2012 (9) TMI 455 - CGOVT - Central Excise

Demand of excess paid drawback applicant initially filed claim for drawback as per brand rate fixed by the LTU, Bangalore, which was sanctioned by the original authority - Subsequently the LTU, Bangalore revised/refixed brand rate of drawback in case of the applicant Held that - Once the brand rate is revised by the proper authority; the original authority i.e. drawback sanctioning authority was required to take consequential action w.r.t. revision of brand rate. As such, the Drawback sanctioning authority was right in demanding excess paid drawback in terms of Rule 16 of Drawback Rules, 1998. Decision in M/s. Indian DyeStuff Industries Ltd. v. UOI (2002 (2) TMI 132 - HIGH COURT OF BOMBAY) followed.

Issues Involved:
1. Recovery of excess duty drawback.
2. Jurisdiction for fixation or revision of brand rates.
3. Applicability of Rule 16 of the Drawback Rules.
4. Procedural fairness in re-fixation of drawback rates.
5. Recovery of interest on excess payment.

Issue-wise Detailed Analysis:

1. Recovery of Excess Duty Drawback:
The applicant, M/s. 3M India Ltd., exported EPOXY Resin Powder and initially claimed duty drawback under a brand rate fixed by the Deputy Commissioner of Central Excise, LTU, Bangalore. This rate was later revised, resulting in an excess drawback amount of Rs. 12,74,538/-. A Show Cause Notice was issued for the recovery of this excess amount, and the original authority confirmed the demand. The applicant's appeal was subsequently rejected by the Commissioner (Appeals).

2. Jurisdiction for Fixation or Revision of Brand Rates:
The applicant contested the revision of the brand rate by the Central Excise authority. The respondent department clarified that the jurisdiction for fixing or revising brand rates under Rules 6 and 7 of the Drawback Rules, 1995, lies with the Central Excise authority. The original authority's role is limited to sanctioning drawback based on the rates fixed by the Central Excise authority. The applicant should have challenged the revision of the brand rate before the appropriate higher authority, which they failed to do.

3. Applicability of Rule 16 of the Drawback Rules:
The applicant argued that Rule 16, which allows for the recovery of erroneous or excess payments, was not applicable. However, the government observed that Rule 16 clearly mandates the repayment of any excess drawback paid. The relevant provision states: "Where an amount of drawback and interest, if any, has been paid erroneously or the amount so paid is in excess of what the claimant is entitled to, the claimant shall, on demand by a proper officer of Customs repay the amount so paid erroneously or in excess." This provision was deemed applicable, and the original authority was justified in demanding the excess paid drawback.

4. Procedural Fairness in Re-fixation of Drawback Rates:
The applicant claimed they were not given an opportunity to oppose the re-fixation of drawback rates. However, evidence showed that the applicant was notified of the revised rates and had opposed the revision through letters dated 18-6-2008 and 30-6-2008. The department argued that the applicant had sufficient time and opportunity to contest the revision before the Central Excise authority.

5. Recovery of Interest on Excess Payment:
The applicant argued against the recovery of interest on the excess payment, citing that the interest provision under Section 75A(2) was not in effect prior to 11-5-2007. However, the government noted that the drawback amount in question was paid in 2008, making the interest provision applicable. The recovery of interest was deemed valid under Section 75A(2) read with Rule 16 of the Drawback Rules, 1995.

Conclusion:
The government upheld the order of the Commissioner (Appeals) and confirmed the demand for the recovery of the excess paid drawback. The revision application was rejected as it lacked merit. The judgment emphasized the proper application of Rule 16 for the recovery of excess payments and the jurisdictional authority of the Central Excise in fixing and revising brand rates. The procedural fairness was also addressed, confirming that the applicant had adequate opportunity to contest the revised rates.

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