TaxTMI 
TaxTMI 
2025 (1) TMI 636
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....er BSCL can claim duty drawback under Rule 6/Rule 7 of the Customs and Central Excise Duties Drawback Rules, 2017 (notified vide Notification No. 88/2017, dated 21st September 2017) for goods manufactured in the MOOWR premises (Manufacturing and Other Operations in Warehouse Regulations, 2019) and exported therefrom? (ii) If yes, whether there is a requirement that there should be import of duty paid raw materials consumed for manufacture of exported goods. Whether duty drawback would be available on goods exported by BSCL if the corresponding raw materials are procured without payment of customs duty and also for domestic procurement on payment of GST? (iii) Whether BSL (as merchant exporter) can claim Duty Drawback under Rule 6/Rule 7 of the Customs and Central Excise Duties Drawback Rules, 2017 on export of goods manufactured by BSCL. (a MOOWR unit)? (iv) If yes, whether there is a requirement that there should be import of duty paid raw materials consumed for manufacture of exported goods. Whether Duty Drawback under Rule 6/Rule 7, as above, would be available on goods exported by BSCL if the corresponding raw materials are procured without paym....
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....e MOOWR unit using duty paid inputs/raw materials either imported or procured locally. The Applicant is also contemplating import of raw materials under advance authorization. The Applicant believes that it is eligible to use Advance Authorization scheme for import of raw materials into the MOOWR unit which would be used for manufacture of finished goods and thereafter exported by BSCL or BSL to fulfil the export obligation. The Applicant is also contemplating to debond certain capital goods on which the benefit of deferral of customs duty for import of capital goods has been claimed under the MOOWR Scheme. The Applicant believes that it can debond the capital goods warehoused into the MOOWR unit by using EPCG authorization. 3. Statement of the applicant containing its interpretation of law and/or facts, as the case may be, in respect of the questions on which advance ruling is required is submitted by the applicant as follows : 3.1 The applicant proposes to have a new model of export of goods from the MOOWR premises and would like to confirm the eligibility of duty drawback for goods manufactured and exported from the said premises. The rates of drawback at present have been....
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....ation) into the MOOWR unit which would be used for manufacture of finished goods (listed out by the applicant in the said application) and thereafter exported by BSCL or BSL to fulfil the export obligation, further, EPCG Scheme allows import of capital goods for pre-production, production and post-production at zero customs duty. Capital goods imported under EPCG Authorization for physical exports are also exempt from IGST and Compensation Cess, as provided in the notification issued by Department of Revenue. The Applicant believes that it can debond the capital goods warehoused into the MOOWR unit by using EPCG authorization. 3.3 The applicant has submitted that Section 75 of the Customs Act read with The Customs and Central Excise Duties and Drawback Rules, 2017 (the Duty Drawback Rules) provide for Duty Drawback of imported material used in the manufacture of exported goods. As per Section 75 of the Customs Act, read with the Duty Drawback Rules, there are 3 different ways of claiming Duty Drawback : (i) Draw Back as per All Industry Rate of Duty Drawback (as per Rule 3 and Rule 4 of the Duly Drawback Rules) (ii) Draw Back as per Brand rate (Rule....
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.... are used in the production or manufacture of goods and the duties paid on such materials or components : Provided that- (i) in case an exporter is exporting the aforesaid goods from more than one place of export, he shall apply to the Principal Commissioner or Commissioner of Customs, having jurisdiction over any one of the said places of export; (ii) the Assistant Commissioner of Customs or Deputy Commissioner of Customs, as the case may be, may extend the aforesaid period of three months by a period of three months and the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, may further extend the period by a period of six months; (iii) the Assistant Commissioner of Customs or Deputy Commissioner of Customs or Principal Commissioner of Customs or Commissioner of Customs, as the case may be, may, on an application and after making such enquiry as he thinks fit, grant extension or refuse to grant extension after recording in writing the reasons for such refusal; (iv) an application fee equivalent to 1% of the FOB value of exports or one thousand rupees whichever is less, shall be payable fo....
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....of Customs, as the case may be, may extend the aforesaid period of three months by a period of three months and that the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, may further extend the period by a period of six months; (iii) the Assistant Commissioner of Customs or Deputy Commissioner of Customs or Principal Commissioner of Customs or Commissioner of Customs, as the case may be, may, on an application and after making such enquiry as he thinks fit, grant extension or refuse to grant extension after recording in writing the reasons for such refusal; (iv) an application fee equivalent to 1% of the FOB value of exports or one thousand rupees whichever is less, shall be payable for applying for grant of extension to the Assistant Commissioner of Customs or Deputy Commissioner of Customs, as the case may be and an application fee of 2% of the FOB value or two thousand rupees whichever is less, shall be payable for applying for grant of extension by the Principal Commissioner of Customs or Commissioner of Customs, as the case may be. 3.6 Further, the applicant has relied upon the following judgments : • M/s. First....
