2013 (10) TMI 1308

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....hishek Industries Limited), Budhani, are engaged in the manufacture and export of various types of 100% Cotton Yarn falling under chapter headings 5205 of the Customs Tariff Act, 1975. 2.1 Brief facts of the case of Revision Application No. 375/03/DBK/ 13-RA are that : Drawback claim of Rs. 2,32,219/- in respect of 100% cotton yarn exported vide shipping Bill No. 096014, dated 23-4-2010 filed by the applicant. A show cause notice dated 25-7-2011 was issued to applicant wherein it is alleged that why the drawback claim of Rs. 2,32,219/- should not be rejected taking into consideration the provisions of Rule 3(1)(ii) of Customs, Central Excise Duties and Service Tax Drawback Rules, 1995, and in view of the decision of Hon'ble Supreme Court held in the case of M/s. Rubfilla International Ltd. The original authority vide impugned Order-in-Original mentioned at Sr. No. (1) of above table, rejected the drawback claim. 2.2 Brief facts of the case of Revision Application No. 375/03-A/DBK/13-RA are that : Drawback claim for Rs. 2,87,763/- in respect of 100% Cotton Yarn exported during Jan. 2009 was sanctioned by Assistant Commissioner of Customs, Mandideep ICD, Bhopal ....

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....and input services. 4.2 We would like to further mention that the "Cotton" is subjected to "Nil" rate of Excise Duty and Customs duty. Department of Drawback has never considered the duty levy on cotton for the purpose of fixation of All Industry Rate of Drawback in respect of cotton yarn. The product i.e. cotton which is having absolute exemption from payment of Excise & Customs Duty can't be sourced voluntarily on payment of duty for availing drawback. 4.3 All Industry Duty Rates for export products are fixed considering the duty incidence suffered on various inputs used in the manufacture of export goods. The basic aim of allowing drawback is to relieve these duties so that the export products become competitive in the international market. Hence only such export products are entitled to drawback where the inputs suffer duties whether of Customs or of Central Excise. In case of product namely "Cotton" the drawback rate has been calculated on the duty paid on packing material, consumables and input services which are chargeable to duty of Excise & Customs. Raw Cotton being subject to Nil Customs & Excise Duty has not been factored for arriving at All Industry Duty....

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....oduct at prior stages of manufacture. Further, the input services and packing materials are also utilized and need to be factored while arriving at a rate of duty drawback. In view of facts, it may not be correct to deny benefits of AIR to the exporters for present. In light of above Board's letter and subsequent directions of Commissioner, the competent authority had sanctioned all the duty drawback claims of exporters." Hence, the above clearly depicts the stand of C.B.E. &. C. and Commissioner directions for sanction of Drawback. Considering the same, the proceedings should be dropped. 5. Personal hearing was scheduled in this case on 29-8-2013. Shri Sanjay Malhotra, Member, Corporate Advisory Board and S.K. Sindhu, Asstt. Manager, Excise, appeared on behalf of the applicant who reiterated the grounds of revision application. Nobody attended hearing on behalf of department. The representatives of applicant also stated that Commissioner (Appeals) subsequently in his Order-in-Appeal No. 38/BPL/13, dated 5-2-2013 in the case of M/s. Anant Spinning Mills Raison MP, has allowed drawback claim in such case. 6. Government has carefully gone through the relevant case ....

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....try Rates of drawback are based on the concept of averages, where the drawback rate itself as well as its customs and excise portions are based on weighted averages of consumption of imported/indigenous inputs of a representative cross-section of exporters and the average incidence of duties suffered on such inputs. These rates have no relation to the actual input consumption pattern or the actual duty incidence suffered on inputs of a particular exporter or individual consignments exported by any exporter under drawback claim. It was categorically stated in the said Circular that the first proviso to Rule 3 of Drawback Rules, 1995, is meant for the Ministry and that it essentially provides a guideline as to how the duty drawback rates are to be determined in certain situations and is not intended for the field formations to use this rule for arbitrarily altering All Industry Rates of duty drawback in the case of individual exporters for individual consignments." 8.2 C.B.E. & C. has further clarified in Board's D.O Letter F. No. 609/98/2007-DBK, dated 1-7-2009 as under : "The position of the Ministry in the matter is that all industries rates of duty drawback would be av....

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....anufactured out of duty paid imported rubber. However, in the present case, there is no such requirement in period. Hence, the fact of the relied upon case are totally different from the present case. The question of fixation of drawback rate for cotton yarn after considering duty suffered on raw cotton would not arise. AIR rate of drawback for various type of cotton yarn would have been fixed by considering average duty element in respect of other inputs and service tax suffered on input services received by the manufacturer exporter. Hence, I agree with the contention of the applicant that the decision of CESTAT in the case of M/s. Rubfilla International Ltd. is distinguishable from the facts and circumstances of instant case. The judgment of M/s. Rubfilla International Ltd. pertains to export effected during 7-5-2002 to 3-2-2003. During this period incidence of input services was not considered for fixation of drawback rate. Impact of service tax was considered first time in para 3 of Board's Circular No. 19/2006, dated 13-7-2006. Now, incidence of service tax paid in respect of input services utilized during the manufacture of exported goods is also considered for fixation o....