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2014 (10) TMI 155 - CGOVT - CustomsRecovery of excessive Duty drawback claim - export of goods in discharge of export obligation under advance license - Held that - Respondent exported goods namely I.C. Engines and parts falling under Tariff Heading 8408 under claim of drawback. They filed brand letter application under Rule 6(1)(a) of Drawback Rules, 1995. Brand rate letters were issued by the jurisdictional Central Excise, Commissionerate, Pune-III. On the basis of said brand rate letters, drawback was sanctioned to the respondent under Rule 6. Subsequently, it was observed by the Customs that the impugned goods were classified under 8408 and the same is mentioned in list of items eligible for AIR of drawback under Rule 3 of the said Drawback Rules, 1995, and that even if the respondent had to file application for brand rate of drawback, they were required to file the same under Rule 7 and not under Rule 6. It is clear that the respondents having exported the goods in discharge of export obligation under advance license, were not entitled of AIR of drawback. This has also been accepted by the department. As such, the respondent were not eligible for AIR of drawback under Rule (3). The applicant has also declared in their application for brand rate of drawback and shipping bills that the goods have been exported for claim of brand rate of drawback - it is ample clear that in case of non-availability of AIR of drawback simultaneously with advance license scheme, the exporter can avail benefit of brand rate of drawback under Rules 6 or Rule 7 of the Drawback Rules, 1995. It is unambiguously clear that brand rate of drawback under Rule 6 can be filed only where amount or rate of drawback has not been determined. Government notes that though the engines are figuring in the relevant All Industry Drawback Schedule but the said AIR rate is not applicable to said goods exported in discharge of export obligation against advance authorization in terms of Clause (b) of Note 7 of Notification No. 36/2005-Cus. (N.T.), dated 2-5-2005. As such, the condition of Rule 6 are not violated and respondent case cannot be taken out of the purview of said rule as held by Commissioner (Appeals) also. Commissioner (Appeals) has given detailed finding on the issue and applicant department has not countered these findings with any valid documentary evidences. The contention regarding availment of Cenvat credit and advance authorization is considered by DBK brand rate fixation authority in Central Excise as discussed above by Commissioner (Appeals). So, this pleading of department has no substance. In case, Customs authorities had any contrary documentary evidences which were not before Central Excise Brand Rate Fixation Authority, then they could have taken up the matter with Central Excise for remedial action, if any. In this case the brand rates fixed by Central Excise are not challenged/reviewed at appropriate level and therefore the brand rates fixed are legally valid. - No infirmity in impugned order - Decided against appellant revenue.
Issues Involved:
1. Eligibility of the respondent for All Industry Rates (AIR) of drawback. 2. Appropriateness of filing for brand rate of drawback under Rule 6 versus Rule 7 of the Drawback Rules, 1995. 3. Allegations of misdeclaration and suppression of facts by the respondent. 4. Impact of availing Cenvat credit and duty exemption on the drawback claims. 5. Validity of the brand rate fixation by Central Excise authorities. Issue-wise Detailed Analysis: 1. Eligibility of the respondent for All Industry Rates (AIR) of drawback: The respondent exported IC Engines under a claim of drawback and filed for brand rate of drawback under Rule 6(1)(a) of the Drawback Rules, 1995. The department contended that the goods were eligible for AIR of drawback under Rule 3 but were not entitled to AIR due to the provisions of para 7(b) of Notification No. 36/2005-Cus. (N.T.), which states that AIR is not applicable to goods exported under an Advance License. The government observed that since the respondent exported goods under an Advance License, they were not eligible for AIR of drawback, making Rule 3 inapplicable. 2. Appropriateness of filing for brand rate of drawback under Rule 6 versus Rule 7 of the Drawback Rules, 1995: The respondent filed for a brand rate of drawback under Rule 6. The department argued that the respondent should have filed under Rule 7, given the availability of AIR for the goods. The government noted that Rule 6 applies when no amount or rate of drawback has been determined. Since AIR was not applicable due to the Advance License, the respondent's application under Rule 6 was appropriate. The government referred to Circular No. 48/2011-Cus., which clarifies that in cases where AIR is not available, exporters can avail the brand rate of drawback under Rule 6 or Rule 7. The government concluded that the respondent's filing under Rule 6 was valid. 3. Allegations of misdeclaration and suppression of facts by the respondent: The department alleged that the respondent misdeclared their eligibility for AIR and suppressed facts. The government found that the respondent had disclosed all relevant information in their application for fixation of brand rate of drawback. The brand rate fixation authority was aware of the facts, and there was no misdeclaration or suppression. The government cited a letter from the Deputy Secretary (DBK), which stated that rejection of claims based on the filing under Rule 6 instead of Rule 7 is improper and unjustified. 4. Impact of availing Cenvat credit and duty exemption on the drawback claims: The department raised concerns about the respondent availing Cenvat credit and duty exemption under the Advance Authorization Scheme. The Commissioner (Appeals) found that the respondent used both duty-paid and duty-free inputs in manufacturing the exported IC engines and claimed drawback only on the customs duties paid on duty-paid inputs. The drawback did not include CVD and SAD, which were availed as Cenvat credit. The government upheld this finding, noting that the brand rate fixation authority considered the respondent's use of Cenvat credit and duty exemption. 5. Validity of the brand rate fixation by Central Excise authorities: The government observed that the brand rates fixed by the Central Excise authorities were not challenged or reviewed by the department. The Commissioner (Appeals) provided a detailed finding that the drawback granted was equal to the customs duties paid on the inputs used in the manufacture of exported goods. The government concluded that the brand rates fixed by Central Excise were legally valid and upheld the Order-in-Appeal. Conclusion: The government found no infirmity in the Order-in-Appeal and upheld it, dismissing the department's revision application. The respondent's filing under Rule 6 was deemed appropriate, and there was no misdeclaration or suppression of facts. The drawback claims were valid, considering the use of Cenvat credit and duty exemption, and the brand rates fixed by Central Excise were upheld. The revision application was disposed of accordingly.
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