2013 (10) TMI 269 - AT - Customs

CENVAT Credit Duty drawback - Revenue was of the view that for claiming All Industry Rate as claimed by the applicant, the goods should have been manufactured without availing the benefit of cenvat credit scheme Held that - The Board has decided to accept the recommendation of the Drawback Committee in this regard - merchant exporters who purchase goods from the local market for export shall henceforth be entitled to full rate of duty drawback (including the excise portion) - However, such merchant exporters shall have to declare at the time of export, the name and address of the trader from whom they have purchased the goods - They shall also have to declare that no rebate (input rebate and also the final product rebate) shall be taken against the Shipping bills under which they are exporting the goods - The merchant exporters who purchase goods from traders may therefore furnish the declaration, at the time of export, in the format annexed with this circular. - This is issued in supersession of para (vi) of Circular No. 64/98-Cus dated 01.09.1998. There was strong merit in the arguments of the Ld. AR inasmuch as we find that the restriction in condition 13 (i) of Notification 103/2008-Cus(N.T) is with reference to the goods manufactured and not with reference to the person who is claiming drawback - Further in the present situation, if the manufacturer was to export the goods and claim drawback he would not have been eligible to get the drawback (excepting the customs component) - However, considering that the customs component would have been available to the exporter we are not inclined to call for 100% pre-deposit of the amount confirmed - Considering the overall facts of the case and law applicable, applicants 1 and 2 was directed to make a pre-deposit of 50% of the drawback amounts demanded from each of them - Subject to such pre-deposit the balance dues arising from the order from these appellants and the other two appellants shall be waived for admission of the appeals and there shall be stay on collection of such dues during pendency of the appeals Partial Stay granted.

Summary

Issues:
- Stay petitions for exporters regarding duty drawback amounts demanded back along with interest and penalties.
- Interpretation of conditions for claiming duty drawback under Notification 103/08-Cus.
- Application of Circular No.16/09-Cus regarding All Industry Rate of duty drawback for merchant exporters.
- Examination of declarations made by exporters and manufacturers for claiming duty drawback.
- Compliance with proviso to Rule 3 of Drawback Rules, 1995.

Analysis:
1. Stay Petitions and Appeals: The judgment dealt with four stay petitions from exporters regarding the demand of duty drawback amounts, interest, and penalties. The applicants were involved in exporting goods and had claimed duty drawback. The dispute arose due to the interpretation of conditions under which duty drawback could be claimed.

2. Interpretation of Conditions: The applicants argued that they were eligible for All Industry Rates of duty drawback as they had not availed Cenvat credit. They relied on Notification 103/08-Cus and Circular No.16/09-Cus to support their claim. The Revenue, however, contended that the goods were manufactured using Cenvat credit, making them ineligible for the claimed rates.

3. Circular No.16/09-Cus: The circular addressed the issue of duty drawback for merchant exporters sourcing goods from the market. It emphasized that full duty drawback, including the excise portion, could be granted to such exporters without requiring Cenvat non-availment declarations. The applicants sought to benefit from this circular to support their claim for All Industry Rates.

4. Declarations for Duty Drawback: The declarations made by exporters and manufacturers played a crucial role in determining the eligibility for duty drawback. The Revenue pointed out discrepancies in the declarations filed by the applicants, highlighting the issue of incorrect or misleading information provided in the process of claiming duty drawback.

5. Compliance with Drawback Rules: The judgment considered the proviso to Rule 3 of the Drawback Rules, 1995, to assess the compliance of the exporters with the rules governing duty drawback claims. The court found that the restriction on claiming duty drawback without availing Cenvat credit applied to the goods manufactured, not just the exporters, leading to a decision on the pre-deposit amount required from the applicants.

In conclusion, the judgment addressed the complex issues surrounding duty drawback claims, including the interpretation of legal provisions, compliance with circulars and rules, and the verification of declarations made by exporters and manufacturers. The decision provided clarity on the eligibility criteria for duty drawback and required the applicants to make a pre-deposit to proceed with their appeals while granting a stay on the collection of the remaining dues during the appeal process.