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TMI Blog2014 (10) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... s such, the respondent were not eligible for AIR of drawback under Rule (3). The applicant has also declared in their application for brand rate of drawback and shipping bills that the goods have been exported for claim of brand rate of drawback - it is ample clear that in case of non-availability of AIR of drawback simultaneously with advance license scheme, the exporter can avail benefit of brand rate of drawback under Rules 6 or Rule 7 of the Drawback Rules, 1995. It is unambiguously clear that brand rate of drawback under Rule 6 can be filed only where amount or rate of drawback has not been determined. Government notes that though the engines are figuring in the relevant All Industry Drawback Schedule but the said AIR rate is not applicable to said goods exported in discharge of export obligation against advance authorization in terms of Clause (b) of Note 7 of Notification No. 36/2005-Cus. (N.T.), dated 2-5-2005. As such, the condition of Rule 6 are not violated and respondent case cannot be taken out of the purview of said rule as held by Commissioner (Appeals) also. Commissioner (Appeals) has given detailed finding on the issue and applicant department has not counter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed any drawback claims under Rule 3 ibid. Rather, they filed for determination of drawback rates under Rule 6(1)(a) and the rates were determined by the jurisdictional Commissionerate under Rule 6(1)(b) of the Drawback Rules. They had misdeclared that their export products have not been covered Rule 3 of the Drawback Rules, 1995. Rule 6(1)(a) is applicable only where no amount or rate of drawback has been determined in respect of any goods in terms of Rule 3 ibid. Even if the All Industry Drawback Rates had been notified in respect of the goods exported by M/s. Cummins India, under Rule 3 of the Drawback Rules, they had the option to go for determination of the amount or rate of drawback under Rule 7 provided the rate or amount determined under Rule 3 was less than four-fifth of the duties or taxes paid on the raw materials or components or input services used in the production or manufacture of goods. But Cummins India did not opt for determination under Rule 7 either. Therefore, it appears that the exporters have incorrectly applied for, claimed and received drawbacks under Rule 6 ibid. Even the declarations made in the Proforma of the application against Sr. Nos. 9 and 10 were f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gust 2008, dated 17-9-2008 they have declared that they are availing Cenvat credit under Rule 3 of Cenvat Credit Rules, 2004. Therefore, they are not eligible for Drawback on Central Excise portion have violated the Brand Rate Letter conditions as above. Hence, drawback sanctioned disbursed by Assistant Commissioner, Customs, ICD Dighi, Pune is recoverable under Rule 16 of the Drawback Rules with interest as applicable. 4.2 Further, in terms of Serial No. 7 of General Notes to the Notification No. 36/2005-Cus. (N.T.), dated 2-5-2005, drawback rates as specified in All Industry Rates (Under Rule 3) shall not be applicable to the goods exported in discharge of export obligation against an Advance License issued under duty exemption scheme of the relevant EXIM policy. Since the IC Engines exported by CIL during said period by availing of facilities under Duty Exemption Scheme (Advance Authorization Scheme) hence CIL were not eligible for any Drawback of Customs Duty portion as they cleared the raw materials without payment of Customs Duty under Duty Exemption Scheme. In terms of para 4.1.14 of the Foreign Trade policy (FTP), In case of an Advance Authorization, drawback shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llocation on account of input services; in fact, the exporters have availed of duty and tax credits on account of CVD paid on duty-paid imports, central excise duty paid on domestic procurements of raw materials and input and input service tax credit availed of on services procured for manufacture and export of export products. Ideally and logically, they should have received an amount that is far less than what they would have received under Rule 3 since the AIR rates themselves represent duty suffrage at an average rate on the All Industry Rate of Input-Output Norms. 4.5 It may be mentioned that Rule 3 of Drawback Rules notifies specified goods and maximum applicable rate of Drawback for those specified goods. Rule 3 provides refund of average amount of duty paid on materials of any particular or any description of goods used for the manufacture of export goods and does not envisage refund of amount calculated by the individual exporter for those specified goods which is also held by Hon ble Supreme Court in the case of M/s. Chemicals Fibres of India v. Union of India - 1991 (54) E.L.T. 3 (S.C.) All Industry Rate of Drawback under Rule 3 is prescribed for goods and class of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C.B.E. C. has specifically clarified that the drawback claim shall be allowed to the exporters under Rule 6 or Rule 7 of Drawback Rules in case if the exporters have availed the benefit of Advance Authorization while procuring partial the inputs and part of the inputs have suffered the incidence of duty. In view of the aforesaid circular the respondents were allowed to avail the drawback either under Rule 6 or Rule 7 of Drawback Rules. Accordingly, the respondents have correctly filed and received the drawback claim under Rule 6 of Drawback Rules. 5.3 It is submitted that even in the present revision application, the Department is taking two contrary arguments. In para 1 of the grounds of application, it is the contention of the Department that the respondents are entitled to claim drawback under Rule 3 whereas in para 2, it contends that the respondents are not entitled to claim All Industry Rate of Drawback under Rule 3 inasmuch as the respondents have availed the benefit of duty exemption while importing its inputs. This was precisely the case of the department even in the show cause notice as well as in the Order-in-Original which has been rightly set aside by the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e examined. The respondents have exported IC engine Model KTA-50 valued at ₹ 39,06,090.35/- (FOB Value) under this shipping bill dated 25-8-2008 All industry rate of drawback @ 1.3% on the FOB value declared in the shipping bill dated 25-8-2008 comes to ₹ 50,779.17/-. Whereas, as per the brand rate applications already filed under Rule 6 (which has been verified and approved), the quantum of duties suffered on the inputs used in the manufacture and export of the above model of IC engine is ₹ 61,237.98/- Thus, the difference between the All Industry Rate of Drawback and actual duties suffered is ₹ 10,458.80 /-, which is 20.59% of the actual duties suffered. Thus the all industry rate of drawback available for the above model of IC engine is less than 80% of the actual duty suffered on the inputs used in the said IC engine. 