Case Law Details

Case Name : Alfa Laval (India) Ltd. Vs. Union of India (BOmbay High Court)
Appeal Number : [(2014) 49 taxmann.com 592 (Bombay)]
Date of Judgement/Order :
Related Assessment Year :

Manufacturer or Exporter is not barred from seeking determination of the Brand Rate of drawback merely because, at the time of export, he had applied for and granted drawback at All Industry Rate

In the instant case, Alfa Laval (India) Ltd.(“the Petitioner) was exporting excisable goods under claim for duty drawback available under Section 75 of the Customs Act, 1962 (“the Customs Act”) read with the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 (“the Drawback Rules). At the time of export of the finished goods, the Petitioner filed the shipping bill under claim of drawback in terms of Rule 3 of the Drawback Rules. Thereafter, within the stipulated time and with the requisite documents, the Petitioner filed an application for determination of drawback under Rule 7 of the Drawback Rules (“the application”).

Vide the orders/ letters dated April 19, 2012, June 11, 2012 and July 24, 2012 issued by the Additional Commissioner (BRU) of Central Excise, Pune – I (“the orders”), the application was rejected on the ground that the Petitioner is barred from seeking a determination of Special Brand Rate under Rule 7 the Drawback Rules because, at time of export, he had already applied for and was granted drawback at All Industry Rate under Rule 3 thereof. Further, in terms of Para 2(d) of Central Board of Excise and Customs’ Circular F. No. 606/04/2011-DBK dated December 30, 2011 (“CBEC Circular”), an exporter once having availed the All Industry Rate of drawback at the time of export, cannot file an application for determination of the Brand Rate of drawback under Rule 7 of the Drawback Rules.

Being aggrieved, the Petitioner preferred an appeal before the Hon’ble Commissioner of Central Excise (Appeals) wherein again the application was rejected relying upon the CBEC Circular. Thereafter, the Petitioner filed a writ petition before the Hon’ble High Court of Bombay.

The Hon’ble High Court of Bombay after detailed analyses of the Drawback Rules directed the Department to accept the application of the Petitioner and process the same subject to compliance of the provisions of Rule 7 of the Drawback Rules.

The Hon’ble High Court further held that the CBEC Circular is liable to be struck down and on the basis of following observations:

  • On a careful and conjoint reading of the Drawback Rules, it is found that there is no prohibition set out in the Drawback Rules, which debars an exporter from seeking determination of the Brand Rate of drawback under Rule 7 of the Drawback Rules, merely because at the time of export, he had already claimed the All Industry Rate of drawback under Rule 3 thereof. In fact, the Drawback Rules seem to suggest otherwise.
  • Rule 7 of the Drawback Rules categorically provides that where in respect of any goods, the manufacturer or exporter finds that the amount or rate of drawback determined under Rule 3 of the Drawback Rules is less than 4/5thof the duties or taxes paid on the inputs/input services used in the production or manufacture of said goods, he may make an application within sixty days for determination of the amount or rate of drawback thereof under Rule 7 of the Drawback Rules, disclosing all the relevant facts and subject to the other conditions stipulated therein;
  • Under the garb of clarifying the Rules, the CBEC cannot incorporate a restriction/limitation, which does not find place in the Drawback Rules. Further, clause (d) of the Circular cannot be reconciled with clauses (b) and (c) thereof.

Hence, the matter was decided in favour of the Petitioner.

 (Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: bimaljain@hotmail.com)

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0 Comments

  1. adv. dr.g.balakrishnan says:

    Right decision by Bombay High court.

    It is constitutionally impermissible. No government can collect any amount which is once alowed one procedure by very government.

    Read articles 38, r/w 39 r/w 265 thoroughly and adopt approved interpretation of statutes;

    No government can work whimsically. there are hundreds of SC rulings are there, CBEC circulars CAN BE SET ASIDE BY CONSTITUTIONAL COURTS. THANKS

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