TaxTMI 
TaxTMI 
2015 (3) TMI 900
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....between January-2008 to March-2008 vide various shipping bills and claimed duty drawback during the period between July-2008 and October-2008 @ 16% of FOB value on their export under All Industries Rate (AIR) of Drawback, at ICD Nagpur. On Both the exported items, exporter claimed the higher rate of drawback @ 16% on the ground that they have not availed the Cenvat credit. As claimed by the applicant, the drawback of Rs. 1,93,96,394/- @ 16% was granted initially in respect of all Shipping Bills for the period January 08 to March/April 08. Subsequently, lower authorities have found that the applicant has indeed availed Cenvat credit of service tax paid on input services and as such they were entitled for AIR of drawback 3% instead of 16% as sanctioned to them. Accordingly, a show cause notice was issued and the same was adjudicated wherein the applicant was held to be eligible to the lower rate of drawback @ 3% and erroneously granted excess drawback of Rs. 15,79,26,612/- was confirmed as liable to be recovered under the provisions of Rule 16 of Customs, Central Excise Duties & Service Tax Drawback Rules, 1995. 3. Being aggrieved by the orders of the adjudicating authority, th....
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....er of the Commissioner (Appeals) is clearly a non-speaking order passed without considering any of the submissions made by the applicants. The Commissioner (Appeals) had not considered the decisions of the Hon'ble Supreme Court in the case of Bombay Dyeing & Mfg. Co. Ltd. - 2007 (215) E.L.T. 3 and the order of the Hon'ble High Court of Bombay dated 23-7-2012 in the case of Steelco Gujrat Ltd. in Writ Petition No. 7033/2011 which were specifically relied upon by the applicants before the Commissioner (Appeals). The basic finding of the Commissioner (Appeals) that once credit is taken, even after subsequent reversal the condition of the notification is not fulfilled, is contrary to the aforesaid decisions. For this reason itself, the impugned order is incorrect and liable to be set aside. 4.2 Notification No. 68/2007-Cus. specified under Condition 12(i) that duty paid on inputs should not be taken as Cenvat credit, it does not specify that duty paid on input services should not be taken as Cenvat credit. Further the condition that duty paid on input service was expressly specified only under Notification No. 103/2008-Cus. (N.T.), dated 29-8-2008. Therefore, during the period Ja....
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.... of such credit entitles the applicant to drawback at the rate of 16%. It must be noted that the applicants reversed Cenvat credit on inputs prior to the clearance of goods to the tune of approx. Rs. 13,97,65,631/-. The applicants were under the bona fide belief that no such reversal is warranted with respect to input services as regards the terms of the Notification No. 68/2007. Subsequently, the applicants have reversed this credit to the tune of Rs. 80,47,036/- with interest of Rs. 31,74,220/-. The demand of drawback for Rs. 15,79,26,679/- for availment of Rs. 80,47,036/- of credit is patently disproportionate and unjust and hence the said demand should be set aside. In the present case, the applicant claimed drawback of Rs. 19,39,63,969/- being the All India Drawback @ 16% in terms of Notification No. 68/2007-Cus. (N.T.), dated 16-7-2007. For this purpose, the applicants had reversed the credit of duty paid on the inputs used in the manufacture of exported final product and such credit reversed amounted to Rs. 13,97,65,631/-. This was undisputedly considered as fulfilment of the condition that Cenvat credit on inputs had not been availed. At the time of claiming the drawback, t....
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....er subsequent reversal of Modvat credit on inputs would still entitle an assessee for the benefits of an exemption notification even after the clearance of goods from factory. After considering the various cases in this regard, the Court came to the conclusion that such a reversal would entitle the assessee for the said benefit. The Hon'ble High Court of Punjab & Haryana in the case of Commissioner of Central Excise v. Diplast Plastic Ltd., 2010 (257) E.L.T. 397 (P&H) held that reversal of credit on input would satisfy the condition of non-availment of credit. This position of law has been reiterated by the Gujarat High Court in the case of CCE v. Ashima Dyecot Ltd., 2008 (232) E.L.T. 580 (Guj.) and affirmed by the Supreme Court in Commissioner v. Ashima Dyecot Ltd., 2009 (240) E.L.T. A41 (S.C.). In the present case, substantial credit was reversed prior to the clearance of the goods for export. The issue of whether reversal of Cenvat credit on the input services is necessary for the claiming drawback is under dispute. Further, the credit on input service was actually reversed by the applicant with interest as allowed by the various High Court and Supreme Court decisions. Finally, ....
