2016 (7) TMI 467 - CGOVT - Customs

Refund of duty drawback claim repaid earlier - Proper format - Earlier, recovery proceedings were initiated for duty drawback sanctioned earlier since respondent / exporter had failed to produce the proof of realization of export proceeds - the respondent repaid the said ineligible drawback along with interest and the penalty amount on 31.01.2013. Meanwhile they received the requisite certificate evidencing realization of export proceeds. Since the certificates demonstrated that the export realization had been received within a period of one year from the relevant date, they filed a refund claim dated 09.02.2013 and the same was rejected by the lower authority as not in proper format. - The main issue for decision is whether refund claim under Rule 16A (4) is admissible or not. Held that - In the present case, the foreign remittance is claimed to have realized by the respondent first and the amount was repaid by them later. Moreover, no proof of realization of export proceeds was furnished by them within the stipulated period of three months. The enabling statutory provision viz. Rule 16A (4) for refund of drawback recovered will undisputedly be subject to provisions of the said Rule. Therefore, the Commissioner (Appeals) has clearly erred in holding the refund as admissible once the that Bank Realization certificates were produced by the exporter within a period of one year from the date of recovery of drawback. Government finds merit in the observation of the original authority that the Order No. 457/2012 dated 15.05.2012 for recovery of drawback amount had become final as it had been accepted by the applicant who did not challenge it any appellate forum and paid the confirmed dues. Therefore, Government holds that question of any refund of duty paid pursuant to such an order which has attained finality does not arise. Government holds that no refund is admissible under Rule 16A (4) of the Customs, Central Excise and Service Tax Drawback Rules, 1995 and the impugned Order-in Appeal is thus set aside as not being legal and proper. - Decided in favor of revenue.

Summary

Issues Involved:
1. Refund claim under Rule 16(4) of the Customs, Central Excise and Service Tax Drawback Rules, 1995.
2. Applicability of Rule 16A(4) after the amendment by Notification No.49/2010-Cus (NT) dated 17.06.2010.
3. Finality of the Order-in-Original and its implications on the refund claim.
4. Department's failure to raise certain grounds before the Commissioner (Appeals).

Issue-wise Detailed Analysis:

1. Refund Claim under Rule 16(4):
The respondent exported goods under the duty drawback scheme and was initially sanctioned the drawback amount. However, due to the failure to produce proof of export realization, a demand was raised for the repayment of the drawback amount along with interest and penalty. The respondent complied and repaid the amount. Subsequently, upon obtaining the necessary certificates proving export realization within the stipulated time, the respondent filed a refund claim under Rule 16(4). The lower authority rejected the refund claim on procedural grounds, which was later set aside by the Commissioner (Appeals), leading to the department's revision application.

2. Applicability of Rule 16A(4) Post-Amendment:
The department argued that Rule 16A(4) had been amended to require the submission of proof of export realization within three months from the date of realization, extendable by nine months upon application. The respondent failed to submit the proof within this period. The government noted that the amended Rule 16A(4) applies specifically when sale proceeds are realized after the recovery of the drawback amount. In this case, the export proceeds were realized before the recovery, making Rule 16A(4) inapplicable.

3. Finality of the Order-in-Original:
The original authority's order demanding the repayment of the drawback amount had become final as the respondent did not appeal against it and had paid the confirmed dues. The government held that since the order had attained finality, the question of any refund of the paid amount does not arise. This finality precludes the refund claim under the cited rule.

4. Department's Failure to Raise Grounds Before Commissioner (Appeals):
The respondent contended that the department did not raise the ground of the amended Rule 16A(4) before the Commissioner (Appeals) and did not file any cross-objections or submissions during the personal hearing. The government observed that the basic issue was the admissibility of the refund under the said rule, and the department's failure to raise specific grounds earlier does not preclude them from contesting the refund claim before the revisionary authority.

Conclusion:
The government concluded that no refund is admissible under Rule 16A(4) of the Customs, Central Excise and Service Tax Drawback Rules, 1995, as the amended rule was inapplicable to the facts of the case. The Commissioner (Appeals) erred in holding the refund as admissible based on the production of Bank Realization Certificates within one year from the date of recovery. The original order demanding the repayment of the drawback amount had attained finality, negating the possibility of a refund. Consequently, the impugned Order-in-Appeal was set aside, and the revision application was allowed.