9911796707
TMI Blog2025 (1) TMI 636X X X X Extracts X X X X X X X X Extracts X X X X ..... od that in the clause (d) of the sub-section (2) of the Section 28(H) of the Customs Act, 1962 there is not any mention of the word drawback; or refund with the words duty or tax. However, it is amply clear that the words chargeable and leviable are expressly mentioned in the same clause and it is observed that these words are associated with the words duty and tax. Therefore, addition of the word drawback with the words duty or tax would be unwarranted and extraneous. Further, in the case of Harshad Chiman Lal Modi v. DLF Universal Ltd. [ 2005 (9) TMI 588 - SUPREME COURT] , the Hon ble Supreme Court held that where a court has no jurisdiction over the subject-matter of the suit by reason of any limitation imposed by statute, charter or commission, it cannot take up the cause or matter. An order passed by a Court having no jurisdiction is a nullity. The questions related to duty drawback involved in the present application do not fall within the ambit of any parameter, on which Advance Ruling can be sought. Benefit of exemption Notification No. 21/2023, dated 1-4-2023 - HELD THAT:- To avail the benefit of exemption Notification No. 21/2023, dated 1-4-2023, filing a Bill of Entry fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied on in relations to the goods warehoused therein. Conclusion - i) There no such jurisdiction vested in this authority as per the mandate of Chapter VB of the Customs Act, 1962. ii) Subject to the fulfilment of the conditions stipulated in the Notification No. 21/2023-Customs, dated 1st April 2023 and current Foreign Trade Policy, the Applicant can import the goods into the MOOWR unit, upon filing a bill of entry for home consumption and clearance, at the customs station of import. Such goods shall not be considered as warehoused goods in terms of section 60 of the Act. iii) The capital goods, on which the benefits of deferral of Customs duty have already been availed/claimed under the MOOWR Scheme, cannot be further de-bonded by using/utilising EPCH license. iv) Supply of manufactured goods by the Applicant to third party customer can be considered as Exports in case the third-party customer exports such goods as it is outside India and in case the goods are directly delivered to the port of Export. - SHRI P.K. RAMESHWARAM, AUTHORITY FOR ADVANCE RULING OF CUSTOMS Shri Sanjeev Nair, Advocate, Shreeni Pillai, Consultant and Anand Parasrampuria, Authorised Representative, for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EPCG license for payment of customs duty payable on debonding as per Notification No. 26/2023-Customs, dated 1st April 2023? (viii) Whether supply of manufactured goods by the Applicant to third party customer would be considered as a DTA Sales or Exports in case the third-party customer exports such goods as it is outside India? 2. Applicant has stated that Blue Star Climatech Limited (BSCL or Applicant) is a wholly owned subsidiary of Blue Star Limited (BSL); BSCL is licensed under Section 65 of the Customs Act, 1962 [Manufacturing and Other Operations in Warehouse Regulations, 2019 (MOOWR) at Sricity, in the State of Andhra Pradesh; BSCL is availing the benefit of deferral of customs duty for import of capital goods in the said MOOWR licensed premises, however, BSCL imports raw material into the said MOOWR premises on payment of applicable customs duty without availing the deferral benefit. The applicant submitted that BSCL proposes to manufacture certain products which would be exported out of India, The goods could be exported directly by the Applicant or by its group entities. The said manufacturing activity would be carried out at the above referred MOOWR licensed premise. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribing conditions to avail duty exemption benefit under Advance Authorization and EPCG schemes are issued under section 25(1) of the Customs Act, the Applicant believes that its case is fit to be considered for Advance Ruling under Section 28H(2)(b) i.e. applicability of a notification issued under sub-section (1) of Section 25, having a bearing on the rate of duty. 3.2 Section 75 of the Customs Act, 1962 provides that drawback should be allowed of duties of customs chargeable under the Customs Act on any imported materials of a class or description used in the manufacture or processing of such goods or carrying out any operation on such goods, as the Central Government may, by notification in the Official Gazette specify. Notification No. 7 of 2020, dated 28-1-2020 puts a bar on claiming All Industry Rate of drawback on goods manufactured partly or wholly in a warehouse under section 65 of the Customs Act, 1962. However. Rule 6 of the Customs and Central Excise Duties Drawback Rules, 2017 notified vide Notification No. 88 of 2017 provides cases where amount or rate of drawback has not been determined. The Applicant therefore believes that it is eligible to claim drawback unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-2020 has specified the rates and condition for All Industry Rate (AIR) of Duty Drawback. Clause 9(i) of the aforesaid notification specifies that AIR i.e. duty drawback rates specified in the notification shall not be applicable for goods which are manufactured partly or wholly in a warehouse registered under section 65 of the Customs Act, 1962. The applicant submitted that therefore it appears that Duty Drawback cannot be claimed at AIR rates for goods manufactured by a unit licensed as bonded area under Manufacturing and Other Operations in Warehouse Regulations, 2019 (MOOWR). 