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....here is no ambiguity in the notification. It is incorrect on the part of the department to contend that a condition which is in favour of the applicants is procedural condition, whereas condition which is in favour of the department is mandatory condition. Hence, the reliance placed on the decision of Authority of Advance Rulings in the case of VMT Spinning is incorrect. Further, the decision of Authority of Advance Rulings does not deal with the grounds mentioned in this appeal. Hence, it does not laid down the correct law. 4.11 The applicants submit that the drawback was sanctioned to the applicants by various orders. This fact is not in dispute. The Revenue issued show cause notice dated 24-5-2010 for recovery of the said drawback, which has culminated into the present proceedings. However, the department has not challenged the order sanctioning the drawback claim of the applicants. In other words, the department has not filed any appeal against the said decision sanctioning drawback to the applicants. The department had only issued the present show cause notice proposing to recover the drawback sanctioned to the applicants. In the absence of any challenge by way of appeal....
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.... Commissioner (Appeals), Customs & Central Excise, Nagpur has observed in Para 33 of the Order-in-Appeal that there is no condition stipulated in the said notification that higher drawback is allowed after reversal of inputs and input service credit. The condition stipulated that they should not have availed CENVAT facility. That means it totally bars availing of the credit in order to avail the 16% drawback instead of 3%. It is not left open to the exporter to give his own interpretation by citing case laws of various appellate forums which were given in different contexts. Moreover the case laws cited by the appellant in respect of Bombay Dyeing & Mfg Co. Ltd. - 2007 (215) E.L.T. 3 and the order of the Hon'ble High Court of Bombay dated 23-7-2012 in the case of Steelco Gujarat Ltd. in Writ Petition No. 7033/2011 are distinguishable from fact of this case. 6.2 As per Condition No. 12 of the Notification No. 68/2007, dated 16-7-2007 the expression "when Cenvat facility has not been availed," used in the said Schedule, shall mean that the exporter shall satisfy the following conditions, namely "(i). The exporter shall declare, and if necessary, establish to the satisfaction of....
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....ases, where the manufacturer-exporter makes a request in this regard stating very clearly the genuine difficulty he may be facing (like difficulty to segregate the finished goods made for home consumption from those meant for export) and not otherwise. These relaxations cannot be claimed as a matter of right by the manufacturer-exporter for being allowed to make reversal of credit after a period of three years and after much litigation, at the appellate stage. There is no such condition stipulated in the said notification that higher drawback is allowed after reversal of inputs and input service credit. The condition stipulated that they should not have availed Cenvat facility. That means, it totally bars availing of the credit in order to avail the 16% drawback instead of 3%. It is not left open to the exporter to give his own interpretation by citing case laws of various appellate fora, which clearly distinguishable and which were given in different contexts. Moreover the case laws cited by the appellant in respect of Bombay Dyeing & Mfg. Co. Ltd. - 2007 (215) E.L.T. 3 are clearly distinguishable from the facts of the present case as the same dealt with condition of availment of ....
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....Customs were reversed but the involved Cenvat credit amounts of the service tax not reversed (as per declarations) at the time of impugned exports. Thereafter proper show cause notice was issued and the case matter was adjudicated upon vide order-in-original dated 25-10-10 holding that the applicant as having been availed Cenvat credit facility (in the form of service tax amount) was entitled to drawback @ 3% of FOB instead of (erroneously granted on a wrong declaration) DBK @ 16% of FOB as was available only for those exported goods where no Cenvat credit facility was availed at all (including that of service tax amounts). The applicant herein filed appeal before jurisdictional Commissioner (Appeals) basically on the main ground that the above non-availment of Cenvat credit means Cenvat credit of Central Excise and Customs only and its meaning does not include the availed credit of Service tax involved in the impugned export goods. Commissioner (Appeals) vide impugned order-in-appeal dated 28-8-12 has upheld the impugned order-in-original and rejected the appeal filed by the applicant. Being aggrieved by the impugned Order-in-Appeal, the applicant has filed this revision applicati....
