2011 (9) TMI 923 - CGOVT - Customs

Summary

Issues Involved:
1. Eligibility for Brand Rate Drawback under Rule 6 of the Customs, Central Excise Duties & Service Tax Drawback Rules, 1995.
2. Applicability of All Industry Rate of Duty Drawback.
3. Condonation of delay in filing Brand Rate Drawback applications.
4. Interpretation of Notification No. 81/2006-Cus. (N.T.), dated 13-7-2006.

Issue-wise Detailed Analysis:

1. Eligibility for Brand Rate Drawback under Rule 6 of the Customs, Central Excise Duties & Service Tax Drawback Rules, 1995:
The primary issue is whether the applicant is entitled to the benefit of 'Brand Rate Drawback' under Rule 6 of the Customs, Central Excise Duties & Service Tax Drawback Rules, 1995. The applicant argued that their claim is maintainable as per the text of Rule 6(i) to (vii) and relevant Board's Circulars. The Government noted that the applicant's unit, which manufactured fully exempted parts of wind-operated machinery, was converted from a DTA unit to a 100% EOU. During the conversion period, the applicant continued to procure duty-paid raw materials for continuous production. The Government observed that the lower authorities rejected the claim based on the condition that the product was manufactured in a warehouse licensed under Section 65 of the Customs Act, 1962. However, the Government concluded that Rule 6 allows for the fixation of Brand Rate where the amount or rate of drawback has not been determined, and this rule is independent of the All Industry Rates fixed under Rule 3. Thus, the applicant is entitled to the fixation of Brand Rate Drawback under Rule 6.

2. Applicability of All Industry Rate of Duty Drawback:
The applicant contended that the All Industry Rate of Duty Drawback is not applicable to their case as they requested the fixation of Brand Rate of Drawback. The Government noted that the Commissioner (Appeals) upheld the rejection of the Brand Rate application on the grounds that an All Industry Rate under DBK - SS 85.03 was already prescribed for such goods. However, the Government found that the All Industry Rate is not applicable to goods manufactured in a warehouse licensed under Section 65 of the Customs Act, 1962, as per the exclusion clause in Notification No. 81/2006-Cus. (N.T.). The Government concluded that the exclusion clause does not bar the fixation of Brand Rate under Rule 6.

3. Condonation of delay in filing Brand Rate Drawback applications:
The applicant argued that the Joint Commissioner impliedly condoned the delay in filing the Brand Rate applications by deciding the case on merit. The Government found force in this plea, noting that the Joint Commissioner had indeed decided the case on merit, implying that the delay was condoned. The Government also referred to the guidelines laid down by the Hon'ble Supreme Court in the case of Mst. Katiji & Others, which advocate for a liberal exercise of discretion in condoning delays within condonable limits. Therefore, the Government deemed the delay to have been condoned.

4. Interpretation of Notification No. 81/2006-Cus. (N.T.), dated 13-7-2006:
The applicant contended that the bar prescribed in condition 7(a) of Notification No. 81/2006-Cus. (N.T.) is not applicable to their case as it pertains to the All Industry Rate of Drawback and not to the fixation of Brand Rate under Rule 6. The Government observed that the plain reading of the exclusion clause in the notification reveals that the rate of drawback specified in the schedule is not applicable to products manufactured in a warehouse licensed under Section 65. However, this does not bar the fixation of Brand Rate under Rule 6. The Government concluded that the interpretation of the statutory provisions should be in line with the purpose of export-oriented schemes, which are meant to rebate duties paid on export goods.

Conclusion:
The Government set aside the impugned order-in-appeal and order-in-original, directing the original authority to process and fix the Brand Rates of Drawback under Rule 6 of the Customs, Central Excise Duties & Service Tax Drawback Rules, 1995. The revision application succeeded, and the applicant was deemed entitled to the fixation of Brand Rate of Drawback for the duty-paid inputs/raw materials used in the manufacture of exported goods.