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When duty drawback of Cus, CX & ST is availed on exported goods, assessee is not entitled for rebate under Rule 18 of CX Rules, 2002: HC

By TIOL News Service

CHENNAI, MAR 25, 2016: THE petitioner has filed a writ petition to issue a Writ of Certiorari to call for the records relating to the order No.51/2015-CX dated 24.08.2015, passed by the first respondent and quash the same.

It is the case of the petitioner that they are manufacturers of synthetic and blended textile yarn made out of raw materials, viz., duty paid polyester staple fiber or polyester viscose staple fiber. The petitioner utilised the said duty paid inputs without availing the benefit of Cenvat credit of the duty paid on the materials, as available under the CENVAT Credit Rules, 2004. The petitioners exported finished goods viz., yarn to various countries on payment of excise duty on yarn. For paying the excise duty on the goods exported, the petitioner utilizes the credit of duty paid on the capital goods used in the manufacture of such yarn and claimed rebate under Rule 18 of the Central Excise Rules, 2002. The goods were exported under drawback scheme.

The rebate claims were rejected on the ground that the petitioners have taken and utilised Cenvat credit and availed the benefit of higher rate of drawback and in terms of the Customs Notification No. 68/2011-Cus (N.T), the claimant cannot avail both Cenvat credit facility and higher rate of drawback simultaneously.

The revision application was also rejected and aggrieved by the same the Petition filed Writ Petition before the High Court.

After hearing both sides, the High Court held:

+ After clearing the goods on payment of duty under claim for rebate, the petitioners should not have claimed drawback for the central excise and service tax portions, before claiming rebate of duty paid and they should have paid back the drawback amount availed before claiming rebate. When this was not done, availing both the benefits would certainly result in double benefit.

+ The 'rebate' of duty paid on excisable goods exported and 'duty drawback' on export goods are governed by Rule 18 of Central Excise Rules, 2002 and Customs, Central Excise Duties and Service Tax Drawback Rules 1995. Both the rules are intended to give relief to the exporters by offsetting the duty paid. When the petitioners had availed duty drawback of Customs, Central Excise and Service Tax on the exported goods, they are not entitled for the rebate under Rule 18 of the Central Excise Rules, 2002 by way of cash payment as it would result in double benefit.

+ In the case on hand, the benefits claimed by the petitioners are covered under two different statutes - one under Customs, Central Excise Duties and Service Tax Drawback Rules 1995 under Section 75 of the Customs Act, 1962 and the other under Rule 18 of the Central Excise Rules, 2002. Since the issue, involved in the present writ petition, is covered under two different statutes, the judgment relied upon by the counsel for the petitioner is not applicable to the facts of the present case.

Accordingly, the High Court dismissed the Petition.

(See 2016-TIOL-581-HC-MAD-CX)


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