2013 (3) TMI 189 - CGOVT - Customs

Government rules in favor of applicant on ENA drawback eligibility dispute, sets aside orders, remands for new decision.

The government resolved the dispute in favor of the applicant regarding the eligibility of Extra Neutral Alcohol (ENA) for drawback under entry No. 2207 ... Eligibility for drawback under a Drawback Schedule entry - classification of exported goods under Heading 2207 - alignment of drawback schedule with the First Schedule up to the four-digit level - clarificatory Notification and retrospective clarification by Central Board of Excise & Customs - remand for fresh adjudication in light of administrative clarificationEligibility for drawback under a Drawback Schedule entry - classification of exported goods under Heading 2207 - clarificatory Notification and retrospective clarification by Central Board of Excise & Customs - remand for fresh adjudication in light of administrative clarification - Whether Ethyl Alcohol (ENA) of minimum 96.4% V/V strength is covered for drawback under Drawback entry No. 2207 10 90 and admissible to the claimed All Industry Rate. - HELD THAT: - Government examined the appeals and the Drawback Schedule entry relied upon by the applicant, and observed that the C.B.E. & C.'s Notification No. 84/2010-Cus.(N.T.) expanded Drawback entry No. 2207 10 90 to include 'Ethanol or Ethyl Alcohol, Rectified Spirit/ENA or otherwise having a minimum strength of 94.5% of Ethyl Alcohol'. Further, Circular No. 42/2011-Cus., dated 22-9-2011, clarified that ENA is covered under heading 2207 as Ethyl Alcohol and that this coverage would include periods prior to 20-9-2011. In light of the Notification and the Circular, and in the absence of any contrary departmental submissions addressing those clarifications, the Government concluded that the dispute regarding coverage of ENA under the said Drawback entry is resolved by those administrative clarifications. The Government therefore set aside the impugned orders and remanded the matters to the adjudicating authority to decide the claims in accordance with the stated Notification and Circular. [Paras 8, 9]Impugned Orders-in-Original and Orders-in-Appeal are set aside and the cases are remanded to the adjudicating authority for fresh decision in the light of Notification No. 84/2010-Cus.(N.T.) and Circular No. 42/2011-Cus., including their retrospective application.Final Conclusion: Revision applications allowed in part: impugned orders set aside and matters remanded to the adjudicating authority to determine the drawback claims for ENA in accordance with the C.B.E. & C. Notification and Circular; revision applications disposed of accordingly. Issues Involved:1. Eligibility of Extra Neutral Alcohol (ENA) for drawback under Drawback entry No. 2207 10 90.2. Interpretation of the description of goods in the Drawback schedule.3. Application of the General Rules of Interpretation of the First Schedule of the Customs Tariff Act, 1975.4. Clarification provided by Notification No. 84/2010-Cus. (N.T.) and Circular No. 42/2011-Cus.Detailed Analysis:1. Eligibility of Extra Neutral Alcohol (ENA) for Drawback under Drawback entry No. 2207 10 90:The applicant, engaged in the manufacture and export of Ethyl Alcohol (ENA) with a minimum strength of 96.4% V/V, claimed a drawback of Rs. 4.00 per litre under entry No. 2207 10 90. The original authority rejected the claim, stating that the description in the Drawback schedule was for 'Rectified Spirit (Ethyl Alcohol) having a minimum strength of 94.68% V/V,' which did not match the exported product's description. The appellate authority upheld this decision. However, the applicant argued that ENA, being a form of rectified spirit with higher purity, should be eligible for the same drawback rate.2. Interpretation of the Description of Goods in the Drawback Schedule:The applicant contended that the entry 'Rectified Spirit (Ethyl Alcohol)' implies ethyl alcohol subjected to rectification, and thus, ENA, which is ethyl alcohol with a higher purity obtained through rectification, should fall under this entry. The applicant emphasized that the entry's requirement of 'minimum strength of 94.68% V/V' means any ethyl alcohol with a concentration equal to or more than 94.68% should be eligible for the drawback.3. Application of the General Rules of Interpretation of the First Schedule of the Customs Tariff Act, 1975:The applicant argued that the Drawback schedule, aligned with the First Schedule of the Customs Tariff Act, 1975, should apply the General Rules of Interpretation mutatis mutandis for classifying export goods. Heading 2207 of the Customs Tariff Act includes 'Undenatured ethyl alcohol of an alcoholic strength by volume of 80% vol. or higher,' which covers ENA. Therefore, at the four-digit level, both rectified spirits and ENA are classifiable under the same heading.4. Clarification Provided by Notification No. 84/2010-Cus. (N.T.) and Circular No. 42/2011-Cus.:The applicant referred to Notification No. 84/2010-Cus. (N.T.), which expanded Drawback entry No. 2207 10 90 to include 'Ethanol or Ethyl Alcohol, Rectified Spirit/ENA or otherwise having a minimum strength of 94.5% of Ethyl Alcohol.' Further, Circular No. 42/2011-Cus. clarified that ENA is covered under heading 2207 as Ethyl Alcohol, applicable to all periods, including those before 20-9-2011. This clarification resolves the dispute and confirms the eligibility of ENA for the claimed drawback.Conclusion:The government, after reviewing the case records and the relevant notifications and circulars, concluded that the dispute regarding the eligibility of ENA for drawback under entry No. 2207 10 90 is resolved in favor of the applicant. The government set aside the impugned orders and remanded the cases back to the adjudicating authority to decide in light of the clarification provided by C.B.E. & C. The revision applications were disposed of on these terms.