2010 (4) TMI 891 - CGOVT - Customs

Government affirms duty drawback decision, dismisses revision application as meritless.

IN RE: HYUNDAI MOTOR INDIA LTD.

IN RE: HYUNDAI MOTOR INDIA LTD. - 2012 (283) E.L.T. 474 (G. O. I.) Issues Involved:1. Right to claim duty drawback post-abandonment of goods.2. Validity and effect of the disclaimer certificate issued by MMTC.3. Entitlement to duty drawback under the Customs and Central Excise Duties Drawback Rules, 1995.4. Applicability of special brand rate versus All Industry Rate of duty drawback.5. Jurisdictional authority's role in determining and granting duty drawback.Issue-wise Detailed Analysis:1. Right to Claim Duty Drawback Post-Abandonment of Goods:The applicant, M/s. Hyundai Motors India Ltd. (HMIL), argued that there was no relinquishment of their right to claim duty drawback even after surrendering the cars to the insurance company. However, the Government noted that HMIL had abandoned all rights and interests in the goods and had disassociated from any warranties or liabilities. The abandonment included the right to claim drawback, as evidenced by the settlement with TATA AIG for Rs. 25.59 Crores. The Government emphasized that duty drawback is not an absolute right but a subjective incentive scheme subject to provisions of the Customs and Central Excise Duties Drawback Rules, 1995.2. Validity and Effect of the Disclaimer Certificate Issued by MMTC:HMIL claimed that the disclaimer certificate issued by MMTC was valid and allowed them to claim the duty drawback. However, MMTC argued that the disclaimer was issued under duress and thus invalid. The lower authority and the Government noted that the disclaimer certificate was disputed, and without a clear and undisputed disclaimer, the manufacturer's claim for drawback could not be considered. The Government upheld the view that the disclaimer could not override the abandonment of rights by HMIL.3. Entitlement to Duty Drawback Under the Customs and Central Excise Duties Drawback Rules, 1995:The Government observed that the title to the goods had transferred to TATA AIG upon settlement of the insurance claim, and TATA AIG, through MMTC, was the rightful exporter. As per the Drawback Rules, if export sale proceeds are not realized within the permitted period, the drawback can only be recovered from the exporter. Since MMTC realized the export proceeds, they were regarded as the exporters eligible for the drawback.4. Applicability of Special Brand Rate Versus All Industry Rate of Duty Drawback:HMIL argued that they were entitled to the special brand rate of duty drawback, which had been determined in their favor. However, the lower authority granted the All Industry Rate of drawback to MMTC. The Government noted that once a brand rate is determined, it cannot be overridden by the All Industry Rate unless revoked by the Central Government. In this case, the brand rate was not revoked, but the Government found that the special circumstances (abandonment and disputed disclaimer) justified the lower authority's decision to grant the All Industry Rate to MMTC.5. Jurisdictional Authority's Role in Determining and Granting Duty Drawback:The Government emphasized that jurisdictional authorities have the mandate to halt, hold, or recover erroneously sanctioned drawback claims under Rule 16A of the Drawback Rules. The determination of eligibility for drawback under Rule 7 does not guarantee absolute entitlement, especially in cases of significant changes in the state of goods or ownership, as seen in this case.Conclusion:The Government upheld the lower authorities' decision, rejecting HMIL's claim for duty drawback and affirming the grant of the All Industry Rate of drawback to MMTC. The revision application was dismissed as devoid of merits, and the order-in-appeal was deemed legal and proper.