2018 (2) TMI 1842 - CGOVT - Customs

Duty Drawback Claim Rejected: Compliance and Eligibility Criteria Essential

The Revision Application filed by M/s. K.V. Aromatics Pvt. Ltd. was rejected by the court due to non-compliance with procedural requirements and failure ... Duty Drawback - rejection for the reason that although the applicant exported their goods to M/s. DHL-FTZ, who are a consolidator in FTWZ, yet the export proceed was not received from M/s. DHL-FTZ - Rule 30(8) of SEZ Rules, 2006 - Held that:- Actually the goods have been finally exported to M/s. Utexam Logistics Ltd., Ireland through M/s. DHL, a SEZ unit in India. The applicant itself has strongly asserted in the Revision Application that M/s. Utexam Logistics is the real buyer of the goods exported by the applicant and M/s. DHL is merely a conduit for M/s. Utexam Logistics. Considering this fact, the applicant’s claim for drawback in this case is not covered under C.B.E. & C. Circular No. 43/2007-Cus., dated 5-12-2007. The eligibility of drawback of duty against any export of goods by a DTA Unit to a SEZ unit is governed by Section 26(d) of the SEZ Act, 2005, Rule, 30(5) and Rule, 30(8) of the SEZ Rules, 2006 which are referred to in the C.B.E. & C’ s above mentioned circular. Rule, 30(8) of the SEZ Rules specifically provides that the drawback against supply of goods by DTA supplier shall be admissible provided payment for the supply are made from the foreign currency account of the SEZ Unit. Thus, to be eligible for claiming drawback of duty, it is imperative that the payment in foreign currency should be received by the DTA Unit from the SEZ Unit only. Revision application rejected. Issues involved:1. Rejection of drawback claim due to payment not received from the correct entity.2. Filing of Revision Application under the wrong provisions.3. Eligibility for duty drawback based on payment received from SEZ unit.4. Interpretation of SEZ Rules and Customs Circular for duty drawback eligibility.Analysis:1. The case involved the rejection of a drawback claim amounting to Rs. 18,08,645 by the original adjudicating authority due to the export proceeds not being received from the correct entity as required by Rule 30(8) of SEZ Rules, 2006. The applicant exported goods to M/s. DHL-FTZ but the payment was not received from them, leading to the rejection of the claim. The applicant contended that the goods were actually sold to M/s. Utexam Logistics Ltd. and not to M/s. DHL, who was merely a consignee. However, the duty drawback eligibility was linked to payment received from the SEZ unit, which was not fulfilled in this case.2. The Revision Application was filed under the wrong provisions, as it was filed in form EA-8 under Central Excise (Appeals) Rules, 2001 and Section 35EE of the Central Excise Act, which were relevant for the rebate of Central Excise duty, not for the drawback of Custom duty under Chapter 10-A of the Customs Act, 1962. The correct procedure required filing in form CA-8 under Section 129DD of the Customs Act, 1962, highlighting a procedural error by the applicant.3. The eligibility for duty drawback hinged on the payment received from the SEZ unit, as per Section 26(d) of the SEZ Act, 2005, Rule 30(5), and Rule 30(8) of the SEZ Rules, 2006. The applicant failed to meet the requirement of payment in foreign currency received from the SEZ unit, which was a prerequisite for claiming duty drawback. The order emphasized that payment should be made from the foreign currency account of the SEZ unit to be eligible for claiming drawback of duty, a condition not satisfied in this case.4. The interpretation of SEZ Rules and Customs Circular was crucial in determining duty drawback eligibility. The order highlighted that the actual payment of export proceeds in foreign currency was made by M/s. Utexam Logistics Ltd. and not by M/s. DHL, emphasizing the importance of payment received from the correct entity for duty drawback claims. The order reiterated the specific provisions of Rule 30(8) of the SEZ Rules and the requirements outlined in the Customs Circular, underscoring the necessity of compliance with these regulations for claiming duty drawback.In conclusion, the Government rejected the Revision Application filed by M/s. K.V. Aromatics Pvt. Ltd. based on the non-compliance with the procedural requirements and the failure to meet the eligibility criteria for duty drawback as stipulated by the SEZ Rules and Customs Circular.