2015 (9) TMI 716 - CGOVT - Customs

Fixation of Brand rate Extension of drawback benefit to BCD Adjudicating authority rejected applications for fixation of brand rate under Rule 6 of DBK Rules, 1995 observing that BCD on imported goods was not paid in cash but was debited in DEPB scrip treating it as exempted Commissioner(A) decided case in favour respondent Held that - respondent s application for fixation of brand rate was rejected by original authority while relied upon Board s Notification No. 97/2009 -Cus., and Board s Circular No. 41/2005-Cus. As per notification entitlement of drawback is limited only up to additional duty leviable under Section 3 of Customs Tariff Act against amount debited in DEPB scrip As such, said notification does not extend benefit of drawback of Basic Customs Duty (BCD) against debited DEPB scrip Circular also does not speak about extension of drawback benefit to BCD paid through debit in DEPB scrip Hence, it can be inferred that such benefit of drawback is not eligible for debit in DEPB against BCD Therefore impugned order set-aside Decided against revenue.

Issues:
1. Rejection of brand rate fixation application by the original authority.
2. Interpretation of relevant notifications and circulars regarding duty drawback.
3. Applicability of basic Customs Duty paid through DEPB scrip for brand rate fixation.
4. Comparison of DEPB payment with cash payment for Customs Duty.

Analysis:
1. The revision application was filed against the rejection of the brand rate fixation application by the Commissioner of Customs & Central Excise, Rajkot. The respondent, engaged in the manufacture and export of excisable goods, had applied for brand rate fixation under Rule 6(1)(a) of DBK Rules, 1995. The original authority rejected the application citing that the Basic Customs Duty (BCD) on imported goods was debited in DEPB scrip, which was considered exempted, thus disallowing the brand rate fixation.

2. The applicant challenged the impugned order-in-appeal, citing Circular No. 41/2005-Cus., which clarified that only Additional Customs Duty paid through DEPB was allowable for brand rate of duty drawback. The applicant argued that the scope of the circular did not include the basic Customs Duty debited through DEPB scrip for brand rate fixation. The applicant also highlighted the lack of further clarification from the Board regarding the allowance of basic Customs Duty for brand rate fixation.

3. The government analyzed the relevant notifications and circulars, including Notification No. 97/2009-Cus. and Circular No. 41/2005-Cus., which specified that the entitlement of drawback was limited to additional duty leviable under Section 3 of the Customs Tariff Act against the amount debited in DEPB scrip. The circular explicitly allowed only the CVD Customs Duty paid through DEPB for brand rate of drawback, excluding the BCD paid through DEPB scrip.

4. The government emphasized the strict adherence to statutory wordings, as per the observations of the Hon'ble Supreme Court in previous cases. The Madras High Court decision in Associated Autotex Ancillaries Pvt Ltd. v. Joint Secretary, Ministry of Finance supported the conclusion that only additional Customs Duty paid through DEPB was eligible for brand rate, excluding the benefit for BCD paid through DEPB. Consequently, the government set aside the impugned order-in-appeal and allowed the Revision Application, stating that the applicant did not qualify for brand rate fixation based on the payment method through DEPB scrip.

Judgment:
The government allowed the Revision Application, overturning the impugned order-in-appeal, as the applicant's claim for brand rate fixation based on BCD paid through DEPB scrip was not supported by the relevant notifications and circulars. The decision was in line with the legal interpretations and precedents regarding duty drawback entitlements and payment methods, emphasizing the strict adherence to statutory provisions and specific criteria for benefit eligibility.

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