9911796707
TMI Blog2014 (10) TMI 329X X X X Extracts X X X X X X X X Extracts X X X X ..... D/SKD condition with SP and ACC 800 TON Make', falling under Customs Tariff Act Entry No. 8462 91 90 under EPCG License from USA during Oct./Nov., 2008. The applicants vide their letter dated 9-6-2011 informed the department that they have imported the said machinery for installation in their factory for manufacturing of Components of Chassis; that due to unavoidable circumstances, only three machines could be installed in the factory and the remaining press machines were lying uninstalled. Since these press machines could not be installed, the applicants withdrew the same from the EPCG Scheme and paid the applicable Customs Duty of Rs. 2,18,50,325/- and appropriate interest amounting to Rs. 61,62,413/-. On such uninstalled press machines, the applicants carried out various operations viz. refurbishing, painting, modifications, rewinding works, etc. and thereafter, the same were exported in CKD/SKD condition by classifying them under Customs Tariff Item 8462 29 10, under UT-1 Bond, under claim of Duty Drawback. Then, the applicants filed seven applications before the Additional Commissioner (BRU), Central Excise, Pune-I Commissionerate on 9-6-2011 for determination of Brand Rate un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e materials used or taxable services used as input services in the manufacture of such goods. 4.2 The term 'manufacture' is defined under Rule 2(e) of the said Rules which read as follows : (e) "manufacture" includes processing of or any other operation carried out on goods, and the term manufacturer shall be construed accordingly. The above definition can be divided into two parts i.e. Manufacture includes i. Processing ii. any other operation carried out on goods It will be evident from the above definition that manufacture includes processing. The term processing is not defined under the Excise or Customs Act. Reference to the various case laws decided on the term of manufacturing & processing is as follows : * The Gujarat High Court on the case of Nirma Chemical Works v. UOI - 1981 (8) E.L.T. 617 * Collector of Central Excise v. Rajasthan State Chemical Works - 1991 (55) E.L.T. 444 (S.C.) * Chowgule & Co. - AIR 1981 SC 1014 = 1993 (67) E.L.T. 34 (S.C.) * &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hines amounts to processing is not acceptable, the said operation shall fall under second part of definition i.e. any other operation. Thus process carried out by the applicant can be construed as manufacture as per the definition under Rule 2(d) of Drawback Rules, 1995. Thus the exported goods are to be construed as manufactured goods. The Additional Commissioner has not given any findings on the above submission of the applicant that the process carried out by the applicant amounts to manufacture. However it will be evident that the Additional Commissioner in para 15 have held that the certain process is carried out by the applicant. The Commissioner (Appeals) has held that the applicants have carried out the process of maintenance/reworking of these machines. The finding of Commissioner (Appeals) is erroneous inasmuch as the process carried out by the applicant which are described above cannot be considered as maintenance or reworking. It is the process of reconditioning or refurbishment which is process of manufacture. 4.4 The term 'imported materials' is defined under Rule 2(d) of the said Rules which reads as follows : (d) "imported material" means any material im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... processing or any other operation carried out on goods shall be construed as manufacture. The said definition does riot require that a new commodity, goods which have its own identity independent from the material used in the manufacture of such products shall emerge after carrying on the process of manufacture. The Additional Commissioner has given his findings on the above ground in paras 17, 20 & 21 of the order-in-original. In para 17 the Addl. Commissioner has reproduced the table giving the details of Capital goods under EPCG License; Bill of Entry wise/FIFO wise and Shipping Bill wise to export the product. The Addl. Commissioner has compared the description of the imported Capital Goods with the description of goods exported by the applicant after carrying out process. On the comparison of the same the Addl. Commissioner has come to the conclusion that the description of 2 columns i.e. description of imported capital goods, exported goods is the same. Similarly in para 20 of the Order-in-Original the Addl. Commissioner has reproduced a table indicating FIFO wise details of DBK-I under which the applicant furnished details of payment of duty on imported capital goods. Accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw material and not on capital goods. Therefore, the applications of the appellant have been correctly and legitimately rejected for claim of duty Drawback under Section 75 of Customs Act, 1962. 5.2 The applicant's argument that imported capital goods can be construed as imported material is not acceptable inasmuch as they have imported capital goods under EPCG for installation in their unit and paid the Customs duty on the Capital goods. It has also been admitted by them that they have installed 4 machines out of 11 machines, for the manufacture of their excisable goods for which they are registered with the Department. 