2011 (3) TMI 82 - AT - Customs

DEPB - Duty drawback - The appellants have not claimed drawback and DEPB benefit in respect of the exempted soles and they have not claimed such benefits on the value of the material in respect of which exemption has been taken - There is a reference to para 7.12 of the EXIM Policy in another context in relation to imports of patterns drawings jigs tools fixtures moulds tackles instruments - The drawback notifications also stipulate that the rates of drawback schedule shall not be eligible for applicable to a commodity if such commodity is a manufactured or exported availing the benefit of Customs Notification No. 32/97 - the appellants are eligible for the customs duty exemption under Notification No. 32/9 - appeals of the assessee allowed

Summary

Issues:
1. Entitlement to exemption under Notification No. 32/97 for imported shoe soles used for job work and subsequent export.
2. Admissibility of drawback and DEPB benefits on exports involving duty-free imported materials under Notification No. 32/97.
3. Interpretation of Rule 3 of the Drawback Rules regarding exemption availed in respect of goods used for export production.

Analysis:
1. The appellants imported shoe soles duty-free under Notification No. 32/97 for job work and exported shoes meeting the prescribed value addition. The dispute arose when authorities sought to deny the exemption leading to the demand. The appellants clarified that they did not claim drawback and DEPB benefits on the same consignment and the export value represented only job charges, not the value of the duty-free material received.

2. The Department argued against allowing benefits under multiple export promotion schemes citing government policy and Rule 3 of the Drawback Rules, which prohibits drawback where exemption has been availed for goods used in export production. However, the Tribunal noted that Notification No. 32/97 did not condition exemption on not availing drawback/DEPB benefits, emphasizing the need to focus solely on the entitlement to this specific exemption.

3. The Tribunal referenced the EXIM Policy and DGFT's clarification that exports using duty-free imports under Notification No. 32/97 would render them ineligible for DEPB benefits. While the authorities could have withheld these benefits, they had already sanctioned them after verifying that the cost of duty-free imports was not included in the export value. The Tribunal emphasized that while authorities could deny drawback/DEPB benefits, this should not impact the entitlement to exemption under Notification No. 32/97 if the conditions are met.

4. Considering the legal provisions and clarifications, the Tribunal concluded that the appellants were eligible for customs duty exemption under Notification No. 32/97. As no appeal was filed against the sanctioning of drawback/DEPB benefits, the denial of exemption was deemed unjustified. Consequently, the impugned orders were set aside, and the appeals were allowed solely for granting customs duty exemption under Notification No. 32/97.