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TMI Blog2004 (3) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... e said to be illegal, save and except to the extent it is sought to be given retrospective effect. Neither Circular No. 68/97 nor Circular No. 39/99 suggests that the brand rate of drawback was restricted to the indigenous inputs not mentioned in SION. On the other hand Circulars 68/97 and 39/99 would show that where Modvat credit was not available, brand rate of drawback was made available over and above the DEPB. Thus, the new Circular No. 39/2001, though cannot be faulted being in accord with the EXIM policy, however, in respect of the drawback claims which had been completed and drawback had been given pursuant to Circular No. 39/99, the drawback cannot now be rejected or claimed back under the Circular No. 39/2001. The exporters who had already made commitments and exported the goods acting on the Circular No. 39/99 cannot be deprived of the brand rate drawback scheme, of course - subject to fulfilment of all conditions of the Circular No. 39/99 until the Circular No. 39/2001 came into effect. What has been provided for the first time vide Circular No. 39/2001 cannot be permitted to be applied in the garb of clarification with retrospective effect from the date the Circular No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations of the exporters, the Board decided that the exports made under the DEPB scheme of those products which cannot avail Modvat credit on additional duty of customs (CVD) paid in cash on imported inputs or excise duty paid on indigenous inputs as no excise duty was payable on the export goods, would be entitled for payment of brand rate of drawback. The brand rate of drawback was to be fixed by the Director of Drawback against additional customs duty/excise duty suffered on Inputs, on submission of proof of payment of duty by the exporters. The Board thereafter by Circular No. 39/99, dated 25-6-1999 issued the following circular : "Circular No. 39/99-Cus., dated 25-6-1999 (From F.No. 605/145/97-DBK) Government of India Ministry of Finance (Department of Revenue) New Delhi. Subject : Extension of Brand Rate of Drawback Scheme to exports under DEPB Scheme - Reimbursement of Additional Customs Duty (CVD) paid in cash on imported inputs and Excise duty paid on indigenous inputs in export goods - Regarding. Various representations have been received from Trade/Exporters that wherever final goods exported by them are liable to compounded levy of Central Excise duty, in such cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ixed by the Directorate of Drawback against excise duty suffered on inputs. The Board, however, subsequently on 6th July, 2001 issued Circular No. 39/2001. Since the said circular is under challenge to the extent stated above, we deem it fit to reproduce the said circular. It reads thus : "Circular No. 39/2001-Cus., dated 6-7-2001 (From F.No. 605/35/2001-DBK) Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject : Extension of Brand Rate of Drawback Scheme to exports under DEPB Scheme against DEPB-cum-Drawback shipping bills - Regarding. Attention is invited to Board's Circular Nos. 68/97-Cus., dated 2-12-1997 and 39/99-Cus., dated 25-6-1999 [1999 (111) E.L.T. T33] (Both issued from F.No. 605/45/97-DBK in terms of which facility of brand rate of Duty Drawback Scheme was extended to exports made under DEPB Scheme against DEPB-cum-Drawback Shipping bills subject to conditions specified in the said two Circulars. Certain doubts have arisen2. in regard to the types of cases whereunder the facility of both DEPB as well as Brand Rate of Drawback will be admissible. It has been observed that EXIM Policy provisions are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unded levy scheme on textile fabrics was introduced and thereby the scheme of deemed Modvat credit came to an end with effect from 16th December, 1998. By telex dated 16th December, 1998, the Ministry of Finance informed the exporters that till an all India industry rate of drawback on processed fabrics was determined, the exporters of fabrics processed by independent processors may file special brand rate fixation applications as per the Drawback Rules, 1995. It is petitioner's case that in respect of 18 shipping bills, listed in Exhibit B-1, the petitioner received orders on diverse dates in 2000 allowing drawback at the rates indicated therein. We may notice that out of these 18 shipping bills, 7 bills have been disallowed vide Exhibits A-1 to A-7. For the period between September, 1999 and January, 2001, the petitioner submitted 129 shipping bills for claim of brand rate of drawback as per the Circular No. 39/1999, dated 25th June, 1999. In 45 shipping bills listed in Exhibit "C" out of 129 shipping bills, according to the petitioner, due to oversight/inadvertence the words "Cum Drawback" after the word "DEPB" left to be typed. These 45 shipping bills were rejected. Some other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; (3) Mazda International (P) Limited v. Union of India, 1995 (77) E.L.T. 526; (4) H.M. Bags v. Commissioner of Central Excise, 1997 (94) E.L.T. 3, and (5) Paper Products v. Commissioner of Central Excise, 1999 (112) E.L.T. 765. 