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TMI Blog2016 (5) TMI 440X X X X Extracts X X X X X X X X Extracts X X X X ..... red while fixing the All Industry Rates of duty drawback. Although, it was also mentioned that the Petitioners have not provided proof of payment of duties, the said line of argument was not pressed. Thus, the only question to be addressed in respect of claims made under the Drawback Schedule 2002-03 is whether the benefit of duty drawback could be denied to the Petitioners on the ground that the data relating to Flanges had not been provided by EEPC and, therefore, was not considered by the Central Government while fixing the All Industry Rates. Insofar as the exports made under shipping bills after the Drawback Schedule 2003-04 was notified are concerned, the Respondents have sought to deny the benefit, additionally on the basis of the Corrigendum dated 13th May, 2003 issued by the Central Government. Thus, it is also necessary to consider whether the Central Government could rectify the notification dated 1st April, 2003 with retrospective effect by a public notice issued on 13th May, 2003. It cannot be disputed that the Flanges exported by the Petitioners conformed to the description as specified in SS 73.29 of Drawback Schedule 2002-03 and SS 73.28 of Drawback Schedule 2003 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to entertain W.P.(C) inasmuch as the Petitioner therein had impugned two show cause notices of even date i.e. 20th June, 2003, which were issued by the Assistant Commissioner of Customs, Ludhiana. Also the Petitioner was also located at Ludhiana and, therefore, no part of cause of action had arisen within the jurisdiction of this Court. Since the authority issuing the show cause notices was at Ludhiana, the cause of action for filing the petition lay entirely outside the territories of Delhi. Held that:- although, there is merit in Respondent's contention that situs of passing a legislation would not give rise to a cause of action to file a writ petition challenging its validity. However, in the present case, the Petitioner has also impugned the letter dated 8th April, 2003 which is not in the nature of a legislative instrument but is an executive direction. Hence, it is apparent that a part of the cause of action has arisen within the territorial jurisdiction of this Court. Consequently, we are unable to accept that the W.P.(C) is not maintainable. Hence, the Respondents are directed to process the Petitioners' claims for duty drawback in accordance with law. - Decided in favo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arifying that Flanges are not eligible for duty drawback under SS No. 73.29 and 73.30 of the Drawback Schedule 2002- 03 and SS No. 73.28, 73.29 and 73.30 of the Drawback Schedule 2003- 04. In W.P.(C) 5277/2003, the Petitioner therein has also impugned the Corrigendum issued by way of a public notice dated 13th May, 2003, inter alia, seeking to correct and rectify SS No. 73.28, 73.29, 73.30 and 73.31 of the Drawback Schedule 2003-04. The Petitioner contended that the said public notice, in fact, seeks to substantially amend those entries; which, according to it, is not permissible as the Drawback Rates have been notified in the Official Gazette in exercise of delegated legislative powers and, thus, cannot be amended by a public notice/circular. 4. For the purposes of addressing the controversy involved in these petitions, certain facts regarding M.F. Rings Bearing Races Ltd. (the Petitioner in W.P.(C) No.5277/2003 and 5118/2003 and hereafter referred to as MFRBRL) are noticed hereunder. 4.1 MFRBRL is, inter alia, engaged in the manufacturing of different types of Steel Forgings under the licence issued by the Department of Industrial Development, Ministry of Industry for man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so filed another petition, W.P.(C) 5277/2003, impugning the Show Cause Notice dated 22nd July, 2003 and the Corrigendum dated 13th May, 2003 issued by the Respondents to the extent it seeks to rectify SS 73.28, 73.29,73.30 and 73.31 of Drawback Schedule 2003-04. 5. Similarly, Uma Shankar Khandelwal Co. (the Petitioner in W.P.(C) 5403/2003) impugns the denial of duty drawback of ₹ 2,11,49,807/- in respect of exports made under shipping bills for the period 20th January, 2003 to 4th April, 2003. In W.P.(C) 5394/2003, R.N. Gupta and Co. Ltd. (the Petitioner therein) claims a sum of ₹ 30,38,385/- as duty drawback under SS 73.28 of the Drawback Schedule 2003-04 alongwith interest. In W.P.(C) 5692/2003, M/s Kunj Forgings (the Petitioner therein) claims a sum of ₹ 55,91,260/- as duty drawback for export of product covered under SS 73.29 of the Drawback Schedule 2002-03. The Petitioners in W.P.(C) 5692/2003, W.P.(C) 5394/2003 and W.P.(C) 5403/2002 also impugn the letter dated 8th April, 2003 issued by Joint Secretary (Drawback), Ministry of Finance whereby it is clarified that Flanges are not eligible for duty drawback at the rates specified under Drawback Schedules. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing edge or rib of a metal wheel or beam used for strengthening, guiding, attaching or securing . The Petitioners state that Flanges are shaped as metal rings, which are used as sleeves to connect different sections of pipes. It is not in dispute that Flanges are manufactured from Carbon Steel by the process of forging. 11. Duty Drawback is an export incentive which entails providing rebate on the exports of specified products. The purpose of Duty Drawback is to neutralise the impact of the duties on imports used for manufacturing export products in order to ensure that products manufactured in India are competitive in the international market. 12. The statutory sanction for granting Duty Drawback is provided under Section 75 of the Customs Act, 1962 (hereafter the Act ). Section 75 of the Act and Section 37 of the Central Excise Act, 1944 provides that where it appears to the Central Government that in respect of any goods or any class or description of goods manufactured in India and which have been entered for export, a drawback should be allowed of duties of customs chargeable on any imported material used in manufacture or processing of such goods, the Central Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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 export goods or carrying out any operation on export goods of that class or description eit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular class of goods. (c) the average amount of duties paid on imported materials or excisable materials used in the manufacture of semis, components and intermediate products which are used in the manufacture of goods; (d) the average amount of duties paid on materials wasted in the process of manufacture and catalytic agents; Provided that if any such waste or catalytic agent is re-used in any process of manufacture or is sold, the average amount of duties on the waste or catalytic agent re-used or sold shall also be deducted; (e) the average amount of duties paid on imported materials or excisable materials used for containing or packing the export goods; (f) any other information which the Central Government may consider relevant or useful for the purpose. 15. In exercise of the powers conferred under Rules 3 and 4 of the Rules, the Central Government notified the Drawback Schedule 2002- 2003 vide Notification No. 33/2002 (NT). Chapter 73 of the said Schedule concerns articles of iron and steel. SS 73.29 of the Drawback Schedule 2002-03 as effective from 1st June, 2002 is extracted below: Serial/ Sub- Serial No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctured through forging process, when CENVAT facility has not been availed. Rs.17.00 (Rs. seventeen only) per kg. of steel content. 10.70 6.3 0 73.29 Non-alloy/ Carbon Steel Forgings (rough)/ unmachined/ semifinished/ machined/ identifiable ready-to-use machined parts/ components, manufactured through forging process, when CENVAT facility has been availed. Rs.10.70 (Rs. ten and paise seventy only) per kg. of steel content. All Customs 73.30 Alloy Steel Forgings (rough) / unmachined/ semi-finished/ machined/ identifiable readyto- use machined parts/ components, manufactured through forging process, when CENVAT facility has not been availed. Rs.26.80 (Rs. twenty-six and paise eighty only) per kg. of steel content. 17.40 9.40 73.31 Alloy Steel Forgings (rough) / unmachined/semi-finished/ machined/ identifiable readyto- use machined parts/components, manufactured through forging process, when CENVAT facility has been availed. Rs.17.40 (Rs. se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oners are covered under those entries. 22. Insofar as exports made under shipping bills prior to the notification dated 1st April, 2003 are concerned, the Respondents are seeking to deny the benefits solely on the basis that the data related to the said products was not considered while fixing the All Industry Rates of duty drawback. Although, it was also mentioned that the Petitioners have not provided proof of payment of duties, the said line of argument was not pressed. Thus, the only question to be addressed in respect of claims made under the Drawback Schedule 2002-03 is whether the benefit of duty drawback could be denied to the Petitioners on the ground that the data relating to Flanges had not been provided by EEPC and, therefore, was not considered by the Central Government while fixing the All Industry Rates. 23. Insofar as the exports made under shipping bills after the Drawback Schedule 2003-04 was notified are concerned, the Respondents have sought to deny the benefit, additionally on the basis of the Corrigendum dated 13th May, 2003 issued by the Central Government. Thus, it is also necessary to consider whether the Central Government could rectify the notificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harassment to genuine exporters. 