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2013 (4) TMI 705 - CGOVT - CustomsRejection 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 The said clarification has neither been withdrawn nor set aside by any court of law.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. Eligibility for fixation of Brand Rate under Rule 7 of the Duty Drawback Rules, 1995. 2. Procedural compliance regarding declaration in shipping bills. 3. Imposition of penalty under Section 114AA of the Customs Act, 1962. 4. Validity and applicability of C.B.E. & C. Circulars. Detailed Analysis: 1. Eligibility for Fixation of Brand Rate: The applicants, M/s. Sandvik Asia Pvt. Ltd. and M/s. JCB India Ltd., filed applications under Rule 7 of the Duty Drawback Rules, 1995, for the fixation of Brand Rate. They argued that the All Industry Rate (AIR) of Drawback under Rule 3 was less than 4/5th of the duties/taxes paid on input materials used in manufacturing the exported goods, thus satisfying the substantive condition for fixing the brand rate. The lower authorities did not dispute this fact but rejected the applications on procedural grounds. 2. Procedural Compliance: The primary procedural issue was the failure to declare the intention to avail the Brand Rate of Drawback under Rule 7 in the relevant shipping bills at the time of export. The applicants contended that this omission was a technical/procedural error and should not result in the denial of the substantive benefit of drawback. They cited several Supreme Court judgments to support their claim that substantial benefits cannot be denied due to procedural lapses. 3. Imposition of Penalty: The Order-in-Appeal imposed a penalty of Rs. 20,000 on the applicants for contravention of Rule 114AA of the Customs Act, 1962. The applicants argued that they had not misdeclared any material particulars and had expressly stated their availing of the benefit of credit of duty paid on inputs. They contended that the penalty was not tenable as the denial of duty drawback was based on an erroneous interpretation of the rules. 4. Validity and Applicability of C.B.E. & C. Circulars: The lower authorities relied on C.B.E. & C. Circular No. 10/2003-Cus. (N.T.), dated 17-2-2003, and Circular No. 606/04/2011-DBK, dated 30-12-2011, which clarified that exporters opting for the fixation of Special Brand Rate under Rule 7 must declare this intention in the shipping bill. The applicants argued that these circulars did not explicitly mention the requirement to declare the Tariff Item No. 9801 in the shipping bill and that the denial of their applications was based on an incorrect interpretation of these circulars. Government's Findings: The government upheld the lower authorities' decisions, emphasizing that the applicants failed to indicate their intention to avail the Brand Rate of Drawback under Rule 7 at the time of export in the relevant shipping bills. The government found no specific relaxation under Rule 17 of the Drawback Rules, 1995, that would allow such amendments post-export. The C.B.E. & C. clarification dated 31-12-2011 was deemed legal and proper, stating that opting for AIR drawback under Rule 3 in the shipping bills disentitles the exporter from claiming the Brand Rate of Drawback. Conclusion: The government rejected the revision applications, finding no infirmity in the impugned Orders-in-Appeal. The violations were not merely procedural lapses, and the penalty was rightly imposed. The government's decision was based on a strict interpretation of the statutory provisions and the C.B.E. & C. circulars. The revision applications were dismissed for lacking merit.
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