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Issues:
- Eligibility for duty drawback on hangers exported along with readymade garments - Interpretation of Circular No. 5/2001-Cus., dated 19-1-2001 - Applicability of Circular No. 19/2005-Cus., dated 21-3-2005 - Compliance with Customs Act, 1962 and Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 Analysis: 1. Eligibility for duty drawback on hangers: The case involved a dispute regarding the eligibility of an exporter for duty drawback on hangers exported along with readymade garments. The exporter claimed drawback on the full FOB value of garments, including the value of locally procured hangers. However, the department contended that exporters were not eligible for drawback on the value of hangers as per Circular No. 5/2001-Cus., which required suitable deductions for hangers not declared separately and deducted by the exporter. 2. Interpretation of Circular No. 5/2001-Cus., dated 19-1-2001: The Circular clarified that duty drawback is not admissible on the value of hangers exported with readymade garments. The adjudicating authority confirmed the demand of erroneously sanctioned drawback based on this Circular. The government upheld this decision, emphasizing that there was no ambiguity in the provisions of the Circular and that the exporter failed to comply by not declaring and deducting the cost of hangers separately. 3. Applicability of Circular No. 19/2005-Cus., dated 21-3-2005: The Commissioner (Appeals) relied on Circular No. 19/2005-Cus., which addressed the fixation of All Industry Rates for drawback. However, the government deemed this reliance improper as the issue at hand was specific to allowing drawback on plastic hangers at the All Industry Rates applicable to readymade garments. The government supported the adjudicating authority's interpretation of Circular No. 5/2001-Cus. 4. Compliance with Customs Act, 1962 and Rules: The government's decision was based on the adherence to Circular No. 5/2001-Cus., dated 19-1-2001, and the interpretation that hangers exported with garments were not eligible for duty drawback. The case highlighted the importance of complying with customs regulations and circulars to determine the correct amount of duty drawback admissible to exporters. In conclusion, the government set aside the order-in-appeal and upheld the order-in-original, confirming the demand of erroneously sanctioned drawback on hangers exported with readymade garments. The judgment emphasized the significance of following circulars and regulations in determining duty drawback eligibility and calculation.
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