2013 (9) TMI 999 - CGOVT - Customs

Recovery of already sanctioned drawback - benefit of C.B.E. & C. Circular No. 35/2010, dated 17-9-2010 - Held that - It is clearly stipulated in the clarification that present Notification 84/2010-Cus. (N.T.), dated 17-9-2010 provides that customs component of AIR Drawback shall be available even if the rebate of excise duty paid on raw materials under Rule 18 or if such raw materials were procured with payments of duty under Rule 19(2). This facility was not available in earlier notification issued prior to Notfn. No. 84/2010-Cus. (N.T.), dated 17-9-2010 which is effective from 20-9-2010. So, it cannot be made applicable to export made prior to 20-9-2010. Government therefore holds that Commissioner (Appeals) has erred in making the said notification and circular applicable to export made prior to 20-9-2010. As such, the duty drawback benefit is not admissible in the instant case. Original authority had rightly ordered for recovery of said duty drawback amount along with interest. Respondent had concealed the fact of procuring raw materials duty free under Rule 19(2). Therefore they are liable to penal action and Government agrees with the findings of original authority to this extent. Keeping in view the overall circumstances of the case the ends of justice will be met by imposing penalty under Section 114(iii)/114AAA of Customs Act, 1962. - Decided against assessee.

Issues Involved:
1. Eligibility of duty drawback claims.
2. Applicability of C.B.E. & C. Circular No. 35/2010 and Notification No. 84/2010-Cus. (N.T.).
3. Interpretation of relevant notifications and circulars.
4. Imposition of penalties on the respondents.

Detailed Analysis:

1. Eligibility of Duty Drawback Claims:
The primary issue revolves around the eligibility of M/s. Pradip Overseas Ltd. for duty drawback claims on the export of de-oiled cake (DOC). The DOC was manufactured by M/s. Rama Phosphates Ltd. using Hexane procured without payment of duty under Rule 19(2) of the Central Excise Rules, 2002. According to Rule 3(1)(ii) of the DBK Rules, 1995, "No drawback shall be allowed if the said goods are produced or manufactured using imported materials or excisable materials or taxable services in respect of which duties or taxes have not been paid." Therefore, the goods exported by the respondent were not eligible for duty drawback as they were manufactured using duty-free raw materials.

2. Applicability of C.B.E. & C. Circular No. 35/2010 and Notification No. 84/2010-Cus. (N.T.):
The appellate authority allowed the appeal by misinterpreting C.B.E. & C. Circular No. 35/2010, dated 17-9-2010, and Notification No. 84/2010-Cus. (N.T.), dated 17-9-2010. The circular and notification were effective from 20-9-2010 and could not be applied retrospectively to claims pertaining to the period before 20-9-2010. The relevant drawback notifications governing the period 2006-07 to 31-8-2010 were Notification Nos. 81/2006-Cus. (N.T.), 68/2007-Cus. (N.T.), and 103/2008-Cus. (N.T.), which clearly stated that drawback was not admissible if the facility under Rule 19(2) was availed.

3. Interpretation of Relevant Notifications and Circulars:
The appellate authority's interpretation that the provisions of the circular would apply equally to any law/notifications issued earlier if the provisions are identical was flawed. The circular dated 17-9-2010 and Notification No. 84/2010-Cus. (N.T.) were prospective and could not be applied to the period before their effective date. The Government observed that the manufacturer had availed the facility of Rule 19(2) for procuring Hexane, making the drawback benefit on the export of DOC inadmissible.

4. Imposition of Penalties on the Respondents:
The adjudicating authority had imposed penalties on the respondents for concealing the fact of procuring raw materials duty-free under Rule 19(2). The Government agreed with the findings of the original authority and imposed penalties of Rs. 25,000 each on M/s. Pradip Overseas Ltd. and Sh. Pradip Keria, M.D. of M/s. Pradip Overseas. The revision application concerning M/s. Rama Phosphate Ltd. was still pending and would be decided separately.

Conclusion:
The Government concluded that the duty drawback benefit was not admissible in the instant case, and the original authority had rightly ordered the recovery of the drawback amount along with interest. The impugned Order-in-Original was restored with modifications regarding the imposition of penalties. The revision applications were disposed of accordingly.

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