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....ny taxable services as input services, on some of which only the duty or tax chargeable thereon has been paid and not on the rest, or only a part of the duty or tax chargeable has been paid; or the duty or tax paid has been rebated or refunded in whole or in part or given as credit, under any of the provisions of the Customs Act, 1962 (52 of 1962) and the rules made thereunder, or of the Central Excise Act, 1944 (1 of 1944) and the rules made thereunder, or of the Finance Act, 1994 (32 of 1994) and the rules made thereunder, the drawback admissible on the said goods shall be reduced taking into account the lesser duty or tax paid or the rebate, refund or credit obtained " Government finds that the above provision stipulates that the amount of drawback can be reduced by taking into account the lesser duty or tax paid by way of rebate, refund or credit obtained. The plain wording of said provision reveal that if any amount has been availed as credit on any inputs, used in manufacture of final product, then such Cenvat credit should be reduced from eligible drawback. The rate of drawback applicable for different exports are notified by Government by issuing a Notification under Rule ....
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....f duty paid on input of Rs. 13,97,65,631/- so as to avail AIR Drawback @ 16% of Rs. 19,39,63,969/-. Department has accepted this reversal of Cenvat credit of Rs. 13,97,65,631/- as fulfilment of condition that Cenvat credit on inputs has not been availed. The demand is confirmed only on the ground that applicant has availed Cenvat credit of service tax paid on input services. Though applicant has now reversed the said credit amount of input services of Rs. 80,47,036/- along with interest yet the subsequent reversal of Cenvat credit has not been considered as fulfilment of condition of Notification which is self-contradictory. Government notes that jurisdictional Central Excise Range Superintendent had certified in the certificates issued by him that applicant was availing Cenvat credit facility and however they have reversed the Cenvat credit availed on inputs/raw materials. This fact is also recorded in the impugned order-in-original and order-in-appeal. As such department has accepted the availment of Cenvat credit and subsequent reversal of the same prior to export as non-availment of Cenvat credit on inputs. Government finds that once department accepted initial availing of Cenv....
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....ccordingly, final decision of case depends upon distinct facts of the case. Ratio of any order/judgment based upon distinct fact of the case cannot be applied universally in generalized manner in a case where involved fact is different. 12.3 Government observes that in case of Texcellance Overseas, the applicant had relied upon various judgments including Hon'ble Supreme Court's judgment in the case of CCE, Mumbai-I v. Bombay Dyeing Ltd. reported in 2007 (215) E.L.T. 3 (S.C.). In the said G.O.I., Order Nos. 217-222/2012, dated 8-5-2012, this authority had observed that the case laws cited by the applicant relate to availment of benefit of Central Excise notification and same cannot be made applicable to issue of admissibility of drawback claim in terms of Section 75 of the Customs Act, 1962. In this regard, it is noted that recently Hon'ble Madhya Pradesh High Court, Indore Bench has given judgment dated 15-4-2013 in Writ Petition No. 5894/2011 in case of M/s. Sterling Agro Industries Ltd., Malanpur reported as 2013-TIOL-329-HC-MP-CX. The said W.P. was filed against G.O.I. Revision Order No. 214-215/10-Cus., dated 6-7-2010 in which it was held that since the applicant manufac....
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....discussed applicability or otherwise of above said judgments in the impugned case. As such, the order of appellate authority suffers from this legal infirmity. 12.5 As such, Government proceeds to examine the issue in the light of above judgments : (a) In case of Chandarapur Magnet Wires Ltd., the Hon'ble Supreme Court has held that on reversal of Modvat credit before utilization, the assessee cannot be said to have taken credit of duty on inputs utilized in the manufacture of exported final product. This judgment clearly spells in unambiguous terms that reversal of Modvat amounts to non-availment of Modvat. (b) In case of Hello Mineral Water (P) Ltd., the Hon'ble Allahabad High Court has clearly held that reversal of Modvat credit amounts to non-taking of credit on inputs, and also that such reversal of credit can be made subsequent to clearance of final product. (c) In case of CCE v. Diplast Plastics Ltd., Hon'ble Punjab and Haryana High Court has held that the contention of department that assessee has reversed Cenvat credit after detection by ....