2011 (9) TMI 1129 - HC - Customs

Summary

Issues Involved:
1. Legality of the drawback benefits claimed by the petitioner.
2. Applicability of various circulars and notifications in determining the eligibility for drawback benefits.
3. Interpretation of Customs and Central Excise Duties Drawback Rules, 1995.

Summary:

Issue 1: Legality of the drawback benefits claimed by the petitioner

The petitioner, engaged in manufacturing and export of readymade garments, sought to quash the Order No. 256/2007 dated 10th May 2007, which denied them full drawback benefits. The Department initiated proceedings based on intelligence that the petitioner availed 'All India rate of drawback' for goods from their Tirupur DTA Unit, which were processed at their Madurai 100% EOU Unit. The Department argued that the petitioner failed to inform about the processing at the 100% EOU and misdeclared the shipping bills, violating conditions in various notifications issued under the Customs and Central Excise Duty Drawback Rules, 1995.

Issue 2: Applicability of various circulars and notifications

The respondents contended that as per Circular No. 31/2000-Cus., dated 20th April 2000, and other related circulars, the petitioner was not entitled to All Industry Rate of drawback for goods processed in a 100% EOU. The appellate authority initially accepted the petitioner's appeal, citing previous Tribunal rulings and clarifying that the goods produced by the 100% EOU and DTA were distinct. However, in revision, the order of the appellate authority was reversed, reinstating the Deputy Commissioner's decision based on the same circulars and notifications.

Issue 3: Interpretation of Customs and Central Excise Duties Drawback Rules, 1995

The revisional authority held that the petitioner was entitled to drawback benefits only as per Circular No. 31/2000-Cus., denying the All Industry Rate of drawback. The petitioner argued that the circulars denying the relief were contrary to statutory rules and notifications. The Court referred to the Division Bench judgment in Commissioner of Customs, Tuticorin v. L.T. Karle, which harmoniously interpreted the rules and circulars to entitle DTA units to drawback benefits for goods processed by 100% EOUs.

Conclusion:

In view of the authoritative pronouncement by the Division Bench, the Court held that the DTA is entitled to 100% drawback. Consequently, the writ petition was allowed, the impugned order was set aside, and the appellate authority's order was restored. The connected miscellaneous petition was closed, and no costs were imposed.