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Issues involved: The issues involved in this case are related to the revocation of brand rate of duty drawback on exports under DEPB scheme based on Circular No. 39/2001-Cus., dated 6-7-2001, and the retrospective application of the circular.
Summary: 1. The petitioner, a partnership company engaged in manufacturing cotton powerloom grey cloth, was not entitled to Cenvat credit due to the product being exempt from Excise duty. The petitioner availed benefits under the Duty Entitlement Passbook Scheme (DEPB) and brand rate of drawback on excise duty paid on inputs. The Ministry of Finance issued letters revoking the brand rate based on Circular No. 39/2001-Cus., dated 6-7-2001. 2. The petitioner challenged the revocation on the grounds that the circular should apply prospectively, not retrospectively. The Bombay High Court in a similar case held that Circular No. 39/2001 operates prospectively. The Apex Court confirmed this decision in Union of India v. Arviva Industries (I) Ltd. The petitioner argued that since they had already been granted the benefit of drawback based on earlier circulars, they should not be denied the benefit retrospectively. 3. The court agreed with the petitioner, citing the Bombay High Court's decision and the Apex Court's confirmation. The revocation letters were set aside, allowing the petitioner to retain the benefit of the brand rate of duty drawback. The court held that the circular should be effective prospectively, and the impugned letters were quashed accordingly. 4. The judgment concluded by allowing both writ petitions, ruling in favor of the petitioner, and no costs were imposed in this matter.
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