TaxTMI 
TaxTMI 
TaxTMI 
2017 (10) TMI 365
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.... its order dated May 28, 2013, in respect of the export of goods in question and to act according to law. (b) A writ of and/or order and/or direction in the nature of Prohibition prohibiting the respondents, their servants and agents from giving any effect to and/or taking any step whatsoever in pursuance of and/or under the said refusal of the respondent No.6 to allow the duty drawback claim filed by your petitioner, vide its order dated May 28, 2013 in respect of the export of goods in question and all the purported proceeding thereunder and/or relating thereto and/or in pursuance thereof so that the same may be quashed and/or set aside and conscionable justice might be rendered. (c) A writ of and/or order and/or direction in the nature of Certiorari commanding the respondents, their servants and agents to transmit and certify the records relating to the said refusal of the respondent No.6 to allow the duty drawback claim filed by your petitioner, vide its order dated May 28, 2013 in respect of the export of goods in question and all the purported proceeding thereunder and/or relating thereto and/or in pursuance thereof so that the same may be quashed and/or set aside and c....
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.... particulars of the letter of permission mentioned therein identified the manufacturing-exporting Unit within the zone, viz., Unit-III M/s. Kariwala Green Bags, was not found acceptable. It is specifically stated by the petitioner that the domestic tariff area Unit which had supplied the duty paid raw materials and the three Units within the zone all belong to the same corporate entity, i.e., Kariwala Industries Limited. It is contended by the petitioner that as between different Units of the same corporate entity, there can be no sale or purchase involving receipt or payment of any consideration. As the petitioner at that time had not opened any foreign currency account, in order to substantially comply with Rule 30(8) of the Special Economic Zone Rules, 2006 (hereinafter referred to as the "said Rules"), the petitioner had transferred in foreign currency, money equivalent to the value of the duty paid raw materials from its current accounts to which the foreign currency export proceeds of Unit-III were credited, to its current account used for the domestic tariff area Unit. At the time of making such transfer, the bank debited the current account used for domestic tariff Unit co....
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....hat export proceeds had been realized, the Commissioner of Customs (Appeals) directed sanction of the drawback claim. Consequently, the concerned respondent authorities preferred a revisional application in respect of the order dated December 30, 2011. The concerned Joint Secretary reversed the order of the Commissioner of Customs (Appeals) and restored the order of the Assistant Commissioner of Customs holding, inter alia, as follows:- "(a) Rule 30(15) of the Rules permitted inter-unit transfer of materials subject to compliance of laid down procedure, violation of which can be treated as a procedural condonable lapse and not a reason to deny substantial benefit like drawback. However, the petitioner had not produced the relevant records for verification by the Assistant Commissioner of Customs and in the absence of valid documentary evidence regarding proper maintenance of records for utilisation of materials, the claim of the petitioner cannot be accepted. (b) Payment from a foreign currency account was a mandatory condition of rule 30(8) and payment in foreign currency from a current account did not satisfy the requirement of rule 30(8)." This order dated May 28, 2013, ....
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.... It is further contended on behalf of the respondent authorities that there are three Units in the FSEZ in the name of Kariwala having separate letters of permission, namely, (a) Kariwala Green Bags(Unit-III of Kariwala Industries Limited), (b) Kariwala Industries (Unit-II) and (c) Kariwala Industries. As per the letters of undertaking, Kariwala Green Bags is the obligor and Kariwala Industries Limited is the surety. The seal that was affixed on the documents bears the seal of Kariwala Green Bags and in the shipping bill that of Kariwala Industries. By not maintaining separate accounts and intermingling accounts of different Units, it was not possible to take clear picture of the various restrictive obligations under the law. It is also contended on behalf of the concerned respondent authorities that in order to submit the claim for drawback, the concerned Unit has to show export and, thus, foreign exchange earnings. The word "Unit" is very important. Hence in the absence of Kariwala Green Bags not undertaking the procedure established by law, the claim of Kariwala Green Bags cannot be granted and the challenged made at the instance of the writ petitioner, namely, Kariwala Industri....
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....s no concept of group companies and the same is limited to a single company. The respondent authorities have also referred to Rules 34 and 22 (2) of the said Rules in order to contend that every unit and developer shall maintain proper accounts, financial year wise and such accounts should clearly indicate in value terms, the goods imported or procured from the domestic tariff area provided that the unit engaged in both trading and manufacturing activities shall maintain separate records for trading and manufacturing activities. The word "Unit" according to the respondent authorities is very important since the law provides that the unit has to comply with the obligations for being under the purview of the SEZ and once the unit has accepted the provisions of the SEZ Act, the consequences of not following the statutory provisions has to be suffered by the said unit. The respondent authorities have referred to Rule 53 of the said Rules which states that "That the unit shall achieve positive NFE to be calculated cumulatively for a period of five years from the commencement of production." The respondent authorities have also referred to section 26(1)(d) read with section 26(2) of the....
