Customs drawback for SEZ supplies fails without payment from the SEZ foreign currency account and proper appellate procedure.
Revision against a customs drawback matter was held not maintainable because it was filed in the rebate form and under Central Excise provisions, whereas the correct remedy for customs drawback was under Section 129DD of the Customs Act in Form CA-8. The drawback claim also failed on merits because supplies by a DTA unit to an SEZ unit qualify only when payment is received from the SEZ unit's foreign currency account. Since the payment came from the overseas buyer and not from that account, the prescribed condition was not met. The rejection was therefore sustained on both procedural and substantive grounds.
Issues: (i) Whether the revision application was maintainable when it was filed in the form and under provisions applicable to rebate of central excise duty instead of the procedure prescribed for customs drawback matters; (ii) Whether drawback was admissible when the export proceeds were received from the overseas buyer and not from the foreign currency account of the SEZ unit.
Issue (i): Whether the revision application was maintainable when it was filed in the form and under provisions applicable to rebate of central excise duty instead of the procedure prescribed for customs drawback matters.
Analysis: The application was filed in Form EA-8 with reference to Rule 9 of the Central Excise (Appeals) Rules, 2001 and Section 35EE of the Central Excise Act, 1944, which are meant for rebate matters. The dispute, however, related to customs drawback under Chapter 10-A of the Customs Act, 1962, for which the prescribed remedy was under Section 129DD of the Customs Act, 1962 in Form CA-8. The filing was therefore not in the proper manner.
Conclusion: The revision application was not properly instituted and was not maintainable in the form in which it was filed.
Issue (ii): Whether drawback was admissible when the export proceeds were received from the overseas buyer and not from the foreign currency account of the SEZ unit.
Analysis: Eligibility for drawback on supplies by a DTA unit to an SEZ unit is governed by Section 26(d) of the Special Economic Zones Act, 2005 and Rules 30(5) and 30(8) of the Special Economic Zones Rules, 2006, as reflected in Circular No. 43/2007-Cus. dated 05-12-2007. The governing requirement is that payment for the supply must be received from the foreign currency account of the SEZ unit. On the facts, the real buyer was outside India, the SEZ unit acted only as a conduit, and the payment was not received from the SEZ unit's foreign currency account. The claimed benefit therefore did not satisfy the prescribed condition.
Conclusion: The drawback claim was inadmissible.
Final Conclusion: The rejection of the revision application was sustained because the matter was pursued under the wrong procedural route and the substantive condition for drawback under the SEZ scheme was not met.
Ratio Decidendi: Drawback for supplies by a DTA unit to an SEZ unit is admissible only when the prescribed payment condition is satisfied, namely receipt of consideration from the SEZ unit's foreign currency account, and the prescribed appellate procedure must be followed for the relevant customs remedy.
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