2017 (6) TMI 994 - AT - Central Excise

Duty drawback - brand rate withdrawn by Revenue by taking the view that Aluminium sheets used in the exported Aluminium utensils are specified in the Standard Input and Output Norms (SION) and hence the respondent will not be eligible for brand rate of duty drawback in terms of CBEC circular No.603/35/2001-DBK dt. 06.07.2001 - Held that - since the respondents have paid the duty of excise on aluminium sheets which went into the manufacture of aluminium utensils which was exported, and since no CENVAT credit has been availed from the duty paid on such sheets, the respondents will be eligible for duty drawback in terms of the brand rates fixed by the department - appeal dismissed - decided against Revenue.

Summary

Issues:
- Eligibility for duty drawback under brand rate fixation
- Interpretation of CBEC circular on brand rate of duty drawback
- Non-availment of Cenvat credit on inputs
- Compliance with Standard Input and Output Norms (SION)
- Jurisdiction of Customs authorities in brand rate fixation

Analysis:
The appeal in this case was against the order withdrawing brand rate fixation for duty drawback on exported Aluminium utensils. The respondent, a manufacturer and exporter of Aluminium utensils, procured indigenous Aluminium sheets but did not avail Cenvat credit on them. The Revenue withdrew the brand rate approval, citing that Aluminium sheets used were specified in the SION and hence not eligible for brand rate of duty drawback. The Commissioner (Appeals) allowed brand rate fixation, leading to the Revenue's appeal.

The CBEC circular of 2001 specified conditions for brand rate of drawback, including payment of additional duty in cash and non-availment of Cenvat credit for imported inputs or excise duty on indigenous inputs not specified in relevant SION. The Revenue argued that since Aluminium sheets were specified in the SION, brand rate fixation was not appropriate. However, the Commissioner (Appeals) analyzed the DEPB Scheme, highlighting that non-availability of Modvat credit was a key condition for brand rate eligibility.

The Commissioner (Appeals) emphasized that the appellants did not avail Cenvat credit on Aluminium sheets used in exported utensils, meeting the eligibility criteria for brand rate of drawback. As the duty on Aluminium sheets was paid without availing Cenvat credit, the respondents were deemed eligible for duty drawback under the brand rates. Consequently, the impugned order was upheld, and the Revenue's appeal was dismissed, affirming the respondents' eligibility for duty drawback.

In conclusion, the judgment clarifies the conditions for brand rate fixation of duty drawback, emphasizing the significance of non-availment of Cenvat credit on inputs and compliance with SION. The decision underscores the importance of meeting specific criteria for brand rate eligibility, ensuring fair treatment in duty drawback determinations.