on inputs used in exported products, irrespective of being imported or indigenous. The Board's Circulars clarified this stance, and the judgment highlighted the legislative intention to grant duty drawback where no Cenvat credit was availed.

Issue 2: Relevance of Board's Circulars and EXIM Policy provisions:
The judgment extensively analyzed the evolution of the DEPB Scheme and related policy provisions. It noted the changes in the EXIM Policy from 1997-2002 to 2002-2007, allowing duty drawback for excise duty paid on inputs used in export products. The judgment referenced Circulars 68/97 and 39/99, which granted brand rate of drawback for products unable to avail Modvat credit. The clarification in Circular 24/2002 emphasized that excise duty paid on inputs for export products was eligible for brand rate of drawback. The judgment concluded that the reliance on an outdated circular by the Lower authority was misplaced, and exporters should not be deprived of their rights based on such outdated interpretations.

Issue 3: Production of original shipping bills as a requirement:
Regarding the production of original shipping bills, the Lower authority had noted the absence of these bills as a basis for rejection. However, the appellants later obtained and submitted the original shipping bills, which were attested by the relevant authority. The judgment acknowledged this submission, stating that the requirement for original shipping bills was effectively fulfilled by the appellants. Consequently, the contention of non-production of original shipping bills was deemed waived, and the appellants were considered eligible for the brand rate of duty drawback on indigenous inputs.

In conclusion, the judgment allowed the appeal, setting aside the Lower authority's order and affirming the appellants' eligibility for the brand rate of duty drawback on indigenous inputs used in the exported goods under the DEPB Scheme. The analysis highlighted the legislative intent behind the policy provisions, emphasizing the rights of exporters to claim duty drawback where Cenvat credit was not availed. The judgment provided a detailed and comprehensive examination of the issues involved, clarifying the legal interpretation and application of relevant circulars and policy provisions in determining the eligibility for duty drawback.