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....vernment vide Circular No. 31/2000-Cus, F. No. 609/41/2000-DBK, dated 20th April 2000 had clarified that DTA exporters will be eligible for grant of duty drawback against duties suffered on inputs processed by EOU/SPZ units for manufacture of goods which are exported. The Circular further informs that DTA exporters will be eligible for payment of Brand Rate of Drawback. 3.8 The applicant has further made a reference to Para 9 of Circular No. 48/2011-Cus., dated 31 October 2011, where it has been clarified as follows : "9. Doubts have been expressed regarding simultaneous availment of benefits under Advance License/Advance Authorization Scheme along with All Industry Rates of duty drawback. In this regard attention is invited to the sub-para (b) of para (8) of the notes and conditions of the notification No. 68/2011-Cus. (N.T.) dated 22-9-2011. It stipulates that the All Industry Rate of drawback is not available if the goods are exported in discharge of export obligation against Advance Licence except under certain conditions. It is clarified that in general, the benefits of All Industry Rates of duty drawback and Advance Licence Scheme are not available simultaneously.....
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....e in manufacture of export goods. 3.11 The applicant further submitted that use of EPCG license to debond capital gods from the MOOWR premises has not been restricted under the MOOWR Regulations. The applicant has referred to CBIC clarification vide FAQ dated 27 October 2020. the relevant extract of the clarification is as below : "17. Can all export benefits under FTP and Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 (IGCR) be taken in Bonded warehouse simultaneously? Response: The eligibility to export benefits under F'FP or IGCR would depend upon the respective scheme. If the Scheme allows, a unit operating under section 65 has no impact on eligibility. In other words, a unit operating under section 65 can avail of any other benefit, if the benefits scheme allows. 'The applicant submits that given the above and the fact that there is no restriction for use of EPCG license to pay duty of goods debonded from MOOWR premises under the MOOWR Regulations, the Applicant can apply for EPCG license and debond the capital goods imported under the MOOWR license by utilizing the said EPCG license for payment of customs duty on such debondin....
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....rd party exporter for exports thereof cannot be considered as DTA sales. 3.13 In the light of aforementioned and in its understanding the Applicant has contended that the duty drawback would be allowed from the date of the first export subject to condition that application for fixation of brand rate is filed within the specified timelines and the answers to all the questions asked by the applicant reproduced (supra) in para 1 should be 'Yes'. 4. The concerned jurisdictional Customs Commissionerate i.e. the Commissioner of Customs (Preventive), Vijaywada has responded to the subject application vide letters dated 18-10-2023 as below: 4.1 The Units operating under Section 65 read with Section 58 of the Customs Act are entitled to import capital goods, machinery, inputs etc. without payment of duty or deferred payment of duty by following the provisions under Chapter IX. Insofar as domestic procurement is concerned, applicable rates of taxes shall be payable and exemptions, if any, can also be availed. By virtue of simply being a unit operating under Section 65, they shall not be entitled to procure goods domestically without payment of taxes. 4.2 Since the warehouse opera....
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....s duties, whether the benefit of exemption notified vide Notification No. 26/2023-Customs, dated 1st April 2023 can be availed by the Applicant. There is nothing in the provisions of law (either under the MOOWR Scheme or the EPCG Scheme) which prohibits claim of such exemption. The exemption under Notification No. 26/2023-Customs, dated 1st April 2023 should be admissible if the conditions stipulated in the said notification are fulfilled by the Applicant. Applicant further states that it is in a position to comply with all conditions prescribed under Notification No. 26/2023-Customs, dated 1st April 2023 at the time of debonding of capital goods from MOOWR Scheme and therefore there is no reason as to why the benefit should be denied to the Applicant. The Notification No. 26/2023 is an exemption notification and it is trite that any exemption notification should be construed strictly at the threshold. The Hon'ble Supreme Court in the case of Union of India v. Wood Papers Limited, (1990) 4 SCC 256 made a distinction between stage of finding out the eligibility to seek exemption and stage of applying the nature of exemption. Relying on the decision in Collector of Central Exci....
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....fications simultaneously in their unit, they can avail, but the said schemes are independent in nature governed by respective laws and authorities and they cannot be clubbed with one another and cross utilization of the schemes for paying respective duties is not allowed. If the applicant wants to import the capital goods under Advance or EPCG authorisation and keep in their factory for manufacturing of their final product and also if they want to claim duty drawback benefits on the duty paid inputs used in the manufacture of their resultant products, they can do it, but only after debonding of capital goods already received under MOOWR Scheme by paying all the applicable duties along with interest without claiming any depreciation of the Capital goods used thereof and also only after surrendering/Cancellation of their MOOWR Licence. Basically the concept of MOOWR Scheme is "Deferment of duty payment" i.e., Units operating under MOOWR Scheme can keep the imported goods either Capital goods or raw materials in their factory as long as they want without any time restriction. But, if they want to clear the goods in Domestic Tariff Area, they have to pay all the applicable Customs duti....
