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Issues: Duty drawback on imported materials used in the manufacture of exported goods under the Customs and Central Excise (Duties Drawback) Rules, 1971.
Detailed Analysis: The judgment involved appeals arising from two writ petitions dismissed concerning duty drawback on imported materials used in manufacturing goods for export under the Customs and Central Excise (Duties Drawback) Rules, 1971. The petitioners purchased aluminum or stainless steel sheets at different rates and applied for revision of duty drawback rates under Rule 7 of the said Rules. The respondents initially fixed and later revised the duty drawback rates for the imported materials purchased by the petitioners. However, the respondents subsequently modified the duty drawback rate, leading to the petitioners filing writ petitions challenging these modifications. One of the writ petitions was allowed by Kurdukar J., setting aside the order revising the duty drawback rate due to a violation of natural justice principles. However, a subsequent order by the respondents further reduced the duty drawback rate, prompting the petitioners to file another writ petition. The respondents issued show-cause notices to the petitioners, alleging recovery shortfalls in the imported materials' cost, leading to the revision of the duty drawback rates. The petitioners contested this revision, arguing that the respondents did not consider the wastage element in the manufacturing process, as required by Rule 3 of the said Rules. The judgment highlighted the importance of providing reasons and considering all relevant factors, including wastage, in determining duty drawback rates under Rule 3 of the Customs and Central Excise (Duties Drawback) Rules, 1971. The court emphasized the need for a speaking order with germane reasons, especially regarding the verification of wastage previously provided by the petitioners. The court concluded that the order revising the duty drawback rate lacked pertinent reasons and failed to address the wastage element, rendering it invalid. As a result, the court quashed the order and directed the respondents to conduct a fresh hearing, issue a speaking order, and consider all factors outlined in Rule 3 before determining the duty drawback rates. The judgment allowed the appeals, setting aside the previous orders and making the writ petitions absolute. The respondents were ordered to pay costs to the petitioners for one writ petition, while no costs were awarded for the other.
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