3.4 The applicant further submitted that AIR can be fixed only for standard goods. It cannot be fixed for special type of products. In such cases, brand rate is fixed under Rule 6 of Customs and Central Excise Drawback Rules, 2017. The applicant submits that Rule 6 does not restrict filing of application for fixation of brand rate for goods that are manufactured in a bonded warehouse. Relevant extract of Rule 6 of above rules is as follows : 6. Cases where amount or rate of drawback has not been determined. - (1) (a) Where no amount or rate of drawback has been determined in respect of any goods, any expo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted thereafter. Rule 7 of Customs and Central Excise Duties Drawback Rules, 2017 refers to fixation of Special Brand Rate. Relevant extract of the said provision is provided herein below : 7. Cases where amount or rate of drawback determined is mentioned below : (1) Where, in respect of any goods, the exporter finds that the amount or rate of drawback determined under rule 3 or, as the case may be, revised under rule 4, for the class of goods is less than eighty per cent of the duties paid on the materials or components used in the production or manufacture of the said goods, he may, except where a claim for drawback under rule 3 or rule 4 has been made, within three months from the date relevant for the applicability of the amount or rate of drawback in terms of sub-rule (3) of rule 5, make an application to the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, having jurisdiction over the place of export, for determination of the amount or rate of drawback thereof stating all relevant facts including the proportion in which the materials or components are used in the production or manufacture of goods and the duties paid on such materials or comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inistry of Finance against the appellate order. The Government of India vide the revised order disallowed the duty drawback claimed under the AIR rate and allowed duty drawback as per the brand rate of 5%. Similarly in case of Leela Scottish (cited supra), the Company had claimed the duty drawback as per the AIR rates, with respect to the export of goods, manufactured by a 100% EOU under a job work arrangement. In the aforesaid case also, the jurisdictional authorities had sought to deny the duty drawback on the grounds that duty drawback as per AIR rates cannot be claimed for goods manufactured at 100% EOU. While raising for demand order, the Commissioner has held that with respect to goods manufactured at 100% EOU (under job work arrangement) DTA unit is eligible for brand rate of drawback and in such cases, drawback will be admissible. The Commissioner had further held that Leela Scottish had not made any application and no brand rate was fixed and hence duty drawback claims filed by Leela Scottish are liable to be rejected. The applicant has also made reference to the decision of Goedicke (I) Private Limited v. Commr. of Customs, Bangalore [2002 (144) E.L.T. 91 (Tribunal)] wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-Cus., dated 1st October 2019 issued under F. No. 473/03/2015-LC (pt). is as follows : 14. The issue of procurement of imported goods that are exempt from duty or are chargeable to nil rate of duty into a warehouse operating under section 65 has also been raised. The objective of Section 65 is to enable manufacture and other operations in customs bonded warehouses. For this purpose, the units should be able to procure required raw materials, consumables, capital goods etc., imported or procured from domestic market. The goods may include dutiable goods, exempt goods or those chargeable to nil rate of duly. Denial of the facility to exempt goods or those chargeable to nil rate of duty, which may be required for manufacturing, would defeat the objective of Section 65. It is therefore clarified that imported goods, that are exempt from duty or are chargeable to nil rate of duty, may be brought into the warehouse, upon filing a bill of entry for home consumption and clearance, at the customs station of import. Such goods shall not be considered as warehoused goods in terms of section 60 of the Act . The applicant submits that