5.3 The details of the Bills of Entry mentioned at para 17 of the Order and the details of Shipping Bills/description mentioned at para 18 of the order confirm the fact that the appellants have imported and exported the same machines. 5.4 Order is not beyond the scope of show cause notice. Appellant is trying to confuse/mislead. The applications have not been rejected on the grounds that the appellant did not file their application under Section 74 of the Customs Act, 1964. While discussing the options available to the appellants, a reference has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. on said imported capital goods and thereafter exported them under claim of drawback. After export of goods, they filed applications for fixation of brand rate of drawback under Rule 7 of Drawback Rules, 1995. Their applications were rejected by the original authority. Commissioner (Appeals) upheld the impugned Order-in-Original. Now, the applicant has filed this revision application on grounds mentioned in para (4) above. 9. Applicants have mainly contended that they have filed applications for fixation of drawback brand rate under Section 75 of Customs Act, 1962; that claim drawback under Drawback Rules, 1995 requires the use of imported materials in the manufacture of exported goods; that they have carried out processes on said materials which amount to manufacturing; that the term materials is much wider and includes all types of goods, i.e. inputs as well as capital goods; that the capital goods imported by the applicants can be construed as imported goods for the purpose of claiming drawback and that the custom duty paid on imported capital goods, which are materials in this case is rightly claimed as drawback under Section 75 of Customs Act, 1962. 10. Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ange Management Act, 1999 (42 of 1999), such drawback shall except under such circumstances or such conditions as the Central Government may, by rule, specify be deemed never to have been allowed 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." 10.2 Further, in terms of Section 75(2) of Customs Act, 1962, Central Government has made the rules namely Customs, Central Excise Duties and Service Tax Drawback Rules, 1995. The relevant rules are extracted below : Rule 2(a). "drawback" in relation to any goods manufactured in India and exported, means the rebate of duty or tax, as the case may be, chargeable on any imported materials or excisable materials used or taxable services used as input services in the manufacture of such goods; These statutory provisions clearly stipulate that duty drawback is admissible of the duty paid on imported materials used in the manufacture of goods which are exported. 10.3 The applicants are registered with Central Excise for manufacture of Motor vehicle chassis and parts thereof falling under Central Excise Tariff Heading 8708 99 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed by the fact that 3 machines imported were installed and actually used. If the balance 7 machines could not be installed, the logical operation available was either to sell the said machines in indigenous market or re-export the same. For re-export of imported goods, under claim DBK, the procedure is provided under Section 74 of Customs Act, 1962 for the reasons best known to the applicant of the subject DBK claim as chosen not to avail the legal option to re-export under Section 74 of Customs Act, 1962. No explanation has been forthcoming form the applicant as to why the option of re-export under Section 74 ibid was not exercised by the applicant. It is pertinent to note that what is imported and what is exported are the same goods known by the same name and for the same use. Notwithstanding the above applicant filed the application for fixation for DBK under Rule 7 of Drawback Rules on the ground that the goods exported were manufactured by them. The goods were imported under EPCG schemes under EPCG license. This clearly shown that the goods imported were in ready to install and ready to use condition and did not secure any further processing for installation and use. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1962. The export of imported machines by carrying out mere reconditioning/refurbishing operation without complying with substantial requirements of said Section 75, renders the said drawback claims inadmissible under Section 75. There is specific provision of claiming drawback on re-exported goods under Section 74 which applicant has failed to avail. 10.6 This observation of Government also finds force from observation made by Hon'ble Delhi Court in the case of ABC India Ltd. v. UOI reported as 1992 (61) E.L.T. 205 (Del.) The relevant para 13 of the said judgment reads as under : "There is difference between Section 74 and Section 75 of the Customs Act, 1962. Section 74 of the Customs Act comes into operation when articles are imported and thereafter re-exported, such articles being easily identifiable and Section 75 comes into operation when "imported materials are used in the manufacture of goods which are exported." The High Court further held that the Hydra-jack, which is identifiable as distinct goods, being special equipment to be used for the purpose of erection of different types of super-heavy articles, including an article like the Monolithic Buddha statue wei ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
