TaxTMI 
TaxTMI 
2012 (10) TMI 79
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....ck permitted to the respondent, contrary to the express provisions of the said scheme. 2. Brief facts necessary to decide the case are that the respondent is in the business of readymade garments and textiles. It purchases these export items from various traders and exports them. On the basis of an existing scheme, it claims duty drawback on the inputs required for the manufacture of such items at drawback rates notified by the Central Government (also known as „All Industry Rates‟). These rates have two components i.e. customs duty element and another, excise duty component. 3. For the period 2003-2004 to 2006-2007, the respondent exported garments and textiles against 326 shipping bills with FOB value of Rs.90,32,98,529/-. It claimed Central Excise portion of duty drawback to the extent of Rs.1,43,15,400/- . The appellant alleged that during the course of investigation based upon the vigilance report it became aware that the respondent had fraudulently obtained in-admissible drawback of the Customs duty component of duty and that it had failed to provide copies of shipping bills and related documents. Consequently, the Commissioner of Customs issued a show cause....
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....ds manufactured from a job worker on his own account and on his behalf. He is responsible for paying excise duty. In such event, he can claim CENVAT credit for inputs procured and used for garment production. A merchant-manufacturer and exporter can claim CENVAT Credit but is under an obligation to furnish certificate-cum-declaration from his supporting job workers clarifying that they were manufacturing and supplying garments to this particular merchant exporter only. In this case, learned counsel urged that the respondent did not furnish any such declaration and was clearly ineligible to duty drawback benefit which it had availed. 6. It is argued on behalf of the Commissioner of Customs (Export) that the excise portion of duty paid on inputs used in manufacturing the goods is required to be paid through CENVAT Credit Scheme which grants them benefit. They cannot be refunded that through the draw-back scheme, which would amount to a double benefit. It is urged that the respondent did not ever produce such certificate. 7. The Tribunal after considering the Circulars relied upon by the Commissioner of Customs (Export), in this case, (i.e. 54/2001, 8/2003, 19/2005 & 16/2009), n....
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....nfirm such huge liability for past periods based on Circulars which were in the knowledge of the department and which were not implemented. We would like to rely more on the legal provisions. The only legal provision relied upon is Rule 3 of the drawback Rules. We agree with the interpretation to this Rule given by the Board in Circular 16/2009-Cus. The argument that this interpretation is applicable from date of issue of circular 16/2009-Cus is repugnant to logic because the Rule has remained the same except for amendment on 13-07-2006, to take care of incidence and rebate of Service Tax. So we are not inclined to rely on the word "henceforth" used in para 7 of this circular and uphold this demand." 9. The above discussion would show that the respondent is a merchant exporter. An important factual aspect highlighted and also noticed by the Tribunal is that the respondent does not engage in job work or getting garments stitched by others. It merely procures readymade garments and textiles and exports them. Rule 3 of the 1995 Customs and Excise Drawback Rules states that drawback are allowed on the export of goods as prescribed amount. A proviso to Section 3 (1) states that if th....
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....a result of the changes announced in the Union Budget, 2001-2002(Finance Bill stage and those made thereafter till the Finance Bill was enacted.) Though normally it is the actual manufacturer who is to pay duty of excise leviable on any commodity, considering the peculiar and very decentralised nature of garment producing sector certain special provisions have been made, wherein the merchants who get their garments produced by supplying materials to producing job working units have been recognised for registration/ duty payment etc. purposes. Vide Rule 4(3) of Central Excise (No.2) Rules, 2001, a merchant manufacturer, i.e., a merchant, who gets the goods manufactured from a job worker on his own account, is required to pay duty on the garments manufactured on his behalf on job work basis, either himself or authorise such job worker(s) to pay duty on his behalf. When merchant manufacturer pays duty, he is also entitled to avail of CENVAT for inputs procured and used for garment production by job workers" 12. Para 6 goes on to describe the procedure:- "These exporters shall also be required to furnish a certificate-cum- declaration as given in Annexure-II, from their supportin....