given the above clarification, the Applicant from MOOWR uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f third-party exporter. Section 2(18) of Customs Act, 1962 defines export to be export , with its grammatical variations and cognate expressions, means taking out of India to a place outside India; Section 50 of Customs Act, 1962 provides as follows : Entry of goods for exportation. - (1) The exporter of any goods shall make entry thereof by presenting electronically on the customs automated system to the proper officer in the case of goods to be exported in a vessel or aircraft, a shipping bill, and in the case of goods to be exported by land, a bill of export in such form and manner as may be prescribed: In the given fact pattern, the Applicant will also sell the goods to third party who would export the goods as such. The said goods would also move directly from the premises of the Applicant to the port of export. Further the documentation would be aligned to the requirement of third-party exports under the FTP provisions. The applicant has submitted that based on the above provisions in FTP 2023, the definition of exports and the fact that movement of the said goods is from the location of place of business of the Applicant (from the MOOWR premises) directly to the port of ship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by respective laws and authorities and they cannot be clubbed with one another and cross-utilisation of the schemes is not allowed. If the applicant wants to import the Capital goods under Advance/EPCG authorisation and keep in their factory for manufacturing of their final products and also if they want to claim duty drawback benefits on the duty paid inputs used in the manufacture of their resultant products, they can do it, but only after de-bonding of the capital goods already received under MOOWR Scheme by paying all the applicable duties along with interest without claiming any depreciation of the Capital goods used thereof and also only after surrendering/Cancellation of their MOOWR licence. 5. On 11-12-2023 the applicant has submitted rebuttal on the above submissions dated 18-10-2023 made by the jurisdictional Commissioner as below : 5.1 At the outset, the Applicant states that the jurisdictional Commissioner appears to have mis-construed the query asked as part of the Advance Ruling. The query does not pertain to admissibility of depreciation benefits at the time of de-bonding as is admissible to EPCG scheme. The query is only whether at the time of de-bonding of capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awback is allowed. The decisions unambiguously convey the position that there is no restriction in law for EOU to claim drawback benefits. There is no reason as to why similar interpretation should not be adopted in the Applicant s case as well. Circular No. 3 l/2000-Cus. F.NO. 609/41/2000-DBK, dated 20th April 2000 wherein the CBIC had clarified that DTA exporters will be eligible for grant of duty drawback against duties suffered on inputs processed by EOU/SPZ units for manufacture of goods which are exported. The Circular further informs that DTA exporters will be eligible for payment of Brand Rate of Drawback. 5.4 The applicant states that the jurisdictional Commissioner has grossly erred in stating that the benefits of MOOWR/EPCG/Duty Drawback are independent in nature and they cannot be clubbed together for the purpose of cross utilisation. This view is directly in the teeth of Para 9 of Circular No. 48/2011-Cus., dated 31-10-2011 (reproduced in para 3.8 supra). 6. On 27-12-2023 in reply to the rebuttals dated 11-12-2023 submitted by the applicant, the concerned Commissionerate submitted that the stand taken by their office holds good and if the Applicant proposes to avail va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with one another and cross utilisation of the schemes for paying respective duties is not allowed. The Jurisdictional Officer has not quoted any provisions of law which prohibits such cross utilisation. The understanding of the Jurisdictional Officer is also contrary to the CBIC clarification vide FAQ dated 27 October 2020. The jurisdictional Commissioner has stated that if the Applicant wants to clear the goods in the domestic tariff area, they have to pay all the applicable customs duties that were foregone at the time of import. There is no quarrel with this proposition. The query of the applicant is that whether at the time of debonding such duties can be paid by availing benefit of an exemption notification under the EPCG Scheme. At the time of payment of customs duties (during the debonding exercise), if the Applicant is entitled to avail any notification benefit, there is no reason as to why the same should not be permitted. The view given by the Jurisdictional officer is contrary to the express provisions of para 2.42 of the Foreign Trade Policy (FTP) 2023 which permits such third party exports. 