2019 (6) TMI 649 - HC - Customs

Duty Drawback - higher All Industry Rate (AIR rate) denied - N/N. 103/2008- Cus (NT) dated 29th August 2008 - HELD THAT - There is no error in the order impugned passed by the learned Tribunal. The purpose of allowing the reduced duty draw back in the hands of the merchant exporter unless he fails to satisfy the authorities of the department that no CENVAT facility has been availed by the manufacturer in respect of the goods exported by the merchant exporter, is to avoid a double benefit in the hands of the exporter/manufacturer of those goods. The duty draw back is allowed for giving incentive to the export to the extent of Excise component only to the extent of Excise duty actually suffered by the goods in question. Since admittedly the appellant M/s. Big Bags International Private Limited in the present case has not purchased the bags in question from the open market but has purchased the same from the manufacturer M/s. Bishan Saroop Kishan Agro Industries (P) Ltd., directly, who has been granted Cenvat credit in respect of the bags in question, the duty draw back available to the exporter was liable to be reduced to that extent - In the absence of any proof of such non availment of Cenvat credit by the manufacturer, obviously the appellant/merchant exporter was therefore entitled only to get the reduced duty draw back after deducting the amount of Cenvat Credit availed by the manufacturer. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Entitlement to custom duty draw back at higher All Industry Rate (AIR rate).
2. Interpretation of Notification No. 103/2008-Cus (NT) dated 29th August 2008.
3. Claiming Cenvat credit and its impact on duty draw back.
4. Applicability of Circular No. 16/2009-Cus dated 25th May 2009 to merchant exporters.
5. Error in the order passed by the learned Tribunal.
6. Reduction of duty draw back due to availed Cenvat credit by the manufacturer.
7. Applicability of Clause 13 of Notification No. 103/2008-Cus (NT) dated 29th August 2008.
8. Merit of the appeal and directions for further proceedings.

Analysis:

1. The judgment concerns the appeal filed by a manufacturer and an exporter against an order passed by the CESTAT regarding the entitlement to custom duty draw back at a higher All Industry Rate (AIR rate). The dispute arose due to the manufacturer availing Cenvat credit, impacting the exporter's claim for higher duty draw back.

2. The interpretation of Notification No. 103/2008-Cus (NT) dated 29th August 2008 was crucial in determining the eligibility for duty draw back. The notification specified conditions for claiming duty draw back, including the non-availment of Cenvat facility for inputs or input services used in the manufacture of export products.

3. The court analyzed the impact of claiming Cenvat credit by the manufacturer on the duty draw back available to the exporter. It emphasized that the purpose of reducing duty draw back was to prevent a double benefit when the manufacturer had already availed Cenvat credit for the goods.

4. Reference was made to Circular No. 16/2009-Cus dated 25th May 2009, which addressed duty draw back for merchant exporters purchasing goods from the open market. However, the court clarified that this circular did not apply to the case at hand where the goods were directly purchased from the manufacturer who had availed Cenvat credit.

5. The court dismissed the argument of error in the Tribunal's order, stating that the reduction in duty draw back was in line with the notification's provisions. It highlighted the requirement for the exporter to prove the non-availment of Cenvat credit by the manufacturer to claim the full duty draw back.

6. The judgment emphasized the significance of Clause 13 of Notification No. 103/2008-Cus (NT) dated 29th August 2008, which mandated exporters to demonstrate the non-availment of Cenvat facility for inputs or services used in manufacturing goods to qualify for duty draw back.

7. Ultimately, the court found no merit in the appeal and dismissed it. However, it granted the appellants the liberty to approach the Tribunal again for unresolved issues, directing the Tribunal to address them in accordance with the law.

This detailed analysis of the judgment covers the issues involved, the court's interpretation of relevant legal provisions, and the reasoning behind the decision, ensuring a comprehensive understanding of the case.