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TMI Blog2012 (10) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... st the order passed by the learned single Judge [2009 (243) E.L.T. 658 (Kar.)] who has declined to interfere with the order passed by the Revisional authority, who has held that the appellants are not entitled to the benefit of Duty Drawback in respect of goods which are manufactured in a 100% Export Oriented Unit. 2. The case of the appellants is that the first appellant is a manufacturer-exporter of ready-made garments. He is entitled to Duty Drawback at the All Industry rate prescribed by the Central Government in exercise of its powers under Section 75 of the Customs Act, 1962 (for short hereinafter referred to as 'the Act') and also in accordance with the Customs and Central Excise Duties Drawback Rules, 1995 (for short hereinafter referred to as 'the Rules'). The second appellant is a 100% EOU. 3. By Circular No. 67/1998-Cus., dated 14-9-1998 to utilize the idle capacity of EOU/EPZ units, the EOU/EPZ units in textile, ready-made garments, agro-processing and granite sectors were permitted to undertake job work from the DTA units, provided the finished products produced by such EOU/EPZ units were exported directly from EOU/EPZ unit itself and these goods are not se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 1-9-1998. There was also a demand for drawback already granted and a proposal for imposing penalty on the appellants under Section 75(2) of the Act read with Section 114(iii). 5. The appellants filed the statement of objections. Thereafter, the dispute was adjudicated by the Additional Commissioner of Customs, Bangalore, who by his Order-in-Original dated 30-6-2000 denied the Duty Drawback and imposed penalty on the appellants. In an appeal preferred by the appellants to the Commissioner (Appeals), following the judgment of the Tribunal in the case of M/s. Leela Scottish Lace Limited reported in 2003 (55) RLT 56 = 2003 (159) E.L.T. 477 (Tribunal), on absolutely identical issue he set aside the order-in-original by his order dated 28-1-2004. The Department preferred a revision petition in terms of Section 129DD before the Joint Secretary Government of India, Ministry of Finance, Department of Revenue, New Delhi. 6. The revisional authority by his order dated 15-12-2008 set aside the order of the Appellate Commissioner and restored the order-in-original. Aggrieved by the same, the appellants preferred Writ Petitions before this Court in W.P. Nos. 5905 & 6482/2009 [20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d only on such determination, he would be entitled to Duty Drawback on the basis of Brand Rate Drawback rate and he is not entitled to Duty Drawback on All Industry rate. Therefore he submits that the order passed by the Revisional Authority as well as the learned Single Judge is strictly in accordance with law and no case for interference is made out. 10. From the aforesaid facts and rival contentions, it is clear that the first appellant is a manufacturer and exporter of ready-made garments. It is also not in dispute that he got the goods manufactured in the second appellant Unit, which is 100% EOU Unit by supplying duty paid raw materials to EOU Unit. After manufacturing, those goods were directly taken from the second appellant Unit to Port of export and the goods are exported and consequently foreign exchange is earned to the country. Now the question for consideration is, as the first appellant manufactured goods in EOU Unit and thus exported the goods, is he not entitled to Duty Drawback under Section 75 of the Act. If he is entitled to Duty Drawback, is it at the All Industry rate or at Brand rate Drawback rate. In this regard it is necessary to look into the statutor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and the Central Government may, by rules made under sub-section (2), specify the procedure for the recovery or adjustment of the amount of such drawback. (1A) Where it appears to the Central Government that the quantity of a particular material imported into India is more than the total quantity of like material that has been used, in the goods manufactured, processed or on which any operation has been carried out in India and exported outside India, then, the Central Government may, by notification in the Official Gazette, declare that so much of the material as is contained in the goods exported shall, for the purpose of sub-section (1), be deemed to be imported material. (2) The Central Government may make rules for the purpose of carrying out the provisions of sub-section (1) and, in particular, such rules may provide - (a) for the payment of drawback equal to the amount of duty actually paid on the imported materials used in the manufacture or processing of the goods or carrying out any operation on the goods or as is specified in the rules as the average amount of duty paid on the materials of that class or description used in the manufacture or processing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Salt Act, 1944 (1 of 1944) and the rules made thereunder. (c) these rules, a drawback may be allowed on the export of goods at such amount or at such rates as may be determined by the Central Government: Provided that where any goods are produced or manufactured from imported materials or excisable materials or by using any taxable services as input services, on some of which only the duty or tax chargeable thereon has been paid and not on the rest, or only a part of the duty or tax chargeable has been paid; or the duty or tax paid has been rebated or refunded in whole or in part or given as credit, under any of the provisions of the Customs Act, 1962 (52 of 1962) and the rules made thereunder, or of the Central Excise Act, 1944 (1 of 1944) and the rules made thereunder, or of the Finance Act, 1994 (32 of 1994) and the rules made thereunder, the drawback admissible on the said goods shall be reduced taking into account the lesser duty or tax paid or the rebate, refund or credit obtained: Provided further that no drawback shall be allowed - (i) if the said goods, except tea cheats used as packing material for export of blended tea, have been taken into use after manufacture; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bangalore, in respect of points raised by M/s. K & M (Exports) Unit II, is recorded as under: "Points raised by M/s. K & M (Exports) Unit II Point 1. -- As per Para 4 of the above circular Govt. has permitted that EOUs to utilise their idle capacity by undertaking job work of DTA unit subject to the condition that the goods so manufactured should be sent directly to the port and not to be set back to DTA. (i) Modalities to be followed in implementing the above. (ii) Confirmation that DTA shall be the exporter who will file regular DBK shipping bill and that the DBK should be eligible for full all industry rate of drawback for such export. Reply (i) In case of EOU undertaking job work and such goods being exported, the existing procedure for removal of goods for export from an EOU to gateway ports shall be followed in this case also. (ii) The owner of the goods shall file the shipping bill and not the EOU unit (job worker). The benefits, if any, of the export shall accrue to the owner of the goods." 13. In the Circular No. 74/99, dated 5-11-1999 dealing with manufacture of goods in EOU Unit as job work and Drawback, it is stated as under: "It has been brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Guiding principle is, it should have been manufactured or processed in India and exported. The Circular 67/98 was issued only to enable EOU Units to overcome the problems which they were facing, so that, instead of keeping their machinery idle, they were permitted to accept job work so that the capacity is utilized and they are able to over come the recession in the world market. It is by virtue of the said Circular, the EOU undertook the job work. The Circular makes it very clear that if the idle capacity of EOU/EPZ Units is utilized and the textile, ready-made garments, agro-processing and granite sectors undertakes job work from the DTA Units, then the finished products produced by such EOU/EPZ Units will have to be exported directly from EOU/EPZ Unit itself and these goods will not be sent back to the DTA. The reason is obvious. The appellant's product does not belong to EOU. It belongs to DTA and in fact export is done in the name of DTA. Once DTA exports the manufactured goods and if they have paid duty on raw materials, then, under Section 75, they are eligible for Duty Drawback. The said right conferred in the statute cannot be taken away by issuing circulars, which runs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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