2014 (8) TMI 439 - HC - Central Excise

Court rules lack of authority in circular affecting footwear manufacturers' rates under Central Excise Rules. Finance Ministry confirms.

The court found that the Additional Commissioner lacked authority to issue a circular affecting footwear manufacturers' drawback rates, which should have ... Authority of the Additional Commission to issue modus operandi circular - Power of Board - Rule 19 (3) of the Central Excise Rules, 2002 - denial of Availment of All industry rate of drawback on clearance of packing material to the manufacturer exporters - whether to be treated as export or not - held that:- Petitioners have asked for clarification from the Board to remove the doubts in the matter and to stop the effect of the modus operandi circular No.1 of 2013 as well as to protect the interest on footwear export industries - The counter affidavit reveals that the petitioners' representation are pending consideration. - board directed to clarify the matter within 4 months - Matter remanded back. Issues:1. Authority of Additional Commissioner to issue circular affecting drawback rates.2. Jurisdiction of the Board to issue circular under Central Excise Rules.3. Nature and impact of the modus operandi circular on footwear exporters.Analysis:1. The petitioners, footwear manufacturers, challenged the authority of the Additional Commissioner, Central Excise, Kanpur to issue a circular affecting their industry rate of drawback on exports. The circular referred to a decision treating clearances of packing material to manufacturer exporters as exports. The petitioners argued that such circulars could only be issued by the Board under Rule 19(3) of the Central Excise Rules, 2002. The Finance Ministry confirmed that the circular was issued without proper authorization, indicating lack of jurisdiction. The petitioners sought clarification and protection of their interests in the footwear export industry.2. The petitioners' representations to the Finance Ministry and the Central Board of Excise and Customs highlighted the need for clarity and cessation of the circular's impact. The respondents contended that the circular was advisory in nature. The court noted that the representations were pending consideration and directed the Central Board of Excise and Customs to decide on the petitioners' representations within four months from the date of the court's order. This decision aimed to address the uncertainty caused by the circular and protect the interests of footwear exporters.3. The judgment focused on the procedural aspects of issuing circulars affecting industry rates of drawback for exporters. It emphasized the need for proper authorization and jurisdiction while also considering the impact on the concerned industries. By directing the Board to provide a reasoned order on the petitioners' representations, the court aimed to bring clarity and resolution to the issue, ensuring fair treatment and protection of the footwear export industry.