Duty drawback under the non-availment condition denied where the manufacturer had already taken CENVAT credit

Higher All Industry Rate duty drawback under Notification No. 103/2008-Cus. (N.T.) was available only where no CENVAT credit had been availed on the inputs or input services used to manufacture the exported goods. Because the goods were purchased directly from the manufacturer, and the manufacturer had admittedly taken CENVAT credit, the exporter failed the non-availment condition. The circular relied on applied only to merchant exporters buying from the local market and was not relevant on these facts. The exporter was therefore entitled only to the reduced drawback applicable to the case.

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Issues: Whether the exporter was entitled to higher duty drawback at the All Industry Rate when the manufacturer of the exported goods had availed CENVAT credit.

Analysis: The higher drawback under Notification No. 103/2008-Cus. (N.T.) dated 28.08.2008 was confined to cases where no CENVAT facility had been availed for the inputs or input services used in the manufacture of the export product. The goods were purchased directly from the manufacturer, not from the open market, and the manufacturer had admittedly availed CENVAT credit. The circular relied on by the exporter dealt with merchant exporters purchasing goods from the local market and did not apply to the present facts. The object of the notification was to prevent double by ensuring that drawback corresponding to the excise component was not granted where CENVAT credit had already been taken in manufacture.

Conclusion: The exporter was not entitled to the higher All Industry Rate drawback and was entitled only to the reduced drawback applicable on these facts.

Ratio Decidendi: Where the exported goods are procured directly from the manufacturer, higher duty drawback is unavailable if CENVAT credit has been availed in the manufacture of those goods; the exporter must satisfy the non-availment condition in the governing notification.

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