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....entatives Shri Sanjeev Nair, Shri Shreeni Pillai and Shri Anand Parasrampuria were present for the applicant M/s. Blue Star Climatech Limited. They reiterated their written submission filed with the application. They contended that all of the (08) questions asked in the application are fit to be answered in their favour. The department was represented by Joint Commissioner of Customs, Ms. Sowmya Nuthalapati who reiterated their written submission provided on 27-12-2023 and 18-10-2023 and submitted that schemes cited by the applicant are independent schemes and cannot be clubbed. The representatives of the applicant reiterated the case laws already cited in the application. 9. I have taken into consideration all the materials placed on record in respect of the subject (08) questions including submissions made by the applicant during the course of both the personal hearings. I have gone through the submissions received from the jurisdictional Commissionerate and the rebuttals to that filed by the applicant. I therefore proceed to decide the present application and to answer all the (08) questions asked by the applicant on the basis of the information on record as well as the exist....
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.... (c) the principles to be adopted for the purposes of determination of value of the goods under the provisions of the Customs Act, 1962 (d) applicability of notifications issued in respect of tax or duties under this Act or the Customs Tariff Act, 1975 or any tax or duty chargeable under any other law for the time being in force in the same manner as duty of customs leviable under this Act or the Customs Tariff Act; (e) determination of origin of the goods in terms of the rules notified under the Customs Tariff Act, 1975 and matters relating thereto. (f) any other matter as the Central Government may, by notification, specify. 10.4 As is clear from the applicant's questions No. (i) to (v) reproduced (supra) the matter does not pertain to classification of goods under the Customs Tariff Act, 1975 or to the grant of exemptions of duty under Section 25(1) of the Customs Act, 1962 and these questions are neither concerned with the valuation nor with origin of imported goods. In plain meaning, the issue also does not pertain to applicability of notifications issued in respect of tax or duties under this Act or the Customs ....
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....d in respect of tax or duty under the Customs Act, 1962 or under the Customs Tariff Act, 1975 or any tax or duty chargeable under any other law for the time being in force in the same manner as duty of customs leviable under this Act or the Customs Tariff Act. Needless to say that the duty under the Customs Act is charged and levied in terms of Section 12 of the Customs Act read with Section 2 and/or 3 of the Customs Tariff Act, 1975. It is further important to note that the term duty is defined under Customs Act, 1962 as per follows : "2. Definitions In this Act, unless the context otherwise requires - (15) "duty" means a duty of customs leviable under this Act". [Emphasis Supplied] 10.6 On the other hand, drawback is defined under section 2(a) of the Drawback Rules, 2017 as : '2.(a) "drawback" in relation to any goods manufactured in India and exported, means the rebate of duty excluding integrated tax leviable under sub-section (7) and compensation cess leviable under sub-section (9) respectively of section 3 of the Customs Tariff Act, 1975 (51 of 1975) chargeable on any imported materials or excisable goods used in the manufact....
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.... been issued by the Central Government in exercise of the powers conferred by Section 75 of the Customs Act, 1962 (52 of 1962) and Section 37 of the Central Excise Act, 1944 (1 of 1944), and not under the power vested under Section 12 of the Customs Act or Section 2 or 3 of the Customs Tariff Act. In the present case the matter on which Advance Ruling is sought pertains to duty drawback, which is a kind of refund of duty and not a levy of duty. It is also to understand that provision related to the power of Central Government to grant exemption from duty is enumerated under Section 25 of the Customs Act, 1962. Exemption is a kind of reduction or removal of compulsory duty leviable that would otherwise be imposed on import/export and any question related to this aspect is specifically covered under clause (b) of the sub-section (2) of Section 28(H) of the Customs Act, 1962, whereas, the words refund/rebate/drawback are not expressly envisaged under the provision of the Section 28(H)(2)(d) of the Custom Act inasmuch as all the provisions here are related to the questions having a bearing on rate of duty leviable on import/export. The terms used 'leviable' and 'payable' are differentl....
