2002 (3) TMI 76 - CGOVT - Customs

Summary

Issues:
Recovery of drawback from M/s. Sarswati Exports based on Govt. of India Order No. 637/99, application of Customs and Central Excise Duties Drawback Rules, distinction between customs and excise components in drawback, interpretation of Sec. 75 of Customs Act, 1962 regarding realization of sale proceeds for drawback, validity and retrospective application of Rule 16A added in 1995, enforcement of recovery provisions, intention of legislation in providing drawback facility.

Analysis:
The Commissioner of Customs filed a Revision Application against the order setting aside the recovery of drawback from M/s. Sarswati Exports. The applicant argued that there are no separate rules for customs and excise components of drawback, and Sec. 75 of the Customs Act, 1962 mandates realization of sale proceeds for drawback. M/s. Sarswati Exports contended that the Govt. of India's Order No. 637/99 is applicable, emphasizing the distinct authority under Customs Act and Central Excise Act for rebate of duties. They questioned the retrospective application of Rule 16A to recover drawback paid in 1992-93.

The Govt. clarified that the Customs and Central Excise Duties Drawback Rules cover both customs and excise components under a single set of rules. Drawback, defined under Rule 2(a), includes rebates on imported and excisable materials used in manufacturing exported goods. Rule 3 allows drawback subject to Customs Act, Central Excise Act, and these rules, treating drawback as a unified concept without distinguishing between customs and excise components.

Sec. 75 of the Customs Act, 1962 was amended in 1991 to mandate realization of sale proceeds for drawback, with Rule 16A added in 1995 for recovery when export proceeds are not realized. The Govt. cited the Madras High Court's judgment on recovery provisions under the Central Excise Act, emphasizing enforceability from the date of enactment. The Govt. opined that the recovery from M/s. Sarswati Exports in 1999 for exports made in 1992-93 is valid under the law.

Regarding legislative intent, the Govt. highlighted that drawback is an incentive for exporters earning foreign exchange, with realization of sale proceeds being crucial for the facility. The amendment to Sec. 75 aimed to ensure revenue protection, applicable to both customs and excise components. Referring to the Supreme Court's stance on harmonious interpretation of statutes, the Govt. agreed with the Commissioner's submissions, setting aside the order of the Commissioner (A) in favor of the applicant.

In conclusion, the judgment upheld the recovery of drawback from M/s. Sarswati Exports, emphasizing the unified treatment of customs and excise components under the Drawback Rules and the legislative intent behind the Sec. 75 amendment for realization of sale proceeds.