TaxTMI 
TaxTMI 
2023 (10) TMI 452
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....fit of the scheme would be availed only if exports were carried out within certain stipulated time frames. There is no dispute on the position that the assessee has achieved the target in that regard and is fully entitled to the benefit of ALS. While this is so, some portion of indigo blue imported by it duty free for the purpose of ALS was found to be in surplus and had been available for the purpose of further manufacture as well. 4. There is admittedly no embargo placed on utilization of the materials imported duty free, post satisfaction of the export obligation under the ALS. Notification No.31/97-Customs dated 01.04.1997 makes it clear that exempted materials, that have been imported, shall not be disposed of or utilized in any manner, except for utilisation in discharge of export obligation, prior to discharge of export obligation in full. 5. Thus, evidently, the assessee is free to deploy the raw materials imported after discharge of export obligations, in any manner as it deems fit, in accordance with law. This position also emanates from clause 4.1.5 of Foreign Trade Policy for the year 2004-09 (FTP 2004-09), to the effect that 'advance licence and/or materials impo....
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....ods exported under the DD Scheme. Hence, the entire drawback claimed, of an amount of Rs.2.23 crores (approx.) was proposed to be reversed with appropriate interest under Section 75A(2) of the Customs Act, 1962 (in short 'the Act"). Penalty was also levied in terms of Section 114(iii) of the Act. 11. As against this order, the assessee approached the Tribunal, which, by way of the impugned order, reversed the order in original. The reversal was done on multiple grounds. Firstly, the Tribunal noticed that insignificant quantity of the indigo blue, which is the subject matter of the litigation, had been used in the second round of manufacture, that is the round of manufacture wherein, benefit under the DD Scheme had been claimed. 12. Secondly, the Tribunal proceeded on the basis that the fractional quantity of the dye utilized, had been wholly consumed in the process of manufacture and hence, this by itself should not tilt the decision adverse to the assessee. Thirdly, and this is relevant, the Tribunal noted that the rate of duty imposed was the All Industry Rate (AIR). 13. Though they do not discuss the distinction between AIR and brand rate, in conclusion, they state that t....
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....3 in the following terms: 3. Drawback.- (1)Subject to the provisions of (a)the Customs Act, 1962 (52 of 1962) and the rules made thereunder, (b)the Central Excises and Salt Act, 1944 (1 of 1944) and the rules made thereunder, and (c)these rules, a drawback may be allowed on the export of goods at such amount, or at such rates, as may be determined by the Central Government: Provided that where any goods are produced or manufactured from imported materials or excisable materials on some of which only, duty chargeable thereon has been paid and not on the rest, or only a part of the duty chargeable has been paid; or the duty 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 Excises and Salt Act, 1944 (1 of 1944) and the rules made thereunder, the drawback admissible on the said goods shall be reduced taking into account the lesser duty paid or the rebate, refund or credit obtained: Provided further that no drawback shall be allowed- ..... (ii)if the said goods are produced or manufactured, using imported materials or excisable ....
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....ck on Export Goods Manufactured from out of inputs, some of which are Non-Duty Paid. I am directed to invite your attention to the above subject and to say that a doubt has been raised as to whether the All Industry Rate of duty drawback is to be denied / reduced on export goods using inputs some of which are non-duty paid. It has been represented that the All Industry Rate of duty drawback is sought to be denied / reduced on floor coverings and made ups on the ground that a part of yarn used has not suffered any duty. Likewise, it has been brought to the notice of the Board that Show Cause Notices are being issued to the garment exporters at the various places and the All Industry Rate of drawback is sought to be denied / reduced on the ground that they have used duty free trimmings & embellishments in the manufacture of export goods. The exporters are being charged with misdeclaration / non-declaration and are being asked to return duty drawback amounts received by them by an amount equal to the duty exemption enjoyed. This, according to trade, amounts to taking away by the left hand what has been given by the right hand. 2. The matter has been examined by the Ministry. In th....