Custom, Excise & Service Tax Tribunal
M/S.R.A.International vs Commissioner Of Customs(Prev.), W.B., ... on 29 April, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
Appeal No.CA-214/10
(Arising out of Order-in-Original No.4/CUS/CC(P)/WB/2010 dated 08.04.2010 passed by the Commissioner of Customs(Prev.), W.B. Kolkata.)
FOR APPROVAL AND SIGNATURE
HONBLE SHRI H.K.THAKUR, MEMBER(TECHNICAL)
1. Whether Press Reporters may be allowed to see
the Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the
CESTAT(Procedure) Rules, 1982 for publication in any
Authorative report or not?
3. Whether Their Lordship wishes to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
Authorities?
M/s.R.A.International
Applicant (s)/Appellant (s)
Vs.
Commissioner of Customs(Prev.), W.B., Kolkata
Respondent (s)
Appearance:
Shri K.K.Sanyal, Consultant for the Appellant (s) Shri S.K.Naskar, AC(AR) for the Revenue CORAM:
Honble Shri H.K.Thakur, Member(Technical) Date of Hearing/Decision :- 29.04.2016 Date of Pronouncement :- 29.04.2016 ORDER NO.FO/A/75332/2016 Per Shri H.K.Thakur.
This Appeal has been filed by the Appellant against Order-in-Original No.4/CUS/CC(P)/WB/2010 dated 08.04.2010 passed by the Commissioner of Customs(Prev.), W.B. Kolkata, as Adjudicating authority, under which a drawback of Rs.9,68,705/- of the Appellant was disallowed and a penalty of Rs.50,000/- was imposed upon the appellant under Section 114AA of the Customs Act, 1962.
2. Shri K.K.Sanyal (Consultant) appearing on behalf of the Appellant argued that the period of dispute is 2006-07 during which Appellant exported fabrics under 26 Bills of Export to Bangladesh to perform the job of CMT (Cutting/Making/Trimming) to make finished garments exported directly to Europe (Third Country) from Bangladesh. That payments were received for the garments directly by the Appellant. That value taken for the purpose of claiming drawback (DBK) was the purchase price of fabrics in India. That Adjudicating authority has rejected their DBK claim due to the fact that export of fabrics to Bangladesh does not involve sales and no foreign exchange remittances have come to the Appellant from its job workers in Bangladesh. That another reason taken by the department is that supporting manufactures in India from whom fabrics are purchased do not exist as per the reports received from their jurisdictional Central Excise officers. That penalties against the appellant are not attracted as no fraudulent means were adopted by the appellant to claim inadmissible DBK. Learned Consultant made the Bench go through Para-7 of CBEC Circular No.16/2009-CUSTOMS dated 25.05.2009 to argue that as per this clarification drawback claim has to be given even if goods exported are purchased from the open market and that DBK claims of the subsequent period of the Appellant have been sanctioned. He submitted relevant invoices and supporting bills for the subsequent period where such DBK was sanctioned. He also made the Bench go through the copies of the certificates issued by the jurisdictional Central Excise Range officer to the effect that manufacturers of fabrics exported by the Appellants are not registered with the Central Excise department.
3. Shri S.K.Naskar, AC(AR) appearing on behalf of the Revenue argued that no sale of fabrics is effected when the same are sent to job-workers in Bangladesh and no foreign exchange is received for fabrics exported to job-workers. That the certificate produced by the Appellant regarding non-registration of supporting manufacturers were not produced during the course of investigation. That amount of foreign exchange remitted to the Appellant and the description of goods as per LC are different than the goods and value sent to job-workers by the Appellant. Learned AR thus strongly defended the Order-in-Original dated 08.04.2010 passed by the Adjudicating authority.
4. Heard both sides and perused the case records. The issue involved in the present proceeding is whether Appellant is eligible to DBK on fabrics exported to job-workers in Bangladesh and finally sent to third country as garments when sale proceeds are received by the Appellant from third country from the buyer of the garments. The DBK is claimed on the value of the fabrics exported and not on the amount realized for the garments. Adjudicating authority has mainly rejected the claim on two grounds:-
(i) That sending of fabrics to Bangladesh does not involve sale and no sale proceeds are received from job-worker.
(ii) That as per the reports of the jurisdictional Central Excise officers the supporting manufactures of fabrics do not exist.
5. So far as point at Para 4(i) above is concerned Rule 16A of Customs, Central Excise and Service Tax Drawback Rules, 1995 (DBK Rules) does refer to recovery of amount of DBK where sale proceeds are not realized. At the same time Rule 12(1)(b) and Rule 13(2)(i) of DBK Rules also indicate that export of goods need not always be on a sale invoice or a Letter of Credit (LC). The above provisions convey that goods could be exported without a sale. The sale proceeds of the finished garments are received from the third country buyer and is received by the Appellant directly from the garment purchaser which is more than the value of fabrics at which drawback is claimed. The bill of export specifically mentions that fabrics are meant for readymade garments against a specific Letter of Credit (LC). In an international trade it can never be a case that fabrics are supplied free to a job-worker and the third country buyer of garments will send amounts to the appellant without getting anything. Therefore, the sale proceeds received by the Appellant from the third country buyer, representing sale proceeds of garments, will also include the proportionate price of the fabric used in the manufacture of garments. It is not the case of the Revenue that Appellant has claimed more DBK on a value which is more than the price of the fabrics exported. The basic principle of DBK like incentive schemes is to have zero rate of duty on exported goods. In the present case the products meant to realize foreign exchange are the garments which are manufactured through job-workers in Bangladesh. The pattern of sale has been made clear by the exporter at the time of exports. Under the existing factual matrix of the case it can not be said that proceeds of the fabrics exported have not been realized and accordingly it is held that provisions of Rule 16A of the DBK Rules are not attracted.
6. So far as the argument of the Revenue at Para 4(ii) above is concerned Appellant has produced certificates from the jurisdictional Central Excise officers to the effect that supporting manufacturers of exported fabrics are not registered in their jurisdiction. If a manufacturing unit is exempted then it may not be registered with the jurisdictional Central Excise authorities. However, non-registration of units do not necessarily mean that such non-registered units are not existing. On this issue exporters were facing difficulty and CBEC vide Circular No.16/2009-Customs dated 25.05.2009 gave following clarification:-
7. In view of the above, the Board has decided to accept the recommendation of the Drawback Committee in this regard. Thus merchant exporters who purchase goods from the local market for export shall henceforth be entitled to full rate of duty drawback (including the excise portion). However, such merchant exporters shall have to declare at the time of export, the name and address of the trader from whom they have purchased the goods. They shall also have to declare that no rebate (input rebate and also the final product rebate) shall be taken against the Shipping Bills under which they are exporting the goods. The merchant exporters who purchase goods from traders may therefore furnish the declaration, at the time of export, in the format annexed with this circular. This is issued in supersession of para (vi) of Circular No.64/98-Cus dated 01.09.1998. 6.1 In the present case there is no point of questioning the Cenvat Credit taken by manufacturers of fabrics as those are not registered with Central Excise, which means no Cenvat Credit on inputs has been taken.
7. In view of the above observations Appeal filed by the Appellant is allowed by setting aside Order-in-Original dated 08.04.2010 with consequential relief, if any.
(Operative part of the order was pronounced in the open court.)
SD/
(H.K.THAKUR) MEMBER(TECHNICAL)
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Appeal No.CA-214/10