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2004 (3) TMI 72 - HC - CustomsEXIM - Validity of Circular No. 39/2001 and its retrospective application - Duty Entitlement Pass Book Scheme (DEPB Scheme) - Departmental Clarifications/Instructions - HELD THAT - Having considered two circulars viz. 68/97 and 39/99 and impugned Circular No. 39/2001 we are unable to accept the submission of the Senior Counsel appearing for the respondents that Circular No. 39/2001 is clarificatory in nature and the Circular Nos. 68/97 and 39/1999 have to be read in that light. The Circular No. 39/2001 is not clarificatory but is a fresh look of the matter in the light of some doubts having arisen and the double benefits being taken by the exporters under the Circular Nos. 68/97 and 39/99. The fresh look of the matter by the Board reflected in the Circular No. 39/2001 seems to withdraw the extension of benefits given vide Circulars 68/97 and 39/99 bring the matter more in conformity with the EXIM Policy. Obviously Circular 39/2001 cannot be said to be illegal save and except to the extent it is sought to be given retrospective effect. Neither Circular No. 68/97 nor Circular No. 39/99 suggests that the brand rate of drawback was restricted to the indigenous inputs not mentioned in SION. On the other hand Circulars 68/97 and 39/99 would show that where Modvat credit was not available brand rate of drawback was made available over and above the DEPB. Thus the new Circular No. 39/2001 though cannot be faulted being in accord with the EXIM policy however in respect of the drawback claims which had been completed and drawback had been given pursuant to Circular No. 39/99 the drawback cannot now be rejected or claimed back under the Circular No. 39/2001. The exporters who had already made commitments and exported the goods acting on the Circular No. 39/99 cannot be deprived of the brand rate drawback scheme of course - subject to fulfilment of all conditions of the Circular No. 39/99 until the Circular No. 39/2001 came into effect. What has been provided for the first time vide Circular No. 39/2001 cannot be permitted to be applied in the garb of clarification with retrospective effect from the date the Circular Nos. 68/97 and 39/99 came into effect. Conclusion (i) Circular No. 39/2001 is effective prospectively. (ii) The orders dated 29th October 2002 (Exhibits A-1 to A-7) are quashed and set aside. (iii) The Respondent No. 2 is directed to process the applications made for fixation of brand rate of drawback accordingly.
Issues Involved:
1. Validity of Circular No. 39/2001 and its retrospective application. 2. Rejection of the petitioner's brand rate applications based on Circular No. 39/2001. Summary: Issue 1: Validity of Circular No. 39/2001 and its retrospective application The petitioner challenged Circular No. 39/2001, dated 6th July 2001, arguing it prejudicially affected their rights by being applied retrospectively. The petitioner contended that the circular could not amend previous circulars with retrospective effect, thereby taking away vested rights. The court noted that Circular No. 39/2001 was not clarificatory but introduced new conditions, thus it could not be applied retrospectively. The court held that the circular must be effective prospectively and not retrospectively, as retrospective application would be legally impermissible and would unjustly affect the exporters who had already made commitments based on the earlier circulars. Issue 2: Rejection of the petitioner's brand rate applications based on Circular No. 39/2001 The petitioner's brand rate applications were rejected based on Circular No. 39/2001. The court found that the petitioner was eligible for the brand rate of drawback under Circular No. 39/1999, as they did not avail Modvat credit for the relevant period. The court quashed the orders dated 29th October 2002 (Exhibits A-1 to A-7) that rejected the petitioner's applications and directed the respondent to process the applications for fixation of brand rate of drawback accordingly. Conclusion: (i) Circular No. 39/2001 is effective prospectively. (ii) The orders dated 29th October 2002 (Exhibits A-1 to A-7) are quashed and set aside. (iii) The Respondent No. 2 is directed to process the applications made for fixation of brand rate of drawback accordingly. No costs.
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