TaxTMI 
TaxTMI 
2017 (11) TMI 1536
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....ted 20.04.2000. The Circular pertains to the eligibility of DTA units for grant of duty drawback against duties suffered on their inputs which are processed by EOU/EPZ units. The petitioner seeks for declaring the said public Notice as ultravires paras 2.1, 2.2, 7.4, 7.17 and 9.17 of the Export Import Policy 1992-97 (EXIM Policy) being violative of Articles 14 and 265 of the Constitution of India apart from being contrary to CBEC Circular No.67/1998-Cus dated 14.09.1998. In fact the amendment which is challenged in the said Writ Petition is a sequel to the earliest policy Circular dated 03.09.1998 in Circular No.35/98-99 and policy Circular No.6 dated 20.05.1998. Though the prayer sought for is to declare the public Notice dated 25.05.2000 as being ultravires what is required to be decided is whether the policy Circular No.6, dated 20.05.1998 would apply to the case of the petitioner. (ii) In W.P. No.11646 of 2003, the petitioner has challenged the order passed by the 3rd respondent, dated 28.02.2003 by which the petitioner was informed that in terms of policy Circular Nos.6 and 35, they are not eligible for DEPB benefit for the exports effected through EOU. (iii)....
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....used for the export of finished goods by the petitioner and other DTA units while it does not provide for such restriction of DTA units sub-contracting work from another DTA unit for export. It is further submitted that the impugned policy Circulars cannot deny the benefit which is conferred on the petitioner under the policy and at best the policy Circular can be clarificatory in nature but it cannot take away the right conferred on the exporter under the EXIM Policy. 5.The case of the respondent is that the petitioner is a manufacturer and an exporter of Denim Fabrics and they are registered with the Central Excise Department and DGFT and they are a Domestic Tarrif Unit (DTA Unit). As the exporters of cotton Denim Fabrics and garments, the petitioner is availing credit under DEPB Scheme and they are availing the benefit extended in Customs Circular No.31/2000-Cus dated 20.04.2000 after taking credit of duty paid on the inputs. The grey yarn is being processed in the 100% EOU at Hosur and it comes back to the petitioner for undergoing further process in their factory and the petitioner send back the Denim Fabric to the 100% EOU in Hosur for further process like mending, final i....
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....n-charge, the second appellant, who in turn forward a sealed cover containing invoice, shipping bills, packing list and letter for removal to the jurisdictional officer at the Port of export. After such export, the first appellant applied for duty Drawback and to a certain extent, it was allowed. However, the further claim was not considered after which the appellants were issued show cause calling upon them to explain as to why the drawback ought not to be denied to them on the goods that have been manufacutred by the second appellant which being a 100% EOU. The appellants filed their objections. However, the adjudicating authority denied the duty drawback and imposed penalty. The appeal filed before the Commissioner (Appeals) was disposed of stating that only revision would lie as against such order in terms of Section 129DD before the Joint Secretary, Government of India, Ministry of Finance, Department of Revenue, New Delhi. The revisional authority set aside the order passed by the Commissioner (Appeals) and restored the order-in-original. Aggrieved by the same, the appellants preferred a writ petition before the High Court of Karnataka. The writ petitions were rejected on the....
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....elying on these two Circulars, the Duty drawback is denied to the first appellant. It is settled law that a right vested under a statutory provisions cannot be taken away by virtue of Circulars issued from time to time, if they are contrary to statutory provisions. Under Section 75, to be eligible for Duty drawback, all that the exporter has to satisfy is that the goods are manufactured, processed or on which any operation has been carried out in India. It is immaterial where the said manufacturing or processing has taken place. It may be in his Unit or it may be in EOU unit. Guiding principle is, it should have been manufactured or processed in India and exported. The Circular 67/98 was issued only to enable EOU Units to overcome the problems which they were facing, so that, instead of keeping their machinery idle, they were permitted to accept job work so that the capacity is utilized and they are able to over come the recession in the world market. It is by virtue of the said Circular, the EOU undertook the job work. The Circular makes it very clear that if the idle capacity of EOU/EPZ Units is utilized and the textile, ready-made garments, agro-processing and granite sectors un....
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....in the open market and by virtue of such Circular, the EOU underook the job. Further it was pointed out that the appellants product do not belong to the EOU but it belongs to DTA and in fact export is done in the name of DTA and once the DTA exports the manufactured goods and if they have paid duty on raw materials, then under Section 17, they are eligible for duty drawback. Therefore, it was held that the right conferred in the statute cannot be taken away by issuing circulars which run contrary to the statutory provisions. Similarly it was held that Circular No.31/2000, where it is stated that under no circumstances, the exporter will be allowed to claim All India Industry Rate also runs counter to the Act and Rules. Thus, when the Government by notification decides what is the public policy known in terms of industry rate, irrespective of duty paid on raw materials, the exporter of finished goods is entitled to duty drawback at such rates. The above decision of the Division Bench was affirmed by the Hon'ble Supreme Court after noting that the decision of the Madras High Court on the same issue has not been challenged by the revenue and they decline to entertain the Special L....