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TMI Blog2023 (10) TMI 452X X X X Extracts X X X X X X X X Extracts X X X X ..... equent apportionment would at all, be possible - A perusal of the Circular makes it clear that AIR duty is to be allowed in full in cases where a portion of inputs would qualify to be non-duty paid. Thus, the absolute position under the 1995 Rules has stands modified somewhat by clause 4.1.14 of FTP and Circular No. 19/2005. The substantial questions of law are thus answered in favour of the assessee and adverse to the revenue - The Circular proceeds on the basis that the inputs that are duty exempt constitute only a fraction of the over-all inputs used, as otherwise, the very purpose of the DD Scheme would become redundant. Abuse of the position, as recognized even under Circular No.19/2005 is not an impossibility. In the present case, there is a finding of fact by the Tribunal to the effect that the indigo blue used in the goods claiming duty drawback, is only a fraction. This finding of fact has not been challenged as perverse in this appeal and has become final. Thus, our answer to the questions of law is premised on this factual finding - Appeal dismissed. - Honourable Dr.Justice Anita Sumanth And Honourable Mr.Justice R.Vijayakumar For the Appellant : Mr.AR.L.S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... availed the Duty Drawback Scheme (DD Scheme) and utilized excess indigo blue available with it in the manufacture of products in respect of which it sought the benefit of DD Scheme. 7. The authorities issued a show cause notice calling upon the assessee to show cause why the benefits obtained from the DD Scheme not be reversed seeing as the assessee has availed the benefit of both ALS and DD Scheme in respect of the same raw materials, ie., indigo blue. 8. That is to say, consignments of indigo blue, that has been imported and utilized in the manufacture of products that had availed the benefit of ALS, had also been used in the manufacture of products, that had received the benefits under DD Scheme. Despite an explanation tendered by the assessee, an order in original came to be passed on 03.03.2011 adverse to its interests. 9. The authority has crystallized the issue for decision as follows: (i)Whether the impugned export goods on which duty drawback was claimed and received was manufactured out of duty free input, Vat indigo Blue Dye, imported under ALS. (ii)Whether the drawback claimed and received by the noticee during the period from 01.04.2005 to 30.09.06 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the individual components of duty qua each input, as what had been applied was a compounded, presumptive rate. 14. It is as against the above order of the Tribunal that the Commissioner has filed the present Appeal raising the following substantial questions of law: (1)Whether the Advance Licence and duty drawback are mutually exclusive in view of the Rule 3(1) of the Customs and Central Excise Duties Drawback Rules 1995 r/w General notes No.2(b) to the Notification No. 26/2003 Cus (NT) dated 01.04.2003. (2)Whether the goods imported duty free under advance licence scheme can be utilized in the manufacture of goods exported under duty draw back (All Industry Rate) and whether the importer cum manufacturer is eligible to avail benefit under both advance licence and duty draw back simultaneously? 15. We have heard Mr.AR.L.Sundaresan, learned Additional Solicitor General for the appellant assisted by Mr.R.Nandakumar, learned Counsel and Mr.Raghavan Ramabadran, learned Counsel for the second respondent. 16. The facts in question are, by and large, admitted. The assessee had admittedly used duty free indigo blue for both imports under ALS as well as exports under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the raw materials have been imported duty free or exempted from payment of duty. This is an absolute position and had matters remained thus, there would have been no difficulty in answering the substantial questions of law in favour of the appellant. 20. However, there are certain other aspects of the matter that must be taken note of. The FTP 2004-09 at Clause 4.1.14 deals with the admissibility of drawback in the following terms: 4.1.14-Admissibility of Drawback In the case of an Advance Licence, the drawback shall be available in respect of any of the duty paid materials, whether imported or indigenous, used in the goods exported, as per the drawback rate fixed by Ministry of Finance (Directorate of Drawback). The Drawback shall however be restricted to the duty paid materials as mentioned in the licence 21. Thus, the absolute position as set out in the 1995 Rules has been somewhat diluted by the acknowledgement in the FTP of the position that exempted/duty free materials may be deployed in the manufacture of goods claiming benefit of ALS, upon condition that the claim of drawback shall be restricted to the duty paid materials as mentioned in the licence only. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as its customs and excise portions are based on weighted averages of consumption of imported / indigenous inputs of a representative cross-section of exporters and the average incidence of duties suffered on such inputs. These rates have no relation to the actual input consumption pattern or the actual duty incidence suffered on inputs of a particular exporter or individual consignments exported by any exporter under drawback claim. It was categorically stated in the said Circular that the first proviso to rule 3 of Drawback Rules, 1995 is meant for the Ministry and that it essentially provides a guideline as to how the duty drawback rates are to be determined in certain situations and is not intended for the field formations to use this rule for arbitrarily altering All Industry Rates of duty drawback in the case of individual exporters for individual consignments. 3. From the above it may be noted that the concept of All Industry Rate of duty drawback is that the rates are determined taking into account the average duties paid on the inputs and in determining the rates, the average (weighted average) consumption of imported / indigenous inputs of a representative cro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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