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....ed in the same clause and it is observed that these words are associated with the words duty and tax. Therefore, addition of the word 'drawback' with the words duty or tax would be unwarranted and extraneous. Further, in the case of Harshad Chiman Lal Modi v. DLF Universal Ltd. (2005) 7 SCC 791, the Hon'ble Supreme Court held that "where a court has no jurisdiction over the subject-matter of the suit by reason of any limitation imposed by statute, charter or commission, it cannot take up the cause or matter. An order passed by a Court having no jurisdiction is a nullity. 10.10 In view of the above discussions and provisions, I have arrived at the conclusion that the questions Nos. (i) to (v) (reproduced supra) involved in the present application do not fall within the ambit of any parameter, on which Advance Ruling can be sought. 11. I have gone through the Circular No. 34/2019-Cus., dated 1st October 2019 issued under F. No. 473/03/2015 -LC (pt). and para 14 thereof is reproduced as under for ready reference : "14. The issue of procurement of imported goods that are exempt from duty or are chargeable to nil rate of duty into a warehouse operating under section 65....
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....e considered as warehoused goods in terms of Section 60 of the Customs Act. 12. The Applicant believes that it can debond the capital goods warehoused into the MOOWR unit by using EPCG authorization. The applicant has clarified that the query does not pertain to admissibility of depreciation benefits at the time of debonding as is admissible to EPCG Scheme, rather, the query is only whether at the time of de-bonding of capital goods imported under the MOOWR Scheme, when the applicant is required to pay appropriate customs duties, whether the benefit of exemption notified vide Notification No. 26/2023-Customs, dated 1st April 2023 can be availed by the Applicant. 12.1 Further, I have also gone through the relevant chapters of the current Foreign Trade Policy (FTP) to decide the case at hand. Para 2.36 of the FTP is reproduced as under for ready reference : "2.36 Private/Public Bonded Warehouses for Imports : (a) Private/Public bonded warehouses may be set up in DTA as per rules, regulations and notifications issued under the Customs Act, 1962. Any person may import goods except prohibited items, arms and ammunition, hazardous waste and chemicals and war....
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....n the quantity of the warehoused goods contained in so much of the waste or refuse as has arisen from the operations carried on in relation to the goods exported : PROVIDED that such waste or refuse is either destroyed or duty is paid on such waste or refuse as if it had been imported into India in that form; (b) if the whole or any part of the goods resulting from such operations are cleared from the warehouse for home consumption, import duty shall be charged on the quantity of the warehoused goods contained in so much of the waste or refuse as has arisen from the operations carried on in relation to the goods cleared for home consumption. Further, as per Section 2 of the Customs Act, 1962, 'warehoused goods' are defined as any goods which are deposited in a warehouse. From the above discussed provisions, it is amply clear that all the three warehouses are set up under different provisions of the Act and they have their own procedures. Public and Private Bonded warehouses are set up to only deposit the goods and not any manufacturing process or other operations are specifically provided in these two warehouses in relation to the goods warehoused ther....
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....xport benefits under FTP or IGCR would depend upon the respective scheme. If the scheme allows, unit operating under section 65 has no impact on the eligibility. In other words, a unit operating under section 65 can avail any other benefit if the benefit scheme allows. [Emphasis Supplied] Response to FAQ No. 17 whereupon the applicant has relied, makes it clear that the eligibility to export benefits under FTP or IGCR would depend upon the respective scheme and a unit operating under Section 65 can avail such benefits, if the benefit scheme allows. However, I find that Notification No. 26/2023-Customs, dated 1-4-2023 which exempts certain capital goods from customs duty leviable thereon, nowhere specifically extends such duty exemption benefits to the capital goods on which the benefit of deferral of customs duty has already been claimed under the MOOWR Scheme. Moreover, response to FAQ No. 17 is also not supporting specifically the contention of the applicant on this particular aspect. I am of the view that the response to FAQ No. 17 has nowhere given clarification about the question asked in the present application inasmuch as this response does not cover the activity conte....
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....he port of export. Some relevant paras of Chapters 2, 5 and 11 of current FTP are reproduced as under for ready reference to find out the answer to the question No. (viii) asked in the present Advance Ruling application : 2.41 Benefits for Supporting Manufacturers : For any benefit to accrue to the supporting manufacturer (as defined in Para 11.59 of FTP), the names of both supporting manufacturer as well as the merchant exporter must figure in the concerned export documents, especially in Tax Invoice/Shipping Bill/Bill of Export/Airway Bill. 2.42 Third Party Exports : Third party exports (except Deemed Export) as defined in Chapter 11 shall be allowed under FTP. In such cases, export documents such as shipping bill shall indicate name of both manufacturing exporter/manufacturer and third-party exporter(s), e-Bank Realization Certificate (e-BRC) or export Realizations from RBI's EDPMS wherever available in DGFT IT Systems. Export Order and Invoice should be in the name of third-party exporter. 5.04 Export obligation : (b) For export of goods, EPCG Authorisation holder may export either directly or through third party(ies). ....