TaxTMI 
TaxTMI 
2026 (8) TMI 251
X X X X Extracts X X X X
X X X X Extracts X X X X
....was rejected and the consequential recovery proceedings were upheld. The petitioner has also challenged the communications issued by the second respondent-Central Board of Excise and Customs (CBEC) dated 08.11.2006, 10.11.2006 and 10.04.2008. 2. The petitioner manufactures passenger buses for export. While the chassis are manufactured by the petitioner, the bus bodies are fabricated by independent small-scale industrial units. Owing to the practical difficulties faced by exporters in establishing the exact incidence of duty on bus bodies manufactured by such independent body builders, the Drawback Directorate issued a circular dated 05.12.1988 prescribing a simplified procedure. Under the said circular, exporters were permitted to claim drawback on the bus body portion at an average rate of 7% of the actual cost of the bus body, without insisting upon production of detailed duty-paid documents. 3. Subsequently, by Circular dated 18.09.2003, the Board clarified that while fixing the brand rate of drawback for complete buses, the practice introduced under the Circular dated 05.12.1988 should continue. Thereafter, the Duty Entitlement Pass Book (DEPB) Scheme was extended to moto....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rd merely clarified the existing legal position. (ii) DEPB benefits were granted on the value of the complete bus. Therefore, grant of additional drawback on the bus body results in duplication of benefits. (iii) Once exports are made under the DEPB Scheme, Circular No.39/2001-Cus., dated 06.07.2001 exclusively governs the grant of brand rate drawback and production of duty-paid documents becomes mandatory. (iv) The law of limitation contained in Section 28 of the Customs Act is not applicable to recovery proceedings under the Drawback Rules. (v) Fiscal incentives are matters of policy and cannot be claimed as vested rights. 7. Upon hearing the learned counsel appearing for the parties and perusing the materials placed on record, the following questions arise for consideration: (i) Whether the clarificatory communications dated 08.11.2006, 10.11.2006 and 10.04.2008 issued by the second respondent are contrary to the statutory scheme? (ii) Whether the petitioner was entitled to simultaneously avail DEPB benefits and 7% brand rate drawback under the Circular dated 05.12.1988? (iii) Whether production of duty-paid docum....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of the duties, the inputs on which they are levied and the statutory basis for the two incentives are distinct. Unless the respondents establish, by acceptable material, that the very same duty element stood reimbursed twice, the allegation of double benefit cannot be sustained. The impugned orders proceed on a general assumption without any examination of the actual duty incidence. 13. The principal reason assigned for rejecting the petitioner's claim is the non-production of duty-paid documents. However, this reasoning overlooks the very purpose for which the Circular dated 05.12.1988 was issued. The Circular dispensed with the requirement of producing such documents precisely because independent body builders were unable to furnish them. If the respondents' interpretation is accepted, the Circular dated 05.12.1988 would be rendered meaningless. 14. Circular No.39/2001-Cus., dated 06.07.2001 cannot be interpreted in a manner that completely nullifies the special dispensation consciously created under the Circular dated 05.12.1988. Such an interpretation is impermissible, particularly when the respondents have not placed any material on record to show that the earlier Circ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gs were initiated within a reasonable period of time, after the Board issued the clarificatory communications taking the view that simultaneous availment of DEPB benefits and 7% drawback was impermissible. In the facts of the case, the contention that the recovery proceedings are barred by limitation is therefore rejected. 19. The doctrine of promissory estoppel cannot compel the continuance of a fiscal incentive contrary to statutory provisions. However, where exporters have acted upon binding departmental circulars which continued to remain in force, those circulars cannot subsequently be interpreted in a manner that defeats the legitimate expectation of the exporters unless they are expressly modified or withdrawn. 20. Learned Senior Counsel appearing for the respondents placed reliance upon the decision of the Division Bench of this Court in Bishan Saroop Kishan Agro Industries (P) Ltd. v. CESTAT, Chennai [(2019) 367 E.L.T. 572 (Mad.)], wherein it was held that the object of restricting drawback is to prevent double benefit, since drawback is intended only to reimburse the excise duty actually suffered on the exported goods. Where CENVAT credit has already been availed in....