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2018 (5) TMI 620 - HC - CustomsClaim of Duty Drawback on supplies from DTA to EOU - deemed export drawback - supplier being claim cenvat credit, the method / route for claiming duty drawback - via fixation of Brand Rate - or via All Industry Rate of Duty Drawback - The petitioner is insisting that it is entitled to claim the duty drawback as per Column B of the All Industry Rate of Duty Drawback Schedule notified by the Department of Revenue, whereas, the respondents are of the view that the petitioners can obtain refund only after submission of documentary evidence in respect of the customs duty paid and getting the same fixed through the route of brand rate fixation. - Scope of policy circular dated 30th October, 2013 Held that - Circular dated 30th October, 2013 seeks to interpret the Rules to mean that an exporter once having availed the All Industry Rate of drawback at the time of export, cannot file an application for determination of the Brand Rate of drawback under Rule 7. As discussed earlier, on a plain reading of the Drawback Rules, we do not find any such prohibition as is sought to be culled out by the CBEC in its Circular dated 30th December, 2011. The CBEC whilst clarifying the said Drawback Rules, has imposed limitations/restrictions which are clearly not provided for in the Rules and has the effect of whittling down the Drawback Rules. Under the garb of clarifying the Rules, the CBEC cannot incorporate a restriction / limitation, which does not find place in the Drawback Rules. In the applications made by the petitioner, it has very clearly stated that it has purchased partial polyester yarn during the period for which the application for duty drawback is made by making payment of excise duty and education cess from the two suppliers. That is treated as deemed export and entitled for benefit of duty drawback at All Industry Rate. The drawback is 4% as specified in Box A when no CENVAT Credit is availed and 4% in Box B when CENVAT Credit is availed. When the same rate is presented in Box A and B , the exporter is entitled for drawback and the issue of input credit availed or not is not relevant. Once there was no dispute about the entitlement of the petitioner, then, we do not see why the petitioners were denied the benefit. The petitioner has also pointed out, and to our mind, rightly, in the application as also the grounds of this petition that they are otherwise entitled to drawback at the rate mentioned in Column B . That could not have been denied by relying upon the policy circular dated 30th October, 2013 and relying upon Para 805 of FTP 2009-2014 In any event, the rejection is not in tune with the policy and the HBP. An unnecessary and uncalled for controversy was generated only because of the route chosen by the petitioner. We do not see how merely for this alleged fault or deficiency could the whole claim have been denied. The conclusion of the respondents that the refund of duty drawback for customs duty on inputs can be made only by way of brand rate of fixation and hence, the claim for refund as per Column B of the All Industry Rates of Duty Drawback Schedule is rejected cannot be sustained. Petition allowed - decided in favor of appellant.
Issues Involved:
1. Legality of Policy Circular No. 9(RE-2013)/2009-14 dated 30.10.2013. 2. Validity of the order dated 15.02.2017 passed by Respondent No. 3. 3. Entitlement of the petitioner to deemed export drawback at the rate mentioned in Column “B” of the Schedule of the All Industry Rate of Duty Drawback. 4. Interpretation of Para 8.5 of the Foreign Trade Policy (FTP) 2009-2014 and Para 8.3.3 of the Hand Book of Procedures (HBP) Volume-I. 5. Application of the Drawback Rules and the relevant notifications. Detailed Analysis: 1. Legality of Policy Circular No. 9(RE-2013)/2009-14 dated 30.10.2013: The petitioner challenged the Policy Circular No. 9(RE-2013)/2009-14, which clarified that deemed export drawback is not admissible if the facility of CENVAT Credit/rebate is availed. The petitioner argued that this circular was contrary to the provisions enabling duty drawback and beyond the powers of the authorities. The court found that the circular was issued to clarify the existing policy and did not introduce any new prohibition or bar that was not already present in the FTP 2009-2014. 2. Validity of the order dated 15.02.2017 passed by Respondent No. 3: The petitioner contended that the order dated 15.02.2017, which rejected their claim for deemed export drawback, was contrary to law. The court noted that the order was based on the interpretation of Para 8.5 of the FTP and the policy circular. The court found that the order was not in tune with the policy and the HBP, and that the rejection of the claim was unwarranted. 3. Entitlement of the petitioner to deemed export drawback at the rate mentioned in Column “B” of the Schedule of the All Industry Rate of Duty Drawback: The petitioner claimed that they were entitled to drawback at the rate specified in Column “B” of the Schedule, even if CENVAT Credit was availed. The court observed that the FTP and HBP provided for two separate rates of drawback, one for when CENVAT Credit is availed (Column “B”) and one for when it is not (Column “A”). The court held that the petitioner was entitled to claim drawback under Column “B” on production of suitable disclaimers and self-declarations. 4. Interpretation of Para 8.5 of the Foreign Trade Policy (FTP) 2009-2014 and Para 8.3.3 of the Hand Book of Procedures (HBP) Volume-I: The court examined the provisions of Para 8.5 of the FTP and Para 8.3.3 of the HBP. It found that these provisions allowed for the claiming of deemed export drawback at the rates specified in the Schedule of All Industry Rates of Duty Drawback or through the fixation of brand rates. The court concluded that the petitioner had the option to claim drawback at the rate specified in Column “B” of the Schedule. 5. Application of the Drawback Rules and the relevant notifications: The court referred to the Drawback Rules and the relevant notifications, including Notification No. 68/2011-Customs (NT) dated 22nd September, 2011, which specified the rates of drawback. The court held that the petitioner was entitled to the benefit of the rates specified in Column “B” of the Schedule, as the same rate was applicable regardless of whether CENVAT Credit was availed or not. Conclusion: The court quashed and set aside the impugned order dated 15.02.2017 and allowed the petitioner’s claim for deemed export drawback at the rate mentioned in Column “B” of the Schedule of the All Industry Rate of Duty Drawback. The court made the rule absolute in terms of the reliefs sought by the petitioner and held that there would be no order as to costs.
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