2000 (7) TMI 81 - HC - Customs

Summary

Issues Involved:
1. Eligibility for duty drawback under Section 74 of the Customs Act.
2. Identity and character of imported goods.
3. Application of Section 75 of the Customs Act for duty drawback.
4. Procedural compliance for claiming brand rate of drawback.

Detailed Analysis:

1. Eligibility for Duty Drawback under Section 74 of the Customs Act:
The petitioner, a partnership firm engaged in the manufacture and export of tinned and pouched roasted cashew nuts, mixed nuts, and peanuts, sought a duty drawback on the imported packing materials (cans and pouches) under Section 74 of the Customs Act. The petitioner argued that since the imported cans and pouches were used in the export of their products without modification, they were eligible for the duty drawback. However, the first respondent rejected this claim, stating that the goods had lost their identity and character as imported goods and had assumed the role of packing materials.

2. Identity and Character of Imported Goods:
The first respondent held that for the purpose of Section 74, the imported goods must retain their identity and character. The imported cans and pouches, once used for packing the roasted nuts, lost their original identity and character. Consequently, the first respondent concluded that the petitioner was not eligible for the duty drawback under Section 74. The Collector of Customs (Appeals) initially overturned this decision, but the third respondent later reinstated the original order, agreeing that the goods had lost their identity and character.

3. Application of Section 75 of the Customs Act for Duty Drawback:
The respondents contended that the appropriate provision for duty drawback in this case was Section 75 of the Customs Act, which covers customs and central excise duties paid on raw materials, components, consumables, and packing materials used in the manufacture of exported products. The respondents argued that the drawback rate under Section 75 includes the duties paid on packing materials, and thus, the petitioner's claim under Section 74 was incorrect.

4. Procedural Compliance for Claiming Brand Rate of Drawback:
The respondents emphasized that the petitioner should have applied for the brand rate of drawback under Rule 6 or special brand rate under Rule 7 of the Drawback Rules. Since the petitioner did not follow this procedure and the time limit for applying was barred, the claim under Section 74 was deemed untenable. The respondents also highlighted that a new provision for payment of drawback on packing materials, provided the export product itself was not covered in the drawback schedule, was not available during the period in dispute.

Conclusion:
The court concluded that the petitioner failed to establish valid grounds for claiming a duty drawback under Section 74 of the Customs Act. The court upheld the third respondent's order, which rejected the petitioner's claim for duty drawback on the imported packing materials. The writ petition was dismissed for lack of merit, and no costs were awarded. Consequently, the connected miscellaneous petitions were also dismissed.