2024 (12) TMI 962 - AT - Customs

100% EOU - Rejection of application for determination of brand rate for goods exported by them under rule 6 of Customs, Central Excise Duties and Service Tax Drawback Rules, 2017 - rejection on the ground that the application was barred by limitation of time prescribed therein without reference to the relevant date as appropriate to the circumstances - HELD THAT - There is no doubt that the application for brand rate was preferred by appellant herein well after the export of the goods. But it may not be ignored that claim for drawback or, for that matter, option exercised for separate drawback rate until after eligibility was attained upon conversion. These could have been converted from the existing bills for exports under the export oriented unit (EOU) to scheme of the Foreign Trade Policy (FTP) or to that under claim for drawback only after the unit had been delicensed as export oriented unit (EOU) ; Consequently, the export would have to be deemed to have taken place only on the date of conversion; amendment of shipping bill/conversion of shipping bill under section 149 of Customs Act, 1962 would be an exercise in futility absent deeming the date of conversion as date of export under section 51 of Customs Act, 1962. The inappropriate interpretation of limitation by the jurisdictional Commissioner of Customs had led to rejection of the claim for brand rate. As the deemed date of extension stands altered owing to its necessity before any further processing can be done, the Commissioner of Customs would need to ascertain compliance with rule 7 of Customs and Central Excise Duties Drawback Rules, 2017 for the purpose of initiating the disposal of application which includes consideration of the ground for condonation of delay. The impugned order of rejection set aside and the applications are directed to be placed once again before the competent authority to determine the limitation period for application for brand rate. Appeal allowed by way of remand.

Issues: Application for determination of 'brand rate' rejected on the ground of limitation.

Analysis:
The appellant, an export-oriented unit (EOU), applied for exiting the scheme under the Foreign Trade Policy (FTP) to transfer to the Export Promotion Capital Goods (EPCG) scheme. During this transition, they continued to manufacture and export goods. The final 'debonding' order was issued by the jurisdictional Development Commissioner after obtaining a 'no due certificate' towards customs or excise duties. Subsequently, the appellant sought to convert shipping bills for exports during the transition period to claim drawback or fulfill the scheme. The rejection of the application for 'brand rate' was based on it being filed beyond the stipulated time limit from the date of respective 'let export order (LEO)' as per the Customs, Central Excise Duties, and Service Tax Drawback Rules, 2017.

The Customs, Central Excise Duties, and Service Tax Drawback Rules, 2017 operationalize section 75 of the Customs Act, 1962 for granting drawback on exports. These rules provide for the determination of a separate rate of drawback for exporters upon application subject to specified conditions. The deadline for filing such applications is three months from the 'relevant date' or an extendable period by the Assistant Commissioner of Customs/Principal Commissioner of Customs. The rejection was based on the application being filed beyond the condonable period, considering the date of export permitted under section 51 of the Customs Act, 1962.

The Tribunal noted that the application for 'brand rate' was filed after the export of goods, but emphasized that the conversion of shipping bills for drawback claim or separate drawback rate could only occur after the unit had been delicensed as an EOU and the export date deemed to be the date of conversion. The Tribunal highlighted the necessity to consider the date of conversion as the date of export under section 51 of the Customs Act, 1962. The Tribunal found the jurisdictional Commissioner's interpretation of the limitation to be inappropriate, leading to the rejection of the brand rate claim. Consequently, the impugned order was set aside, and the applications were directed to be reconsidered by the competent authority to determine the limitation period for the brand rate application.

In conclusion, the appeal was allowed by way of remand, emphasizing the need for a proper assessment of the limitation period for the brand rate application in accordance with the Customs and Central Excise Duties Drawback Rules, 2017.

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