2013 (5) TMI 793 - CGOVT - Customs

Rejection of application for fixation of Special Brand Rate of Drawback under Rule 7 of the Drawback Rules - failure to indicate their intention to avail Brand Rate of Drawback Rules under Rule 7 at the time of export in the relevant Shipping Bills - failure to mention Serial No. of drawback schedule in the Shipping Bills - Held that - applicant exported the goods and claimed All Industry Rate of drawback. Subsequently, the applicant by terming the same as an inadvertent error wanted to change the same into a claim of fixation of Brand Rate - Clarification by C.B.E. & C. unambiguously states that opting of AIR drawback under Rule 3 in the Shipping Bills disentitles exporter from claiming brand rate of drawback. The said clarification has neither been withdrawn nor set aside by any court of law. As such, the said clarification is very much in existence. Moreover, exporter has to carefully choose a scheme which is beneficial to him at the time of filing Shipping Bill. After choosing a scheme he cannot be allowed to change it subsequently. In C.B.E. & C. Circular No. 10/2003-Cus., dated 17-2-2003, it was clarified that henceforth in all those cases where the exporters have applied for brand rate of drawback, they may be permitted the duty drawback at All Industry Rate as admissible under the relevant Sr. No. of duty drawback table and subsequently when exporters are issued brand rate of drawback, the differential amount may be sanctioned to them. Applicant had exported chillers in CKD/SKD condition and claimed fixation of drawback under Rule 6(1) of Customs, Central Excise and Service Tax Drawback Rules, 1995. The fixation of brand rate of DBK under Rule 6(1) was not allowed since there was a AIR brand rate of @1.1% fixed for the said item. The goods were exported in different consignments under 8 Shipping Bills. As per C.B.E. & C. Circular No. 26/2005-Cus., dated 8-6-2005, for goods exported in SKD/CKD, unassembled condition, brand rate drawback shall also be admissible. Department had not allowed AIR drawback in earlier cases and therefore special brand rate was claimed by the exporter in the impugned export - violations pointed out in these cases cannot be merely treated as procedural minor lapses - Decided against assessee.

Issues Involved
1. Legality of filing supplementary claims for fixation of Brand Rate of Duty Drawback under Rule 7 after availing All Industry Rate (AIR) of Drawback.
2. Requirement of declaring the intention to file for Brand Rate in the Shipping Bill at the time of export.
3. Applicability of C.B.E. & C. Circulars and clarifications regarding the procedure for claiming Brand Rate of Duty Drawback.
4. Interpretation of statutory provisions and procedural requirements under the Drawback Rules, 1995.

Detailed Analysis

1. Legality of Filing Supplementary Claims for Fixation of Brand Rate of Duty Drawback under Rule 7 after Availing AIR
The applicant filed for fixation of Brand Rate under Rule 7 after initially availing the AIR of Drawback. The lower authorities rejected this supplementary claim on the grounds that the applicant did not declare the intention to file for Brand Rate at the time of export in the Shipping Bills, which is contrary to the provisions of the Drawback Rules and C.B.E. & C. Circulars. The Government upheld this rejection, stating that the Drawback Rules do not allow for a subsequent change from AIR to Brand Rate once the AIR has been claimed.

2. Requirement of Declaring Intention to File for Brand Rate in the Shipping Bill
The applicant failed to declare their intention to file for the Brand Rate of Drawback in the relevant Shipping Bills at the time of export. According to Rule 7 of the Drawback Rules and C.B.E. & C. Circular No. 10/2003-Cus., dated 17-2-2003, and the clarification dated 31-12-2011, exporters must declare their intent to avail the Brand Rate by specifying Tariff Item No. 9801 in the Shipping Bill. The Government noted that this requirement is mandatory and not declaring it in the Shipping Bill indicates satisfaction with the AIR, thus disqualifying the exporter from subsequently claiming the Brand Rate.

3. Applicability of C.B.E. & C. Circulars and Clarifications
The C.B.E. & C. Circulars and clarifications play a crucial role in guiding the procedures for claiming Duty Drawback. The Circular No. 10/2003-Cus. allows for AIR Drawback pending the fixation of the Brand Rate, but it does not permit an exporter to first claim AIR and then apply for the Brand Rate. The Government emphasized that the clarification dated 31-12-2011, which states that opting for AIR disqualifies the exporter from later claiming the Brand Rate, is still valid and has not been set aside by any court. Therefore, the Government found no reason to ignore these clarifications.

4. Interpretation of Statutory Provisions and Procedural Requirements
The Government referenced the Supreme Court's observations in cases such as M/s. ITC Ltd. v. CCE, Delhi and M/s. India Aluminum Co., which emphasize strict interpretation of statutes and procedural requirements. The Government agreed with the findings of the Commissioner (Appeals) that the applicant's failure to declare the intent to claim the Brand Rate in the Shipping Bill is not a minor procedural lapse but a significant violation of the Drawback Rules. The Government upheld the lower authorities' decisions, stating that the procedural requirements must be strictly followed and any deviation is not permissible.

Conclusion
The Government found no infirmity in the Order-in-Appeal and upheld the rejection of the revision application. The applicant's failure to declare the intention to file for the Brand Rate in the Shipping Bill at the time of export and the subsequent attempt to change from AIR to Brand Rate were deemed contrary to the Drawback Rules and applicable Circulars. The Government reiterated the importance of adhering to procedural requirements and statutory provisions, thus rejecting the revision application for being devoid of merits.

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