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2013 (10) TMI 1314 - CGOVT - CustomsDenial of duty drawback claim - Claim sanctioned previously - notification No. 84/2010-Cus. (N.T.) dated 17-9-2010 - Rule 19(2) - Commission upheld denial of drawback claim but set aside penalty - Held that - respondent M/s. Rama Phosphate Ltd. is a manufacture who sold the goods to merchant exporter M/s. Pradeep Overseas Ltd. The merchant exporter has not declared the fact of procurement of raw materials duty free under Rule 19(2) by the manufacturer in the relevant shipping bills. Manufacturer has not made any such misdeclaration in any document. The allegation of his connivance with the merchant exporter is without any documentary evidence. As such the respondents can not be held liable to penal action under Section 114 of Customs Act 1962. Government do not find any infirmity in the impugned orders-in-appeal as regards dropping penal proceedings against the respondent and therefore uphold the said upto the extent of dropping penal action against the respondent. - Decided against Revenue.
Issues Involved:
1. Eligibility for duty drawback claims. 2. Interpretation of relevant notifications and circulars. 3. Imposition of penalties on respondents. Issue-wise Detailed Analysis: 1. Eligibility for Duty Drawback Claims: The central issue revolves around the eligibility for duty drawback claims by the respondent, M/s. Rama Phosphate Ltd., who exported de-oiled cake (DOC) under the duty drawback scheme. The DOC was manufactured using Hexane, procured without payment of duty under Rule 19(2) of the Central Excise Rules, 2002. According to the relevant drawback notifications, the drawback claims were not admissible if the facility under Rule 19(2) was availed during the manufacturing process. The Additional Commissioner of Customs (Prev.), Jamnagar, adjudicated the case, ordering the recovery of the drawback amount of Rs. 94,052 and imposing penalties on the respondents. 2. Interpretation of Relevant Notifications and Circulars: The appellate authority set aside the penalties imposed by the adjudicating authority, which led to the department filing a revision application. The department argued that the appellate authority misinterpreted the Board's Circular No. 35/2010, dated 17-9-2010, and Notification No. 84/2010-Cus. (N.T.), dated 17-9-2010, which were effective from 20-9-2010. The appellate authority erroneously applied these provisions retrospectively to the drawback claims pertaining to the period before 20-9-2010, which were governed by earlier notifications (81/2006-Cus., 68/2007-Cus., and 103/2008-Cus.). The department cited that as per Rule 3(1)(ii) of the DBK Rules, 1995, no drawback shall be allowed if the goods are manufactured using duty-free inputs. The government concurred with the department's view, stating that the Commissioner (Appeals) erred in applying the provisions retrospectively and that the duty drawback benefit was not admissible for exports made prior to 20-9-2010. 3. Imposition of Penalties on Respondents: Regarding the imposition of penalties, the adjudicating authority had initially imposed penalties on the respondents, including M/s. Rama Phosphate Ltd., for their alleged mala fide intentions. However, the Commissioner (Appeals) set aside these penalties. The department argued that the respondents were liable for penalties as per the findings of the adjudicating authority. The government noted that the merchant exporter, M/s. Pradeep Overseas Ltd., did not declare the procurement of duty-free raw materials in the relevant shipping bills, and there was no evidence of misdeclaration by the manufacturer. The government found no documentary evidence of connivance between the manufacturer and the merchant exporter. Thus, the respondents could not be held liable for penal action under Section 114 of the Customs Act, 1962. The government upheld the appellate authority's decision to drop the penal proceedings against the respondents. Conclusion: The government rejected the revision application, upholding the Commissioner (Appeals)'s decision to drop the penal action against the respondents but agreeing with the department that the duty drawback benefit was not admissible for the period before 20-9-2010. The original adjudicating authority's order for the recovery of the drawback amount along with interest was deemed appropriate.
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