2. The issue has been examined in the Board. All Industry Rate is based on the concept of averages, wherein the drawback rate itself, as well as its customs and excise portions, are based on weighted averages of consumption of imported / indigenous inputs of a cross section of exporters and the average incidence for duties suffered on such inputs. These rates have no relation to the actual input consumption pattern and actual incidence suffered on inputs of a particular exporter or individual consignments exported by any particular exporter under AIR/DBK Claim. 3. Therefore, it is clarified that, as a matter of rule, no evidence of actual duties suffered or imported or indigenous nature of inputs, even if the All Industry Rate has customs portion, should be insisted upon by the field formations along with declaration filed by exporters under Rule 12(l)(a)(ii) of the Customs Central Excise Duties Drawback Rules, 1995. 26. In view of the above, an exporter is only required to satisfy that the exported product falls within the description of the goods as notified by the Central Government in order to claim duty drawbacks at the spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 'FLANGES' require low-grade steel as input, value of which is also very low. Hence, the aforesaid entries in the Drawback Schedule are not representative of the product 'FLANGES'. Therefore, keeping in view the revenue interest and in consonance with the true mandate of Customs Central Excise Duties Drawback Rules 1995, it is clarified that 'FLANGES' were not and are not eligible for drawback under these entries. In order to further gauge the extent of any other misuse of these entries I have already sent a detailed FAX to your Commissioner and other Commissioners soliciting details of such shipments so that further corrective action can be taken by the Ministry by the Ministry (sic) to avoid accrual of any unintended benefits to the exporters. You may like to take action in the light of above. 28. A plain reading of the aforesaid letter indicates that the only reason provided for denial of benefit is that the data in respect of Flanges was not considered by the Government while fixing the All Industry Rates. This is also the principal contention advanced by the learned counsel for the Respondents. 29. As observed earlier, All Indust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plain language of the notifications, it was entitled to exemption from payment of excise duty on the cotton fabrics. The appellant contended that the exemption applied to all cotton fabrics which were produced on powerlooms owned by cooperative societies and it was not relevant as to who produced or manufactured such fabrics. The Supreme Court accepted the above contention, as the notification clearly granted exemption to cotton fabrics produced by any co-operative society formed of owners of cotton powerlooms which is registered or which may be registered on or before March 31, 1961 . It was contended on behalf of the Respondents therein that the object of granting exemption was to encourage the formation of co-operative societies which not only produced cotton fabrics but which consisted of members who not only owned but had actually operated not more than four powerlooms during the three years immediately preceding their joining the society. It was emphasized that the intention of the Government always was that exemption be available only in respect of goods produced by the society on its own behalf. The Court did not accept this contention and held that on a true construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, we find that the language of the entries is clear and unequivocal and, thus, there is no room to attempt to discover the intention of the Central Government by taking recourse to any other external aid. 36. In view of the aforesaid, the clarification dated 8th April, 2003 has no statutory force. The express language of the Drawback Schedules as notified by Central Government in exercise of statutory powers cannot be diluted or whittled down by the letter dated 8th April, 2003 and, accordingly, the same is liable to be set aside. 37. We are also inclined to accept the contention that the public notice dated 13th May, 2003 seeks to make substantial amendments to the express language of the Drawback Schedule 2003-04 with retrospective effect and that too is not permissible. 38. It is well established that the devices of public notice or circulars cannot be adopted for modifying the substantive provisions of a statutory notification. In a recent decision, this Court in Allen Diesels India Pvt. Ltd. v. Union of India Ors.: W.P.(C) 4665/2014 decided on 1st February, 2016, following the earlier decisions in Sandur Micro Circuits Ltd. v. Commissioner of Central Excise: 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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