6.On the other hand, the respondents stand in opposition to the writ petition is that Circular No. 68/97 was aimed at operationalising the provisions of the EXIM policy pertaining to DEPB Scheme whereby brand rate of drawback would be admissible to exporters who were unable to avail Modvat/Cenvat credit of additional customs duty paid in cash on imported inputs or excise duty paid on indigenous inputs, utilised in the manufacture of product exported under DEPB scheme. The said circular has to be read harmoniously with the extent EXIM policy provisions. According to the respondents, under DEPB Scheme the exporter is entitled to grant on basic export duty on surcharge of deemed basis on the inputs mentioned in SION published in the Handbook of Procedures which go into the production of export products. The exports under DEPB scheme are not entitled to drawback. This was done as DEPB was considered to be an alternative scheme. However an exception was made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat provides for DEPB, scheme reads thus : The objective of Duty Entitlement"7.25 Passbook Scheme is to neutralise the incidence of basic customs duty and surcharge thereof on the import content of the export product. The neutralization shall be provided by way of grant of duty credit against the export product. The duty credit under the scheme shall be calculated by taking into account the deemed import content of the said export product as per Standard Input-Output Norms and determine basic custom duty and surcharge thereof payable on such deemed imports. The value addition achieved by export of such product shall also be taken into account while determining the rate of duty credit under the Scheme. Under the Duty Entitlement Pass Book (DEPB) Scheme, an exporter shall be eligible to claim credit as a specified percentage of fob value of exports made in freely convertible currency. The credit shall be available against such export products and at such rate as may be specified by the Director General of Foreign Trade by a Public Notice issued in this behalf. Any item except those mentioned as restricted in ITC (HS) classifications of Export and Imports items shall be allowed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Rule 6(1)/7(1) of the Customs and Central Excise Duties Drawback Rules, 1995, at the rate fixed on specific application. The procedure laid down under Drawback Rules, 1995, will have to be followed for fixation of Brand Rates of Drawback. Such exporters will have to apply to the Directorate of Drawback for fixation of Brand Rates on exports under DEPB. To enable the exporters to file their application for Brand Rates, they may be permitted to file "DEPB-cum-Drawback Shipping Bill'. However, under no circumstances, the exporter are allowed to claim All-Industry Rate of Drawback." 11.A perusal of the said circular would show that the representations were made to the Board by various exporters as well as the people in that trade that the duties suffered by the exporters being unable to avail Modvat credit of additional customs duty (CVD) paid in cash on imported inputs or excise duty on indigenous inputs, utilised in the production of export goods was not fully compensated to them at the time of export wherever the goods exported by them were not liable to Central Excise duty. It was in this background that the Board examined the issue and it decided that the exports made under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bring the matter more in conformity with the EXIM Policy. Obviously, Circular 39/2001 cannot be said to be illegal, save and except to the extent it is sought to be given retrospective effect. Neither Circular No. 68/97 nor Circular No. 39/99 suggests that the brand rate of drawback was restricted to the indigenous inputs not mentioned in SION. On the other hand Circulars 68/97 and 39/99 would show that where Modvat credit was not available, brand rate of drawback was made available over and above the DEPB. Thus, the new Circular No. 39/2001, though cannot be faulted being in accord with the EXIM policy, however, in respect of the drawback claims which had been completed and drawback had been given pursuant to Circular No. 39/99, the drawback cannot now be rejected or claimed back under the Circular No. 39/2001. The exporters who had already made commitments and exported the goods acting on the Circular No. 39/99 cannot be deprived of the brand rate drawback scheme, of course - subject to fulfilment of all conditions of the Circular No. 39/99 until the Circular No. 39/2001 came into effect. What has been provided for the first time vide Circular No. 39/2001 cannot be permitted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of goods. After all, no manufacturer has a right to claim exemption. It is a relief which is granted by the Government in case where it thinks appropriate and proper. Exemptions could be granted subject to certain conditions. They may even be granted, as in this particular case, to a small variety of items, which would otherwise fall under Tariff Item 15A. If the explanation could have been inserted in 1971 when the exemption was first promulgated there is, in our opinion, no legal impediment in the Government issuing a notification which has the effect of amending an earlier notification and thereby restricting the operation of the exemption notification. Under the General Clauses Act when power is given to the Government to issue notification there is inherent in the same power to amend the same. This is precisely what has happened in the present case." 16.What is said by the Supreme Court in the aforestated paragraph is that what could have been done by the Central Government by including explanation at the time when the notification was first promulgated in the year 1971 could always be done by inserting explanation in the year 1978. We are afraid by the said proposition, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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