8. Personal hearings in the matter were conducted on 12-12-2023 and 8-1-2024 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1962 and Section 37 of the Central Excise Act, 1944. 10.2 The applicant is of the view that their application is in conformity with the clause (d) of sub-section (2) of the Section 28H of the Customs Act, 1962. The applicant has further contended that the questions involved in the instant application which are in respect of drawback falls under the jurisdiction of the Customs Authority for Advance Ruling to decide; and that their application is fit for seeking advance ruling on the question of drawback; and that since the eligibility to claim drawback on export goods is directly related to the duty discharged on the inputs used for its manufacture, the same would fall under the category of Section 28H(2)(d) i.e. applicability of notifications issued in respect of tax or duties under this Act or the Customs Tariff Act, 1975 (51 of 1975) . 10.3 As per clause (d) of sub-section (2) of the Section 28H of the Customs Act, 1962, the questions on which the Advance Ruling can be sought shall be in respect of, - (a) classification of goods under the Customs Tariff Act, 1975; (b) applicability of a notification issued under sub-section (1) of section- 25, having a bearing on the rate o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicability of Notification issued ..1975, or any tax or duty chargeable under any other law for the time being in force in the same manner as duty of customs leviable under this Act or the Customs Tariff Act . Interpretation of the clause (d) is incomplete without considering the words Notification , tax or duties , chargeable and leviable . It is very clear that the wordings used in the opening lines of the clause (d) of Section 28(H) (2) starts with applicability of notifications issued in respect of : (i) tax or duties under Customs Act, 1962 or (ii) tax or duties under the Customs Tariff Act, 1975 or (iii) any tax or duty, chargeable under any other law for the time being in force in the same manner as duty of customs leviable under this Act or the Customs Tariff Act . Further, as per the dictionary meaning of the term in respect of simply means in connection with. The Courts also have interpreted the phrase in respect of to mean connected with or attributable to. Thus, this clause is only connected with the Notification issued in respect of tax or duty under the Customs Act, 1962 or under the Customs Tariff Act, 1975 or any tax or duty chargeable under any other law for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 (51 of 1975) or any other law for the time being in force, on goods imported into, or exported from, India . Similarly, Section 2 of the Customs Tariff Act, 1975 reads as follows : SECTION 2. Duties specified in the Schedules to be levied . - The rates at which duties of customs shall be levied under the Customs Act, 1962 (52 of 1962), are specified in the First and Second Schedules . In fact, the chargeability/leviability of tax or duties and payability of refund/drawback are two different sets of mechanism under Custom Act for which separate provisions are made. It can be seen that the notification governing the Drawback Rules, 2017 has been issued by the Central Government in exercise of the powers conferred by Section 75 of the Customs Act, 1962 (52 of 1962) and Section 37 of the Central Excise Act, 1944 (1 of 1944), and not under the power vested under Section 12 of the Customs Act or Section 2 or 3 of the Customs Tariff Act. In the present case the matter on which Advance Ruling is sought pertains t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ambiguity and the intention of the Legislature is clearly conveyed, there is no scope for the Court to take upon itself the task of amending or alternating the statutory provisions. Wherever the language is clear the intention of the Legislature is to be gathered from the language used. While doing so what has been said in the statute as also what has not been said has to be noted. The construction which requires for its support addition or substitution of words or which results in rejection of words has to be avoided. It is understood that in the clause (d) of the sub-section (2) of the Section 28(H) of the Customs Act, 1962 there is not any mention of the word drawback; or refund with the words duty or tax. However, it is amply clear that the words chargeable and leviable are expressly mentioned in the same clause and it is observed that these words are associated with the words duty and tax. Therefore, addition of the word drawback with the words duty or tax would be unwarranted and extraneous. Further, in the case of Harshad Chiman Lal Modi v. DLF Universal Ltd. (2005) 7 SCC 791, the Hon ble Supreme Court held that where a court has no jurisdiction over the subject-matter of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for home consumption