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TMI Blog2016 (6) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... ms Act, nor rule 3 of the Rules of 1995, provide any restriction on claim of drawback, if the basic duty of customs is paid through DEPB. - Decided in favour of petitioner X X X X Extracts X X X X X X X X Extracts X X X X ..... form, should be exported out of the country and therefore the basic customs duty paid through debittal of DEPB scrip should be eligible for the brand rate of drawback. In this regard I find that the instant contention of the appellant is acceptable. Just because no clarification has been issued for getting drawback in respect of basic customs duty it does not mean that the brand rate of the drawback is not available in respect of basic customs duty. Clarifications are warranted when there is ambiguity. Excepting non availability of clarification from the Board, New Delhi, in respect of the basic customs, duty, the lower adjudicating authority has not pointed out as to how and under which provisions of the law the same is not required to be granted." 3. The department challenged the order of Commissioner (Appeals) before the Government by filing the revision petition. The revision petition was allowed by impugned order dated 9.10.2014. Reference was made to the notification no.97/2009 dated 11.9.2009 which provided that an importer shall be entitled to avail the drawback or CENVAT credit of additional duty leviable under section 3 of the Customs Tariff Act against the amount debite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Bhatt for the department opposed the petitions contending that the claim of drawback of an exporter must be examined within the statutory provisions and Government of India notifications and the policy, which do not permit drawback on imports made under DEPB and other similar export incentive schemes. In case of imports made under DEPB scheme, the customs duty is exempted. Goods therefore, not having suffered the customs duty, upon export of the final product, drawback would not be available. Our attention was drawn to the decision of Division Bench of this Court in case of Gujarat Ambuja Exports Ltd. v. Government of India reported in 2013 (289) ELT 273 (Guj), in which in the context of chargeability of education cess, this Court had examined the provisions contained in DEPB scheme. Reliance was also placed on the Government of India circular no.3/99 dated 3.2.1999 in which it was clarified that brand rate of drawback is admissible only against cash payment of duties and debit of duties under DEPB scheme on import of goods being in the nature of availment of exemption of duty under the Customs Act, drawback would not be available. 7. The short question therefore, that call ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 chests used as packing material for export of blended tea, have been taken into use after manufacture; (ii) if the said goods are produced or manufactured, using imported materials or excisable materials or taxable services in respect of which duties or taxes have not been paid; or] (iii) on jute batching oil used in the manufacture of export goods, namely jute (including Bimplipatam jute or mesta fibre) yarn, twist, twine, thread, cords and ropes; (iv) If the said goods, being packing materials have been used in or in relation to the export of (1) jute yarn (including Bimplipatam jute or mesta fibre), twist, twine, thread and ropes in which jute yarn predominates in weight; (2) jute fabrics (including Bimlipatam jute or mesta fibre), in which jute predominates in we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missible subject to the conditions specified therein; (c) manufactured or exported by a unit licensed as hundred per cent. Export Oriented Unit in terms of the provisions of the relevant Export and Import Policy and the Foreign Trade Policy; (d) manufactured or exported by any of the units situated in free trade zones or export processing zones or special economic zones; (e) manufactured or exported availing the benefit of the relevant Export and Import Policy and the Foreign Trade Policy;" 11. We may also refer to the Board circular no.41/2005 dated 28.10.2005 since much debate on this circular has taken place in the orders passed by the authorities. The relevant portion of the said circular reads as under : "Subject : Eligibility of brand rate of duty drawback where inputs used in the manufacture of export products are imported availing of DEPB Clarification Regarding The undersigned is directed to invite your attention on the above mentioned subject and to state that an issue has been raised as to whether additional customs duty paid through debit under DEPB can be allowed as brand rate of duty drawback. 2. The matter has been examined by the Board. Hitherto, the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to time. Section 75 in plain terms enables the Government of India to issue notification allowing drawback of the duty on export of goods or inputs utilised for manufacture of export goods. The drawback would be relatable to duty of customs chargeable under the Act on such imported materials. 14. As noted, in exercise of powers under section(2) of section 75, the Drawback Rules of 1995 have been framed. In terms of rule 3 of the said Rules of 1995, drawback is allowed on export of goods at such rates as may be determined by the Central Government. Under further proviso to rule 3 however, such drawback would not be available in various categories specified therein. None of these categories include the payment of customs duty on the goods through DEPB scrip. In other words, rule 3 does not prohibit a claim of drawback as per the specified rates if the duty on the imported goods is not paid in cash but by surrendering credit in the DEPB scrip. Thus neither section 75 of the Customs Act, nor rule 3 of the Rules of 1995, provide any restriction on claim of drawback, if the basic duty of customs is paid through DEPB. 15. In order to appreciate the department's concern about the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitation through the clarification issued by the Government of India in various circulars which principally touch the question of eligibility of draw back, when additional duties have been paid through DEPB would not be the correct interpretative process. 18. We may recall, in the circular dated 28.10.2005 it was clarified that hitherto additional customs duty paid in cash only was adjusted as CENVAT credit or duty drawback and the same paid through debit under DEPB was not allowed as duty drawback. However, with effect from 1.9.2004, Foreign Trade Policy provided that additional customs duty/excise duty paid in cash or through debit under DEPB shall be adjusted as CENVAT credit or duty drawback as per the rules. It was in this background provided that additional customs duty paid through debit under DEPB shall also be allowed as brand rate of duty drawback. Thus, the Foreign Trade Policy removed restrictions on additional customs duty being adjusted against CENVAT credit or duty drawback, unless paid in cash. A corresponding clarification was issued. This clarification cannot be seen in reverse as to eliminate the facility of draw back when basic customs duty has been paid throug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility of education cess which was calculated at the rate of 2% on the aggregate of duty of customs levied and collected by the Central Government. In this background, question arose where the imports are made under DEPB scheme, would education cess be applicable. Noticing that subject to adjustment in DEPB scrip, the imports are made exempt from payment of duty, it was held that there cannot be education cess on such imports. The issue in the present case is vastly different. 22. Likewise, the decision of learned Single Judge of Madras High Court relied upon by the counsel for the Revenue in case of Associated Autotex Ancilliaries P.Ltd. v. Joint Secretary, MF reported in 2007(211) ELT 368(Mad), did not concern the present controversy. In the said case, it was held that modification by circular dated 28.10.2005 would be prospective and the clarification of brand rate of duty drawback would be available also in relation to additional customs duty paid through DEPB, would have no retrospective effect. 23. In the result, both the petitions are allowed. Impugned orders are reversed. Proceedings are placed back before the original authority for fixation of brand rate of duty in each ..... X X X X Extracts X X X X X X X X Extracts X X X X
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