2013 (8) TMI 353 - CGOVT - Customs

Condonation of Delay - Held that - There were sufficient cause for condonation of the delay - their excise consultant had met with a severe accident and there consultant was not well therefore they could not draft revision applications in time - One medical certificate was also submitted. Fixation of Brand rate of drawback - Revenue rejected the application for fixation of brand rate of drawback under Rule 6 on the ground that export value was less than the value of imported materials Held that - The requirement of Rules/ Circulars as substantial requirement of law and cannot be considered as minor technical lapse The entire case matters should be considered and proceeded as per the statutory provisions of relevant rules/circulars and on the basis of all the legal documents which stands finalized as per the prescribed procedure following M/s. Paper Products Ltd. v. CC 1999 (8) TMI 70 - SUPREME COURT OF INDIA - The plain reading of statute as clarified and elaborated vide the C.B.E. & C. Manual and circulars were mandatorily binding on the departmental authorities and INDIAN ALUMINIUM COMPANY LTD. Versus THANE MUNICIPAL 1991 (9) TMI 162 - SUPREME COURT OF INDIA - when provisions were stipulated for doing a particular act in a specific manner then it would mean that any deviation therefrom was not permitted at all and it should be performed in that manner itself as per Rules. Purpose of Rule 8(2) of Drawback Rules - Rule 8(2) provides the formula to ascertain value addition as provided under Board Circular No. 14/2003-Cus - the value as per Bill of Entry and Shipping Bill were to be necessarily taken into consideration - Any subsequent negotiations or re-settlement of prices to be paid specifically when the assesse had paid the duties at the time of imports through DFCE licence cannot override the statutory provisions - The orders-in-appeal were therefore upheld for being perfectly legal and proper Revision application Rejected Decided against assesse.

Issues Involved:
1. Negative Value Addition and Rejection of Drawback Claims.
2. Revision of CIF Value and its Impact on Drawback Claims.
3. Validity and Timeliness of Revised Applications for Brand Rate Fixation.
4. Application of Rule 8(2) of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995.
5. Applicability of Judicial Precedents and Circulars.

Detailed Analysis:

1. Negative Value Addition and Rejection of Drawback Claims:
The core issue in all the revision applications was the rejection of the brand rate fixation applications due to negative value addition. The applicants, merchant exporters, imported raw materials under the DFCE Scheme and exported finished goods. However, the export value of these goods was less than the value of the imported materials, leading to the rejection of their drawback claims under Rule 8(2) of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995. The adjudicating authority and the Commissioner (Appeals) both upheld the rejection based on the negative value addition.

2. Revision of CIF Value and its Impact on Drawback Claims:
The applicants argued that due to a worldwide economic recession, they renegotiated the prices of the imported materials with their suppliers, resulting in a lower CIF value. They contended that the revised CIF value should be considered for calculating value addition, which would then be positive. However, the government noted that the CIF value as assessed in the Bill of Entry, which was not reassessed by the competent authority, must be taken into account. Hence, the revised CIF values provided by the applicants were not accepted for the calculation of value addition.

3. Validity and Timeliness of Revised Applications for Brand Rate Fixation:
The applicants filed revised applications for brand rate fixation based on the renegotiated CIF values. However, these revised applications were not submitted within the stipulated statutory time limit. The government emphasized that the original applications were timely, but the revised applications did not meet the statutory requirements and had deficiencies. Consequently, the revised applications could not be treated as valid under Rule 6 of the Drawback Rules, 1995.

4. Application of Rule 8(2) of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995:
Rule 8(2) stipulates that no amount or rate of drawback shall be determined if the export value is less than the value of the imported materials used. The government reiterated that the CIF value assessed in the Bill of Entry must be used for calculating value addition. Since the export value was less than the assessed CIF value, the condition under Rule 8(2) was not satisfied, leading to the rejection of the drawback claims.

5. Applicability of Judicial Precedents and Circulars:
The applicants cited the case of Oracle Infotech (P) Ltd. v. CCE, New Delhi, arguing that the revised CIF values should be considered. However, the government noted that the cited case involved mis-declaration of value and description of goods imported for re-export, which was not applicable in the present cases. The government also referred to the C.B.E. & C. Circular No. 14/2003-Cus. and Supreme Court decisions, emphasizing that statutory provisions and circulars are binding and must be followed.

Conclusion:
The government upheld the orders-in-appeal, finding them legal and proper. The revision applications were rejected for being devoid of merits, as the applicants failed to meet the statutory requirements and could not substantiate their claims with valid reassessments or timely revised applications. The government emphasized the importance of adhering to statutory provisions and the authenticity of legal documents, rejecting any deviations based on subsequent negotiations or technical lapses.

← Previous Next →