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TMI Blog2020 (3) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... of the benefit to the exporter. The original stipulation that no drawback was available for export was imposed to ensure that no double benefit was obtained. Subsequently, when an EOU was permitted to engage in job work, the original condition stood modified to the effect that a manufacturer/exporter would also be entitled to drawback, provided the finished commodity was exported from EOU/EPZ itself. A situation such as the present where the goods revert back to the assessee for further processing has not been envisaged and is thus not covered, though it is, in my view, also entitled to such benefit. Such a situation is clearly not intended to be kept out of the beneficial sweep of Notification 31 of 2000. The issue is remanded to the Assessing Authority to verify specifically whether duty has been remitted on the raw materials utilised in job work. If the result of the enquiry is positive, the petitioner is entitled to the drawback of the duty paid in accordance with law - petition disposed off. - W.P.Nos.4846 and 4847 of 2007 and M.P.Nos.1 and 1 of 2007 - - - Dated:- 15-11-2019 - DR. ANITA SUMANTH J. For Petitioner : Mr. G. Natarajan For Respondents : Mrs. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as usual subject to the petitioner paying applicable excise duty on all raw materials and inputs that have been utilised in the manufacturing process. This Writ Petition stands disposed on 15.11.2001. 6. Let us now examine the Notifications cited, in the context of the facts narrated above. The first of the Notifications relied on is 31/1999 dated 20.05.1999, which provides for new duty drawback rates, effective 01.06.1999. This Notification confirms that the rates of drawback specified therein shall not be applicable to export of commodities/products, if such commodities/products are as per clause 2(b) thereof, manufactured and/or exported in discharge of export obligation against an advance licence issued under the Duty Exemption Scheme of Export and Import Policy in force. 7. Then we come to Circular No.67 of 1998 dated 14.09.1998. The Circular is relevant in entirety and is extracted in full hereunder: Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Subject: 100% EOUs/EPZ/EHTP Units Permission to send out goods for jobwork outside the unit Regarding. I am directed to refer to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... responsible for filing the necessary shipping documents in cases where a part of the job work has been carried out by a unit in an EOU. To settle this ambiguity, Notification 74 of 1999 dated 05.11.1999 was issued wherein at paragraphs 1 to 4 the Board states as follows: I am directed to refer to paragraph 4 of Board s Circular No.67/98-Cus., dated the 14th September, 1998 on the above subject under which the EOU/EPZ units in textile, ready-made garments, agro-processing and granite sectors have been allowed to undertake job work on behalf of the DTA units. This is subject to the condition that the finished products produced by such EOU/EPZ units will be exported directly from EOU/EPZ unit itself and that these goods will not be sent back to the DTA unit. 2. As per Paragraph 9.17(d) of Exim Policy, 1997-2002, as amended up to 1-4-1999, the EOU/EPZ units in aquaculture, animal husbandry, electronics hardware and software, can also undertake job work for export on behalf of DTA units with the permission of Asstt. Commissioner of Customs. In this connection, it has been brought to the notice of Board by Trade the Ministry of Commerce that EOU/EPZ units are facing difficul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts in certain sectors for manufacturing export goods. 2. In such cases, the inputs which are supplied by DTA Units for processing by EOU/EPZ Units are procured by DTA units on payment of applicable duties. Various Trade Associations and the Ministry of Commerce have brought out that the incidence of such duty on inputs consumed in the manufacture of the export goods can be rebated only through the Brand Rate Drawback route. 3. The issue has been examined in the Board. It has been decided that in view of the above mentioned facts, the DTA units shall be eligible for grant of drawback against duties suffered on their inputs which are processed by EOU/EPZ units for die manufacture of goods which are exported in accordance with the said Circular No.67/98. 4. Such DTA Exporters will be eligible for payment of Brand Rate of Drawback against duties suffered on inputs, on submission of proof of payment of duty. Accordingly, drawback will be payable to such exporters under Rule 6(1) of the Customs and Central Excise Duties Drawback Rules, 1995, at the rate fixed on specific application. The procedure laid down under the said Drawback Rules will have to be followed for fixatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the intention of the Notifications was never to permit a drawback claim by a manufacturer or exporter in cases where there had been job work carried out by EOU/units in EPZ. This is for the reason that various concessions are available already to exports from EOU/units in EPZ and the provision of drawback is an additional benefit not contemplated in law. She brings to the notice of the Court two conflicting decisions of the Karnataka High Court, one in the case of Karle International V. Commissioner of Customs, Bangalore (2012 (281) ELT 486) in favour of the assessee and an another of another Bench of the same Court in Commissioner of Customs, Bangalore V. Leela Scottish Lace Ltd. (2011 (268) ELT 185), adverse to the assessee. 15. The decision of Karle International (supra) is dated 23.08.2011, whereas the decision in Leela Scottish Lace Ltd. (supra) is dated 18.02.2011 but has not been brought to the notice of the subsequent Bench. The Revenue carried in appeal the decision of the Division Bench in Karle International (supra) and the Departmental SLP in Special Leave to Appeal (Civil) CC Nos.6104 and 6105 of 2012 came to be dismissed by the Supreme Court on 13.4.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h are exported directly from 100% EOUs, without sending them back to the DTA units. 20. The legal issue raised in this case is thus liable to be answered in favour of the petitioner and I do so holding that the petitioner is entitled to drawback at All India Rate in respect of the duty suffered on inputs utilised by 100% EOU/units in EPZ for manufacture. 21. The difficulty does not stop there, since in the present case, admittedly, the goods have not been exported directly from the 100% EOU, but have come back to the DTA for further processing. In such a case, it becomes necessary for the authorities to categorically ensure that the duty in respect of raw materials have, in fact, been remitted, prior to export. 22. I may make, in this connection, useful reference to Rule 3 of the Customs and Central Excise Duties and Service Tax Drawback Rules, 1995 that reads as follows: Rule 3. Drawback. - (1) Subject to the provisions of - (a) the Customs Act, 1962 (52 of 1962) and the rules made thereunder, (b) the Central Excises and Salt Act, 1944 (1 of 1944) and the rules made thereunder, (bb) the Finance Act, 1994( 32 of 1994), and the rules made thereu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of manufacturing have been conducted in the premise of EOU/unit of EPZ, if the assessee is otherwise entitled to the benefit. Though the Notifications do specifically require that the export, after completion of job work, is to take place only from the EOU/EPZ, this can be given effect to only in a situation where the entire process of manufacture/finishing is occasioned in such EOU/EPZ. In a situation such as the present, where parts of the process are carried out in different locations, one can hardly conclude that this operational difference would result in denial of the benefit to the exporter. The original stipulation that no drawback was available for export was imposed to ensure that no double benefit was obtained. Subsequently, when an EOU was permitted to engage in job work, the original condition stood modified to the effect that a manufacturer/exporter would also be entitled to drawback, provided the finished commodity was exported from EOU/EPZ itself. A situation such as the present where the goods revert back to the assessee for further processing has not been envisaged and is thus not covered, though it is, in my view, also entitled to such benefit. Such a situa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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