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....ount has to be maintained by the unit concerned and non-compliance thereof shall be deemed that foreign currency has not been received by the said unit. For the purpose of answering the two questions which have arisen, it is necessary to quote the relevant rules, namely, Rules 22(2), 30(8), 30(15) and 34 of the said Rules. The said Rules are quoted hereinbelow:- "22(2). Every Unit and Developer shall maintain proper accounts, financial yearwise, and such accounts which should clearly indicate in value terms the goods imported or procured from Domestic Tariff Area, consumption or utilization of goods, production of goods, including by-products, waste or scrap or remnants, disposal of goods manufactured or produced, by way of exports, sales or supplies in the domestic tariff area or transfer to Special Economic Zone or Export Oriented Unit or Electronic Hardware Technology Park or Software Technology Park Units or Bio-technology Park Unit, as the case may be, and balance in stock: Provided that unit and developers shall maintain such records for a period of seven years from the end of relevant financial year: Provided further that the unit engaged in both trading and manufac....
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....the authorized operations but if the goods admitted are utilized for purposes other than for the authorized operations or if the Unit or Developer fails to account for the goods as provided under these rules, duty shall be chargeable on such goods as if these goods have been cleared for home consumption: Provided that in case a Unit is unable to utilize the goods imported or procured from Domestic Tariff Area, it may export the goods or sell the same to other Unit or to an Export Oriented Unit or Electronic Hardware Technology Park Unit or Software Technology Park Unit or Bio-technology Park Unit, without payment of duty, or dispose off the same in the Domestic Tariff Area on payment of applicable duties on the basis of an import licence submitted by the Domestic Tariff Area buyer, wherever applicable." A plain reading of Rule 22(2) reveals that every unit is required to maintain proper accounts of the goods procured from Domestic Tariff Area and their consumption/utilization, production of goods and disposal by way of exports or sales in the domestic tariff area or transfer to Special Economic Zone or Export Oriented Unit or Electronic Hardware Technology Park or Software Tec....
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....they are guilty of misdeclaration. However, it is not the case of the Customs Authorities that the duty paid raw materials brought into the zone were used otherwise than for manufacture of goods which were exported. If the Customs Authorities were not satisfied that the materials were so used, they would have demanded duty from the writ petitioner as provided under Rule 34. The said Rule has been invoked by the Customs Authorities in the instant case not for demanding duty but because, according to them, the raw materials brought into one unit cannot be treated as raw materials of another unit in the same zone. However, if one looks at the proviso to Rule 34 carefully, one would find that the said proviso itself contemplates of transfer of goods from one unit to another in the same zone without payment of duty. Rule 30(15) also provides for transfer from one unit to the another in the same zone without filing of any Bill of Entry. The finding of the revisional authority regarding non-maintenance of records which would demonstrate utilization of raw materials brought into Unit-III by another Unit of the writ petitioner in the same zone is not in consonance with the findings in the....
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....als procured from Domestic Tariff Area in foreign currency, such payment was not made from a Foreign Currency Account as contemplated under Rule 30(8) of the said Rules. The provision relating to exemptions, drawbacks and concessions to every developer and entrepreneur is provided under section 26 of the SEZ Act. Clause (d) of sub-section (1) of section 26 of the SEZ Act provides as follows:- "(d) drawback or such other benefits as may be admissible from time to time on goods brought or services provided from the Domestic Tariff Area into a Special Economic Zone or Unit or services provided in a Special Economic Zone or Unit by the service providers located outside India to carry on the authorised operations by the Developer or entrepreneur;" Sub-section (2) of section 26 provides for the manner in which the Central Government may prescribe the terms and conditions subject to which, the exemptions, concessions, drawback or other benefits shall be granted to the developer or entrepreneur under sub-section (1). The statutory definition of the word "prescribed" can be found under clause (w) of section 2 of the SEZ Act which reads as follows :- "(w) "prescribed" means prescribed ....
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....ange Management (Foreign Currency Accounts by a person resident in India) (Third Amendment) Regulations, 2002. The language of the said Regulation makes it clear that a unit located in a Special Economic Zone "may open hold and maintain a Foreign Currency Account...."(emphasis supplied). As such, it would be apparent that Regulation 6A does not make it mandatory for a unit located in a Special Economic Zone to open a Foreign Currency Account. If such a unit chooses to open a Foreign Currency Account as provided under Regulation 6A, it has also to comply with the other requirements provided under the said Regulation; such as credit of all foreign exchange funds received by the unit into such account, etc.. Regulation 6A is only an enabling provision whereby a unit in a Special Economic Zone is permitted to open a Foreign Currency Account - if it so chooses - subject to the compliance of the conditions as stipulated therein. Simply because a unit has not opened a Foreign Currency Account as provided under the said Regulation, neither realization of the export proceeds become invalid nor can the actual receipt of foreign currency be either ignored or dismissed. It is clear from the r....