1999 (7) TMI 314 - AT - Central Excise

Summary

Issues:
Exported goods refund claim rejection based on drawback availed and excise duty paid on inputs.

Analysis:
The appellant exported synthetic organic dyes and sought a refund of excise duty paid on inputs under the second proviso to Rule 57F(3). The claim was rejected by the Assistant Collector and confirmed by the Collector (Appeals) because the appellant had already claimed and paid drawback under the Drawback Rules on the exported goods, making the refund claim ineligible under the second proviso to Rule 57F(3.

The common contention in both appeals is that the drawback paid related to customs duty, not excise duty on the inputs used in manufacturing. The second proviso to Rule 57F(3) prohibits refund of duty taken as Modvat credit if the manufacturer avails of drawback under the Customs and Central Excise Duty (Drawback) Rule, 1971, or claims duty rebate under Rule 12A, specifically for excise duty paid on the inputs used in manufacturing the exported goods.

The judgment highlighted that not all drawbacks paid are related to Central Excise duty. Section 75 of the Customs Act, 1962 allows drawback on customs duties chargeable on imported goods used in manufacturing exported goods. The Customs and Central Excise Duties (Drawback) Rules, 1995 determine the drawback rates, considering credits taken under the Customs Act or Central Excise and Salt Act. The judgment emphasized the importance of determining whether the drawback paid is attributable to basic customs duty or additional customs duty, or central excise duty on inputs.

The Tribunal clarified that if the drawback paid is related to basic customs duty, not central excise duty on inputs, the credit under Rule 57F(3) cannot be denied. The judgment criticized the Collector (Appeals) for not considering whether the drawback on synthetic organic dyes was solely on customs duty, excluding central excise duty on inputs. The Tribunal directed the Assistant Commissioner to reevaluate the claim, allowing the appellant to provide evidence supporting their contention and consulting the Directorate of Drawback if needed.

In conclusion, the appeals were allowed, and the impugned order was set aside. The case was remanded to the Assistant Commissioner for a fresh determination on the refund claim, ensuring a fair opportunity for the appellant to substantiate their claim with necessary evidence.