Cus - When Petitioners have admitted that they had manufactured goods & exported them in terms of sub-Rule (2) of Rule 19 of CER, 2002, question of admitting claim towards customs allocation drawback is not at all justified: HC
By TIOL News Service
MUMBAI, MAR 16,2016: THE Petitioners are 100% EOU and are engaged in the manufacturer of zinc oxide which is mainly used in the tyre and paint industry.
They filed three Shipping Bills dated 14.08.2004, 21.08.2004 and 03.09.2004 for export of zinc oxide under claim for drawback under Sr. no. 28.06 of the Drawback Schedule. The goods exported were manufactured by using the inputs received indigenously as per rule 19(2) of the CER, 2002 and no rebate was claimed against any inputs or the final products exported as the export was under Bond.
Rule 19(2) reads -
| (2) Any material may be removed without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, for use in the manufacture or processing of goods which are exported, as may be approved by the Principal Commissioner or Commissioner, as the case may be. |
The petitioner claimed drawback in terms of Notification no. 26/2003-Cus(NT) dated 01.04.2003 under All Industry Rate. But, however, no Cenvat or rebate against Rule 18 of CER, 2002 was claimed.
The Deputy Commissioner of Customs by his Order dated 02.05.2006, rejected the Petitioners' claim for draw back of Rs.14,07,860/- in respect of the aforesaid three shipping bills holding that the Petitioners' claim for All Industry rate of Drawback is inadmissible in view of the specific inadmissibility laid down in proviso 2(f) to the Notification dated 01.04.2003.
The Commissioner (Appeals) by Order dated 15.09.2006 rejected the Appeal filed by the Petitioner. By the said Order, the Respondent Commr(A) held that since the Petitioners have availed the benefit of Rule 19 of the CER, 2002, they are not entitled for drawback rates as specified in the Table.
The Revision Petition was also rejected by the Joint Secretary to Government of India by an order dated 29.01.2009.
It was further held that the claim of Petitioners of Customs portion of All Industry Rate of drawback is not legal and proper and that the proviso 2(f) of the Notification implies that any drawback is not available to the Petitioners, who have availed of Rule 19(2) of the CER, 2002.
The petitioner is before the High Court.
The essence of their claim is that the Petitioner is entitled for Customs drawback as, according to them, merely because they are not entitled to claim drawback on account of excise, it would not by itself disentitle the Petitioners from claiming drawback towards Customs duty.
The counsel for the Revenue submitted that it is well settled that fiscal and taxation laws has to be strictly construed; that the Petitioners have availed of the rebate towards the Central Excise and this itself disentitles the Petitioners from claiming any alleged drawback for Customs Duty; that the question of invoking the provisions of Section 75 of the said Act would not be applicable in the present case more so since the Petitioners have not paid any amount towards Customs Duty.
The General Note 2 of the notification 26/2003-Cus, clause (f) reads -
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2. The rates of drawback specified in the said Table shall not be applicable to export of a commodity or product if such commodity or product is-
(f) manufactured or exported in terms of sub-rule (2) of Rule 19 of the Central Excise Rules, 2002;
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The High Court after considering the elaborate submissions observed -
++ On going through the said relevant clauses, we find that the view taken by the authorities below that the Petitioners cannot avail of the Customs drawback, cannot be faulted. There is no scope of bifurcating drawback towards customs and excise allocation.
++ On the basis of the admitted facts by the Petitioners themselves that they had manufactured their goods and exported them in terms of sub-Rule (2) of Rule 19 of the Central and Excise Rules, 2002, the question of admitting the claim of the Petitioners towards customs allocation drawback is not at all justified. The said Notification clearly provides an exclusion of the applicability of the entire Notification in specific situations which have been specified therein. As such, nothing further can be read into such Notification.
++ It is well settled that the taxation and fiscal statutes have to be strictly construed. The Courts cannot read words into such proviso.
++ The exercise submitted by Counsel appearing for the Petitioners, to bifurcate the non-applicability of the said Notification into the claims towards customs allocation, cannot be accepted. This exercise would be totally in contravention of the very Notification no. 26/2003.
++ Para 3 of the Circular 89/2003-Cus dated 06.10.2003 cannot be read in isolation when Para 4 of the Circular clearly provides that while allowing drawbacks, it should be ensured that the exporters do not avail all the facility under Rule 19(2) of the Central Excise Rules of 2002. Once it is not disputed that the Petitioners have availed of the benefits under Rule 19(2) of the said Central and Excise Rules of 2002, the question of availing any drawbacks in terms of the subject Notification would not arise at all.
++ The Petitioners admittedly availed of the said benefits and removed exported excisable goods without payment of duty from the factory and, as such, the question of availing of any drawback in terms of the said Scheme is not at all justified.
Holding that there is no infirmity in the impugned order, the Petition was rejected.
(See 2016-TIOL-506-HC-MUM-CUS)
