2003 (1) TMI 154 - AT - Customs

Summary

Issues Involved:
1. Eligibility for Duty Drawback on Exports by LSLL.
2. Compliance with EXIM Policy and Customs Notifications.
3. Liability for Confiscation and Penalty under Customs Act, 1962.
4. Appropriation of Pre-deposit and Recovery of Duty Drawback.

Issue-wise Detailed Analysis:

1. Eligibility for Duty Drawback on Exports by LSLL:
The appellants, LSLL, filed 103 Shipping Bills for the export of readymade garments claiming duty drawback under sub-serial No. 62.01 of the table annexed to Government of India Notifications No. 67/98-Cus. (N.T.) and 31/99-Cus. (N.T.). The goods were manufactured by 100% EOUs, M/s. Tropicate Textiles Ltd. and M/s. Sara International Inc., from raw material supplied by LSLL. The Commissioner ordered the recovery of Rs. 93,14,838.97 already paid as duty drawback and rejected the pending claim of Rs. 28,44,812/-. However, the Tribunal found that LSLL was the owner, manufacturer, and exporter of the garments, and the goods were not manufactured in a Customs bonded warehouse under Section 65 of the Customs Act. Therefore, LSLL was entitled to the duty drawback as claimed.

2. Compliance with EXIM Policy and Customs Notifications:
The Commissioner alleged that LSLL did not comply with Para 3.54 of the EXIM Policy and Circular No. 74/99 by not indicating the names of the EOUs in the Shipping Bills and invoices. The Tribunal found that since LSLL was considered the manufacturer and exporter, the requirement to mention the EOUs' names did not apply. The Tribunal also noted that the goods were fabricated from duty-paid raw materials supplied by LSLL and not from goods deposited in a Customs warehouse. Thus, the exclusions under Paras 2(a) and 2(c) of the General Notes to Notifications No. 67/98-Cus. (N.T.) and 31/99-Cus. (N.T.) did not apply.

3. Liability for Confiscation and Penalty under Customs Act, 1962:
The Commissioner held the goods liable for confiscation under Section 113(i) of the Customs Act for claiming ineligible drawback and imposed a penalty of Rs. 1,21,59,651.97 under Section 114(iii). The Tribunal found that the goods were correctly declared, and the non-mention of the EOUs' names did not constitute a material discrepancy. The Tribunal also found that the goods were not manufactured by an EOU and thus were not subject to the exclusions that would render them ineligible for drawback. Consequently, the Tribunal did not uphold the liability for confiscation or penalty.

4. Appropriation of Pre-deposit and Recovery of Duty Drawback:
The Commissioner ordered the appropriation of Rs. 20,28,690/- paid as a pre-deposit towards the excess drawback claimed. The Tribunal, however, set aside the Commissioner's order, finding no grounds for the recovery of the duty drawback already paid or for the appropriation of any amounts in lieu thereof. The Tribunal allowed the appeal with consequential benefits to LSLL.

Conclusion:
The Tribunal set aside the Commissioner's order, finding that LSLL was entitled to the duty drawback claimed, as they were the manufacturer and exporter of the garments. The Tribunal also found no basis for the confiscation of goods or imposition of penalties and allowed the appeal with consequential benefits.