is mandatory to bring imported goods, that are exempt from duty or are chargeable to nil rate of duty into the warehouse operating under section 65. Therefore, the contention of the applicant that bringing the imported goods into its MOOWR unit against Advance Authorisation Scheme may be allowed is right but with the condition that said goods are brought into its MOOWR unit upon filing bill of entry for home consumption only. Therefore, to avail the benefit of exemption Notification No. 21/2023, dated 1-4-2023, filing a Bill of Entry for home consumption is mandatory. Once the benefits of the Advance Authorisation scheme are claimed by the applicant, then, the goods imported under said Advance Authorisation shall not be considered as warehoused goods in terms of Section 60 of the Customs Act. 12. The Applicant believes that it can debond the capital goods warehoused into the MOOWR unit by using EPCG authorization. The applicant has clarified that the query does not pertain to admissibility of depreciation benefits at the time of debonding as is admissible to EPCG Scheme, rather, the query is only whether at the time of de-bonding of capital goods imported und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R) in relation to goods in a warehouse . - (1) With the permission of the Principal Commissioner of Customs or Commissioner of Customs and subject to such conditions as may be prescribed, the owner of any warehoused goods may carry on any manufacturing process or other operations in the warehouse in relation to such goods. (2) Where in the course of any operations permissible in relation to any warehoused goods under sub-section (1), there is any waste or refuse, the following provisions shall apply :- (a) if the whole or any part of the goods resulting from such operations are exported, import duty shall be remitted on the quantity of the warehoused goods contained in so much of the waste or refuse as has arisen from the operations carried on in relation to the goods exported : PROVIDED that such waste or refuse is either destroyed or duty is paid on such waste or refuse as if it had been imported into India in that form; (b) if the whole or any part of the goods resulting from such operations are cleared from the warehouse for home consumption, import duty shall be charged on the quantity of the warehoused goods contained in so much of the waste or refuse as has arisen from the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facturing process or other operations may be carried on in relations to the goods warehoused therein. 12.4 Further, I have also referred to the Frequently Asked Questions (FAQs) on Manufacture and Other Operations in Customs Warehouse available on the official website of the CBIC (updated on 27th October 2020). FAQ No. 17 relied upon by the applicant is reproduced as under : 17. Can all export benefits under FTP and Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 (IGCR) be taken in Bonded warehouse simultaneously? Response : The eligibility to export benefits under FTP or IGCR would depend upon the respective scheme. If the scheme allows, unit operating under section 65 has no impact on the eligibility. In other words, a unit operating under section 65 can avail any other benefit if the benefit scheme allows. [Emphasis Supplied] Response to FAQ No. 17 whereupon the applicant has relied, makes it clear that the eligibility to export benefits under FTP or IGCR would depend upon the respective scheme and a unit operating under Section 65 can avail such benefits, if the benefit scheme allows. However, I find that Notification No. 26/2023-Customs, dated 1-4-2023 which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on notification. Similarly, observations of the Hon ble Supreme Court in the case of M/s. Grasim Industries Limited v. Collector of Customs. Bombay, 2002 as referred in para 10.9 (supra) are squarely applicable while interpreting the above notifications. 14. The applicant has submitted that supply of goods manufactured by the Applicant to third party customer qualify as exports in case the third-party customer exports such goods as it is outside India and the said goods move directly from the premises of the Applicant to the port of export. Some relevant paras of Chapters 2, 5 and 11 of current FTP are reproduced as under for ready reference to find out the answer to the question No. (viii) asked in the present Advance Ruling application : 2.41 Benefits for Supporting Manufacturers : For any benefit to accrue to the supporting manufacturer (as defined in Para 11.59 of FTP), the names of both supporting manufacturer as well as the merchant exporter must figure in the concerned export documents, especially in Tax Invoice/Shipping Bill/Bill of Export/Airway Bill. 2.42 Third Party Exports : Third party exports (except Deemed Export) as defined in Chapter 11 shall be allowed under FTP. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
