2011 (3) TMI 1421 - CGOVT - Customs

Revision Application - goods re-exported under claim of duty Drawback under Section 74 of Customs Act, 1962 on the reason that these were found defective after clearance Held that - Once, it is proved that, the market price of any goods is less than the amount of Drawback dues, the Drawback may be rejected in terms of Section 76. Applicant had declared the value of goods as no commercial value, market price of goods found to be less than Drawback claimed, and hence the Appeal was rightly rejected by the Appellate Authority, Revision Application is rejected being devoid of any merit

Summary

Issues:
- Interpretation of Section 76 of the Customs Act, 1962 regarding duty drawback on re-exported goods under Section 74.
- Applicability of market price in granting duty drawback under Sections 74 and 75 of the Customs Act.
- Rejection of duty drawback claim based on market price of goods.

Analysis:

1. Interpretation of Section 76 of the Customs Act, 1962:
The case involved a dispute over the interpretation of Section 76 of the Customs Act, 1962, concerning duty drawback on re-exported goods under Section 74. The applicant contended that the provision of Section 76 did not apply to re-export under Section 74. However, the government observed that Section 76 does not differentiate between exports under Section 75 and re-exports under Section 74. The section clearly states that no drawback is admissible if the market price of the goods is less than the amount of drawback due, without any exception limiting its applicability to Section 74 only.

2. Applicability of Market Price for Duty Drawback:
The applicant argued that the market value is not a relevant factor for granting duty drawback under Section 74, citing circulars issued by the Central Board of Excise and Customs. They contended that the market value requirement is applicable only to cases involving duty drawback under Section 75. However, the government disagreed, emphasizing that once it is established that the market price of goods is less than the drawback claimed, the drawback may be rejected under Section 76. In this case, the applicant had declared the goods as having no commercial value, and as the market price was found to be less than the drawback claimed, the appellate authority rightly rejected the appeal.

3. Rejection of Duty Drawback Claim:
The applicant sought duty drawback under Section 74 for re-exporting defective batteries, claiming that almost 100% of the batteries passed quality tests. They argued that the declaration of "no commercial value" in the shipping bill was for FEMA purposes and that the market value was not relevant for granting drawback under Section 74. However, the government found that the market price of the goods was indeed less than the drawback claimed, leading to the rejection of the duty drawback claim by the appellate authority. The government upheld the appellate Commissioner's order, stating that there was no merit in the revision application and consequently rejected it.

In conclusion, the judgment clarified the interpretation of Section 76 of the Customs Act, 1962, affirmed the applicability of market price in granting duty drawback under Sections 74 and 75, and upheld the rejection of the duty drawback claim based on the market price of the goods.