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TMI Blog2013 (7) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... ctors, viz. IC engines, Transmission assembly, sheet metal components etc., classifiable under Ch. 84 & 87 of the Central Excise Tariff. The tractor parts manufactured and used within the factory of manufacture for manufacture of goods i.e. tractors of Heading No. 8701 are wholly exempt from payment of duty w.e.f. 9-7-2004. Therefore parts of tractors manufactured and cleared outside for home consumption are liable to Central Excise duty. The tractors, as well as parts of tractors, referred above as "aggregates" by the applicant are exempted from payment of duty, vide Notification No. 6/2002-C.E., dated 1-3-2002. The applicants chose to pay the duty on the aggregates used in the manufacture of tractors exported. The applicants filed their claim for drawback of the duty paid on inputs used in the manufacture of tractors exported. With respect to the claim for the drawback of the duty paid on aggregates used in the manufacture of tractors exported, the adjudicating authority rejected the applicants claim for drawback of the duty on "aggregates" on the ground that the applicant was not liable to pay duty on the aggregates, and as such their claim has not been considered for allowing d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cture of tractors, is a conditional notification and not absolutely notification. 4.4 A close reading of Section 5A(1) and Section 5A(1A) would clearly show that the Central Government has power, by way of issuing notification, to exempt either absolutely or subject to conditions as may be specified in the Notification. In other words exemption granted can be either absolutely (Unconditional) or subject to certain conditions stipulated in the notification itself. However, Section 5A(1A) would apply only in the case where the exemption from the whole of the duty is granted absolutely i.e. unconditionally. When the notification grants exemption from the whole of the duty by stipulating the condition in the notification then such notification is not covered under Section 5A(1). The excisable goods covered by full exemption subject to certain condition are not covered by the bar provided under Section 5A(1A). 4.5 The exemption granted to parts of the tractor by Sl. No. 296 of Notification No. 6/2006-C.E. is subjected to the condition that they are captively consumed in the manufacture of tractor. Therefore the exemption granted under this notification to the parts of tractors is a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the present case, it is as undisputed fact that the duties had been paid on the aggregates. 4.9 By M.F. (D.R.) Circular No. 14-Cus./2003, dated 6-3-2003 issued from F.No. 609/32/2003-DBK, it has been clarified that the exporter becomes eligible to drawback on substantiating that the goods have been exported, that the inputs used in such exported goods are duty paid and that he has not availed Cenvat credit of such duty paid. In the instant case, it is established that the duty paid aggregates have been used in the manufacture of tractors exported and no Cenvat credit thereon has been availed. 4.10 By Circular No. 510/06/2000-CX., dated 3-2-2000 issued from F.No. 209/29/99-CX-6, the CBEC has clarified that the rebate sanctioning authority should not examine the correctness of assessment but should examine only the admissibility of rebate of the duty paid on the export goods covered by a claim. 4.11 The applicant is entitled to the duty drawback on the inputs used in the tractors exported in August 05 under DEPB-cum-Drawback Shipping Bills. The applicant submits that Circular No. 39/2001-Cus., dated 6-7-2001 [based on which Drawback of the duty paid on indigenous inputs speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00, indicates lack of knowledge, on the part of the Commissioner (Appeals), about the provisions of law pertaining to Duty Drawback. The Applicant submits that all claims for Duty Drawback on the goods exported are to be filed under the provisions of Rule 6/7 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995, read with CBEC Circular No. 14/2003-Cus., dated 6-3-2003, irrespective of the scheme under which the said goods are exported. Circular No. 39/2001-Cus., dated 6-7-2001 does not provide for filing of drawback claims in respect of inputs used in goods exported under DEPB-cum-Drawback Shipping Bills can be allowed. Similarly, Circular No. 33/2000-Cus., dated 2-5-2001 highlights the salient features of the DFRC Licence announced in the Exim Policy 2000-2001 and lays down the procedure to be followed for export and import under DFRC Licence. In the circumstances, the applicant submits that the Commissioner (Appeals) has erred in arriving at the conclusion that a claim under DEPB-cum-Drawback Shipping Bill is to be filed as per the directions contained in Circular No. 39/2001-Cus., dated 6-7-2001 and not under Circular No. 33/2000-Cus., dated 2-5-2000. Conse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufactures tractors and parts of tractors viz. IC engines, transmission assembly and sheet metal components referred together as aggregates, classifiable under Chapters 84 & 87 Central Excise Tariff which are exempted from payment of Central Excise duty vide Notification No. 6/2002-C.E., dated 1-3-2002 as amended by Notification No. 23/2004-C.E., dt. 9-7-2004 as the parts are used for captive consumption. However applicants choose to pay duty on part of tractors (aggregates). They subsequently exported tractors and filed application of fixation of brand rate of drawback in r/o duty paid on such aggregates. The original authority rejected their drawback brand rate fixation application on the grounds that 'aggregates' being part of tractors are exempted from payment of duty vide Notification No. 6/2002-C.E., dated 1-3-2002, as amended and duty was not required to be paid. The impugned order also does not consider Rs. 20,45,199/- paid on indegeneous inputs specified in relevant SION used in the manufacture of tractors exported under DEPB-cum-drawback and DFRC-cum-drawback Shipping Bills, Rs. 9,12,026/- paid on inputs not imported under DFRC scheme, Rs. 93,032/- paid on inputs not im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le services used as input services in the manufacture of such goods. This rules stipulates that rebate of duty chargeable on said materials is to be given a drawback. In case the duty is not chargeable, the question of drawback does not arise. Applicant had no option to pay duty on aggregates/materials used in the manufacture of tractors exported, in terms of Section 5A(1A) of Central Excise Act, 1944. Therefore Commissioner (Appeals) has rightly denied the fixation of drawback on this ground. 9. As regard to issue of applicant's entitlement of duty drawback on the inputs used in the tractors exported under DEPB-cum-Drawback Shipping Bills, Government notes that such availment are governed by Board's Circular No. 39/2001-Cus., dated 6-7-2001. As per Circular No. 39/2001, the facility of brand rate of drawback for export made under DEPB-cum-Drawback Shipping Bills shall be allowed only under following conditions :- (a) where the additional duty of customs has been paid in cash on inputs imported under DEPB Scheme used in export products and no Modvat (Cenvat) has been availed for such additional duty paid; and (b) Where excise duty is paid on indigenous inputs not spe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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