2013 (7) TMI 644 - CGOVT - Customs

Fixation of duty drawback - Held that - Commissioner (Appeals) has rightly denied the fixation of drawback - The exemption contained in the Notification being absolute/unconditional - manufacturer had no option to pay duty on said exempted goods in terms of the provisions of Section 5A(1A) of Central Excise Act - no condition was provided under column (5) of the Notification - the exemption is available to all goods captively consumed the rules stipulates that rebate of duty chargeable on said materials was to be given a drawback - In case the duty was not chargeable, the question of drawback does not arise - assessee had no option to pay duty on aggregates/materials used in the manufacture of tractors exported - assessee s entitlement of duty drawback on the inputs used in the tractors exported under DEPB-cum-Drawback Shipping Bills - Government notes that such availment were governed by Board s Circular No. 39/2001-Cus. brand rate of drawback was available on excise duty paid on indigenous inputs only if such inputs are not specified in relevant SION. Brand rate in duty paid - assessee was claiming brand rate on duty paid on indigenous inputs which are specified in SION norms Held that - the claim was not admissible in view of provisions of Circular No. 39/2001-Cus. assessee s reliance upon relevant export-import Policy was not tenable on the ground that no provision in the said Policy categorically provides for exemption from conditions for eligibility of drawback in terms of circular No. 39/2001-Cus - brand rate of drawback is available for duty paid on indigenously procured inputs provided such inputs are not specified in SION - the inputs on which brand rate was being claimed are specified in SION, as such, rendered the assessee ineligible for brand rate of drawback in terms of Board s Circular No. 27/2001-Cus. Brand rate of Duty paid under protest the claim of duty paid under protest had been rejected - rejection of brand rate of duty paid under protest on inputs by input supplier - Government notes that the original authority had clearly held that in absence of non-mentioning of reason of payment of duty under protest in their Drawback claims and in absence of any certificate indicating that refund of duty had not been claimed by input supplier - assessee failed to give any categorical reasons contradicting findings of original authority their eligibility of the claim does not sustain - decided against the assessee.

Issues Involved:
1. Entitlement to duty drawback on aggregates used in the manufacture of exported tractors.
2. Application of Notification No. 6/2002-C.E. and its amendments.
3. Conditions under Section 5A(1A) of the Central Excise Act, 1944.
4. Eligibility for duty drawback under DEPB-cum-Drawback Shipping Bills.
5. Eligibility for duty drawback under DFRC-cum-Drawback Shipping Bills.
6. Rejection of duty drawback claim for duty paid under protest.

Issue-Wise Analysis:

1. Entitlement to Duty Drawback on Aggregates:
The applicants, M/s. Mahindra & Mahindra Ltd., paid duty on aggregates (IC engines, transmission assembly, and sheet metal components) used in the manufacture of tractors that were exported. They filed for drawback claims on these duties. The adjudicating authority rejected the claims, stating that the aggregates were exempt from duty under Notification No. 6/2002-C.E. as amended, and thus no duty was payable.

2. Application of Notification No. 6/2002-C.E. and Its Amendments:
Notification No. 6/2002-C.E., as amended by Notification No. 23/2004-C.E., exempts parts of tractors used within the factory from duty. The applicants argued that this exemption was conditional, but the Government observed that no condition was specified in the notification. Thus, the exemption was absolute, and the manufacturer had no option to pay duty on these parts.

3. Conditions under Section 5A(1A) of the Central Excise Act, 1944:
Section 5A(1A) mandates that if an exemption is absolute, the manufacturer cannot opt to pay duty. Since the exemption for tractor parts was unconditional, the duty paid by the applicants on these parts was not legally required, and thus, no drawback could be claimed.

4. Eligibility for Duty Drawback under DEPB-cum-Drawback Shipping Bills:
The applicants claimed duty drawback on indigenous inputs specified in the Standard Input-Output Norms (SION) used in tractors exported under DEPB-cum-Drawback Shipping Bills. The Government noted that as per Circular No. 39/2001-Cus., brand rate of drawback is only available if the inputs are not specified in SION. Since the inputs were specified in SION, the claim was not admissible.

5. Eligibility for Duty Drawback under DFRC-cum-Drawback Shipping Bills:
For exports under the DFRC Scheme, Circular No. 27/2001-Cus. stipulates that brand rate of drawback is available for duty paid on indigenously procured inputs only if such inputs are not specified in SION. The applicants' inputs were specified in SION, rendering them ineligible for the brand rate of drawback.

6. Rejection of Duty Drawback Claim for Duty Paid Under Protest:
The applicants claimed a drawback for Rs. 11,504/- paid under protest. The original authority rejected this claim due to the absence of reasons for payment under protest and lack of certification that the input supplier did not claim a refund. The applicants failed to counter these findings, leading to the rejection of this claim.

Conclusion:
The Government upheld the orders rejecting the applicants' claims for duty drawback on all grounds. The revision applications were rejected as devoid of merit.

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