5.7 The Deputy Secretary (Drawback) in the Ministry of Finance, vide letter dated 6-11-2006 addressed to the Commissioner of Central Excise, Delhi-II has clarified that if the exporter-assessee claims drawback wrongly under Rule 6, but if the drawback is otherwise available under Rule 7, the department should grant drawback under Rule 7, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the revision application. 5.10 In any case, the sanction of drawback under Rule 6 has attained finality. No review of the drawback already sanctioned has been done in the present case. Hence recovery of drawback already determined, sanctioned without reviewing/challenging the order passed under Section 51 of the Act, on the shipping bills is not sustainable. Similarly, the orders fixing the drawback and the orders sanctioning the drawback have also not been reviewed or challenged. In other words, there is an order determining and sanctioning the drawback in the present case, albeit under Rule 6. These orders have not been reviewed or challenged by the department. In this regard, reliance is placed on the decisions of the Supreme Court in Collector v. Cotspun Ltd. - 1999 (113) E.L.T. 353 (S.C.) and Priya Blue Industries Ltd. v. Commissioner - 2004 (172) E.L.T. 145 (S.C.). 5.11 Even if it is assumed that the department is right that the respondents had not even mentioned that their product is covered in the All Industry Rate of Drawback (though it is not available due to the technical reason discussed above), it is submitted that once there is no dispute on the descriptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided the case in favour of respondent. Now, the applicant department has filed this revision application on grounds mentioned in para (4) above. 9. Government observes that the application for claim of drawback was filed by the respondent for brand rate of drawback under Rule 6 of the Drawback Rules, 1995. The respondent contended that though their goods were mentioned in list of items eligible for AIR of drawback under Rule (3), they were not entitled for availment of AIR in terms of para 7(b) of the Notification No. 36/2005-Cus. (N.T.), dated 2-5-2005, as amended. The said para 7(b) of the Notification No. 36/2005-Cus. (N.T.) reads as under : 7. The rates of drawback specified in the said Schedule shall not be applicable to export of a commodity or product if such commodity or product is - (a) (b) manufactured or exported in discharge of export obligation against an Advance Licence issued under the Duty Exemption Scheme of the relevant Export and Import Policy and the Foreign Trade Policy : Provided that where exports are made against Advance Licences issued on or after the 1st April, 1997, in discharge of export obligations in terms of Notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d therein, for the duty paid inputs used in the manufacture of export goods. From perusal of above said Circular, it is ample clear that in case of non-availability of AIR of drawback simultaneously with advance license scheme, the exporter can avail benefit of brand rate of drawback under Rules 6 or Rule 7 of the Drawback Rules, 1995. 9.2 Government finds that in this case the respondent has filed brand rate of drawback under Rule 6 of the said Drawback Rules, 1995, while the department is contending that he should have filed brand rate of drawback claim under Rule 7. Government finds that Rule 6 of the DBK Rules, 1995 reads as under : 6. Cases where amount or rate of drawback has not been determined. - (1)(a) Where no amount or rate of drawback has been determined in respect of any goods, any manufacturer or exporter of such goods may, within sixty days from the date relevant for the applicability of the amount or rate of drawback in terms of sub-rule (3) of Rule (5), apply in writing to the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, having jurisdiction over the manufacturing unit, of the manufacturer or, of the supporting manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e All Industry Rate of duty drawback notified is considered by the exporter as inadequate to compensate the duties or tax suffered on inputs used in the manufacture of export product. However, all the conditions and guidelines including the time limit prescribed for determination of drawback rate are the same for the claims made under Rule 6 Rule 7 of the said Rules. 4. The Drawback Schedule 2005-2006 was notified aligning tariff items in the Schedule with those in the Customs tariff. In this elaborate exercise, the rates for certain tariff items could not be determined either due to non-availability of data, as in the case of tariff item in dispute i.e. 3002 or consciously omitted to prescribed rate, as in the case of tariff items in Chapter 71. Thus, insofar as this particular tariff item is concerned, i.e. tariff item 3002, it is informed that the rate of drawback has not been determined by the Ministry. 5. It may be noted that all the conditions to be compiled with for determination of the drawback rate under Rule 6 Rule 7 are the same and therefore, the claim should not be rejected only on the ground that the claim was filed under Rule 6 instead of Rule 7. Even the B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27, for manufacture and export of IC engines. The Appellant also informed that in the IC engines exported out of India, they would be using both duty paid and duty free inputs. Sl. No. 16 of Form ANF 4A requires the applicant to indicate details of other materials to be used in the export product and sought to be imported/procured from sources other than the licence, on which drawback benefit is to be availed (not to be filled if drawback benefits are not being claimed). The Appellant imported inputs which were covered by the advance authorization without payment of duty. In addition, the Appellant imported duty paid inputs (which were listed in Sl. No. 16 of the application for obtaining the advance licence. These inputs (both duty paid as well as duty free inputs) were used in the manufacture of IC engines. The IC engines so manufactured were exported under the advance authorization-cum-drawback scheme/shipping bills. After export of the goods, the Appellant applied to the jurisdictional Central Excise authorities for fixation of drawback under Rule 6 of Drawback Rules. In Sl. No. 9 of the Application Form for fixation of brand rates, the Appellant have indicated that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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