2013 (3) TMI 189 - CGOVT - Customs

Duty drawback - entry No. 2207 10 90 - held that - the dispute as to whether ENA of Min. 96.4% V/V strength is eligible for Drawback claim @ Rs. 4.00 per litre under Drawback heading 2207 10 90 has been put at rest by C.B.E. & C. s Notification No. 84/2010-Cus. (N.T.) read with C.B.E. & C. s Circular No. 42, dated 22-9-2011. Vide Notification No. 84/2010-Cus. (N.T.), the Drawback entry No. 2207 10 90 was expanded to include description as Ethanol or Ethyl Alcohol, Rectified Spirit/ENA or otherwise having a minimum strength of 94.5% of Ethyl Alcohol . It is further clarified by the C.B.E. & C. in para (10) of the Circular No. 42/2011-Cus., dated 22-9-2011 that ENA is covered under the heading of 2207 as Ethyl Alcohol and would cover all periods including those prior to 20-9-2011. Harmoneous reading of the said Notification No. 84/2010-Cus. (N.T.) with circular No. 42, dated 22-9-2011 dispels all the disputes and settles the issue. Further, respondent department has not given any submissions controverting the eligibility of the impugned goods for Drawback claim, in light of above said Notification and circular. - Matter remanded back to adjudicating authority to decide the issue in the light of above said clarification given by C.B.E. & C.

Issues Involved:
1. Eligibility of Extra Neutral Alcohol (ENA) for drawback under Drawback entry No. 2207 10 90.
2. Interpretation of the description of goods in the Drawback schedule.
3. Application of the General Rules of Interpretation of the First Schedule of the Customs Tariff Act, 1975.
4. Clarification provided by Notification No. 84/2010-Cus. (N.T.) and Circular No. 42/2011-Cus.

Detailed Analysis:

1. Eligibility of Extra Neutral Alcohol (ENA) for Drawback under Drawback entry No. 2207 10 90:
The applicant, engaged in the manufacture and export of Ethyl Alcohol (ENA) with a minimum strength of 96.4% V/V, claimed a drawback of Rs. 4.00 per litre under entry No. 2207 10 90. The original authority rejected the claim, stating that the description in the Drawback schedule was for "Rectified Spirit (Ethyl Alcohol) having a minimum strength of 94.68% V/V," which did not match the exported product's description. The appellate authority upheld this decision. However, the applicant argued that ENA, being a form of rectified spirit with higher purity, should be eligible for the same drawback rate.

2. Interpretation of the Description of Goods in the Drawback Schedule:
The applicant contended that the entry "Rectified Spirit (Ethyl Alcohol)" implies ethyl alcohol subjected to rectification, and thus, ENA, which is ethyl alcohol with a higher purity obtained through rectification, should fall under this entry. The applicant emphasized that the entry's requirement of "minimum strength of 94.68% V/V" means any ethyl alcohol with a concentration equal to or more than 94.68% should be eligible for the drawback.

3. Application of the General Rules of Interpretation of the First Schedule of the Customs Tariff Act, 1975:
The applicant argued that the Drawback schedule, aligned with the First Schedule of the Customs Tariff Act, 1975, should apply the General Rules of Interpretation mutatis mutandis for classifying export goods. Heading 2207 of the Customs Tariff Act includes "Undenatured ethyl alcohol of an alcoholic strength by volume of 80% vol. or higher," which covers ENA. Therefore, at the four-digit level, both rectified spirits and ENA are classifiable under the same heading.

4. Clarification Provided by Notification No. 84/2010-Cus. (N.T.) and Circular No. 42/2011-Cus.:
The applicant referred to Notification No. 84/2010-Cus. (N.T.), which expanded Drawback entry No. 2207 10 90 to include "Ethanol or Ethyl Alcohol, Rectified Spirit/ENA or otherwise having a minimum strength of 94.5% of Ethyl Alcohol." Further, Circular No. 42/2011-Cus. clarified that ENA is covered under heading 2207 as Ethyl Alcohol, applicable to all periods, including those before 20-9-2011. This clarification resolves the dispute and confirms the eligibility of ENA for the claimed drawback.

Conclusion:
The government, after reviewing the case records and the relevant notifications and circulars, concluded that the dispute regarding the eligibility of ENA for drawback under entry No. 2207 10 90 is resolved in favor of the applicant. The government set aside the impugned orders and remanded the cases back to the adjudicating authority to decide in light of the clarification provided by C.B.E. & C. The revision applications were disposed of on these terms.

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