Special Civil Application No. 8025 of 2015 with SCA No. 2753 of 2016. Case: Ratnamani Metals and Tubes Ltd. Vs Union of India. Gujarat High Court CEGAT & CESTAT Cases

Case NumberSpecial Civil Application No. 8025 of 2015 with SCA No. 2753 of 2016
CounselFor Appellant: Shri Paresh M. Dave with Paritosh Gupta, J.C. Patel and Dhaval Shah, Advocates and For Respondents: Shri Devang Vyas, Y.N. Ravani and Ms. Maithili D. Mehta, Advocates
JudgesAkil Kureshi and A.Y. Kogje, JJ.
IssueCustoms Act, 1962 - Section 75
Citation2016 (339) ELT 509 (Guj.)
Judgement DateMay 06, 2016
CourtGujarat High Court CEGAT & CESTAT Cases


Akil Kureshi, J. (Oral)

  1. In these petitions, facts somewhat differ. However, legal controversy being common, we have heard them together. We may notice facts from each petition.

  2. In Special Civil Application No. 8025/2015, the petitioner has challenged an order dated 9-10-2014 [2015 (320) E.L.T. 684 (G.O.I.)] by which the Government of India allowed the revision petition of the department and set aside the order of Commissioner (Appeals) dated 11-7-2013. The petitioner is in the business of manufacturing goods which are exported by the petitioner. For the purpose of the manufacturing activity, the petitioner imports various inputs and raw materials. The petitioner imported various items such as polyethylene, adhesive epoxy, etc. by paying customs duty utilising Duty Entitlement Pass Book Scrip ("DEPB scrip" for short) which the petitioner had purchased from the market. While exporting the final product manufactured with the aid of such imported inputs, the petitioner desired to avail duty drawback. For such purpose, the petitioner applied for determination of brand rate of drawback in terms of Rule 6 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 (hereinafter referred to as "the Rules of 1995"). The Additional Commissioner of Customs rejected said application by an order dated 19-4-2013 on the ground that the duty was not paid in cash but through DEPB scrip. According to him, the imports made under DEPB scheme are exempt from payment of customs duty and that therefore, it cannot be stated that the imports had suffered customs duty. The petitioner challenged the order of competent authority before the Commissioner (Appeals), who by his order dated 11-7-2013 allowed the appeal. He referred to the Board Circular No. 41/2005, dated 28-10-2005 and observed that in the said circular, it is clarified that additional customs duty paid through debit in DEPB is allowed as brand rate of duty drawback. He made the following observations:

    "8.1 On the other hand on going through the para 10 to 12 reproduced above, on the ground that the element of CVD and 4% special CVD are eligible for fixation of brand rate however, element of Basic Customs duty, debited through the DEPB scrip is not eligible for drawback. The lower adjudicating authority has held in this regard that,

    "....... I find that as discussed hereinabove, I find that as discussed hereinabove, (sic) one exception has been made by the Government in case of CVD and special CVD and for that provisions are made in the notifications itself, as well as clarifications are issued. However, no such clarification is issued with regard to Basic Customs Duty. Therefore, if the intention of the Government was to allow drawback of that portion of BCD which was debited through DEPB scrip, the Government must have issued some clarification. Since there is no such clarification, it is clear that the intention of the Government is not to grant drawback of that portion of BCD which is debited in DEPB, by treating as exempted fully."

    8.2 The appellant has on the other hand contended that no tax or duty, in any 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 debited in the DEPB scrip. This clarification was interpreted as to limiting the benefit of drawback only on additional duty leviable under Section 3 of the Customs Tariff Act and not to cover the drawback on basic customs duty when debited in the DEPB. This order the petitioner has challenged in this petition.

  4. In Special Civil Application No. 2753/2016, the petitioner has challenged an order dated 28-12-2015 by which the Commissioner (Appeals) dismissed the appeal of the petitioner and held that the petitioner would not be entitled to duty drawback. This issue arose in the background of the fact that the petitioner is an exporter of Acyclic Amide and avails of various schemes such as Vishesh Krishi and Gram Udyog Yojana ("VKGUY" for short), Focus Market Scheme ("FMS" for short) and Focus Product Scheme ("FPS" for short) under which certain incentives have been granted by the Government of India on the exports made by the exporter. In this case also, the question relates to availability of duty drawback where the basic customs duty has been paid through the credited incentive in the MLFPS scheme. Here also, the Government of India contends that the duty drawback is not available unless the customs duty is paid in cash and not through debit in the scrip.

  5. In the background of such...

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