Customs, Excise and Gold Tribunal - Mumbai
Piramal Exports Ltd. vs Collector Of Customs on 31 December, 1985
Equivalent citations: 1986(9)ECR499(TRI.-MUMBAI)
ORDER K. Gopal Hegde, Member (J)
1. Fourteen Revision Applications filed before the Government of India against the Order bearing Nos. S/49-374 to 387/79 DBK dt. 25.2.1980 passed by the Appellate Collector of Customs, statutorily stood transferred to the Tribunal for being heard as appeals.
2. As all these appeals involve common questions of law and facts they are clubbed together, heard together and hence this common order.
3. The brief facts necessary for the disposal of these appeals may be stated as under:
The appellants, M/s Piramal Exports Ltd., are the exporters of printed sarees of polyester which they purchased from M/s Morarjee Gokuldas Spinning and Weaving Mills Co. Ltd. They purchased 100% polyester sarees between September, 1978 to 31st March, 1979 from the Mills. According to the appellants the Mills paid excise duty for the fibre and they did not claim any rebate in respect of the fibre after the sarees are manufactured therefrom. It was the contention of the appellants that at the time of export they had made necessary declaration in the shipping bills for the purpose of claiming drawback and that the shipping bills were scrutinised by the Customs Officer and no objection was taken as to the declarations made therein. The grievance of the appellants in all these appeals is that the Assistant Collector of Customs, Drawback, and the Appellate Collector of Customs have wrongly rejected their claim for drawback.
4. During the hearing of these appeals Dr. Kantawala appearing for the appellants contended that under the Drawback Schedule the appellants were entitled to claim drawback in respect of yarn content, dye content and fibre content under Sub-Sr. No. 2503. The authorities granted drawback towards yarn content and dye content but denied drawback on the fibre content solely on the ground that the shipping bills did not contain a declaration that no rebate of duty paid on fibre has been obtained under the Central Excise Rules, 1944. Dr. Kantawala urged that the authorities were not correct in holding that there was no such declaration on the shipping bills. He submitted that the declaration made in the shipping bills clearly established that no rebate of duty paid on fibre had been obtained. Dr. Kantawala further submitted that drawback claim had been denied on a technical and flimsy ground. He, therefore, prayed that the orders of the authorities below may be set aside and there may be an order for grant of drawback. It was also submitted by Dr. Kantawala that the Mills have by their letter dt. 25.7.1980 declared that they had not claimed rebate or refund of duty paid on the fibre used in the manufacture of sarees sold to the appellants between the period from September, 1978 to 31st March, 1979.
5. Shri Senthivel appearing for the respondent Collector, however, contended that in order to claim drawback on the fibre content, the relevant schedule required the appellants to make the required declaration, and admittedly, they had not made the said declaration, and therefore, no exception can be taken to the orders passed by the authorities below. He urged that the declarations made by the appellants on the shipping bills are the declarations contemplated in the Drawback Rules and not the declaration contemplated in the Drawback Schedule. He, therefore, prayed that the appeals may be rejected.
6. I have carefully considered the submissions made on both sides.
7. In order to appreciate the rival contentions it is necessary to refer to the nature of declaration made on the shipping bills and the declaration required to be made under the Drawback Schedule. The declaration made on the shipping bill reads:
We hereby declare that no separate claim for rebate of duty has been or will be made to the Central Excise Authorities under Rule 12 or 12A, 56A, 191A and 191B of the Central Excise Rules, 1944 and that the Customs and Central Excise duty has been paid on the raw materials used in the manufacture of goods.
8. The goods exported are 100% polyester sarees. As per the Sub-Sr. No. 2606 of the Drawback Schedule the exporters are entitled to claim drawback at the rate specified against Sub-Sr. No. 2503 in respect of yarn content, dye content and fibre content of the sarees. The rate of drawback admissible for yarn content, dye content and fibre content are set out in Sub-Sr. No. 2503-A, B & C, respectively. The sarees exported being polyester, the rate of drawback would be as per Sub-Sr. No. 2503 C(i)(a). In order to claim drawback at the rates specified in the clause referred to above, the manufacturer or exporter is required to make the following declarations at the time of shipment:
(i) the yarn used under item (e) and (f) is worsted (This declaration is not relevant for the purpose of these appeals as the sarees imported are polyester sarees).
(ii) no rebate of duty paid on fibres has been obtained under the Central Excise Rules, 1944.
The Assistant Collector, Drawback and the Collector, Drawback have held that the exporter has failed to declare on the shipping bill that no rebate of duty paid on fibre has been obtained under the Central Excise, Rules, 1944.
9. Admittedly, the appellants are exporters and not the manufacturers of the polyester sarees which they had exported. There was no dispute that the sarees were manufactured from the duty paid fibres. As a matter of fact the Drawback Authorities had granted drawback towards yarn content and dye content. Therefore, it could be safely said that the sarees exported were made out of duty paid fibre. It is true that the declaration was not made in the shipping bills in the manner in which it was required to be made. But then from the declaration made on the shipping bills it could be said that there was substantial compliance of the requirement. The declaration was that no separate claim for rebate of duty has been or will be made. This declaration clearly implies that no claim for rebate of duty had been made. If no claim had been made no rebate could have been granted or allowed. Therefore, it could be said that no rebate of duty paid on fibres had been obtained. The Assistant Collector, Drawback, did not consider the effect of the declaration made by the exporters in the shipping bills. The Appellate Collector, however, had taken a view that the declaration made does not lend itself to an interpretation to the effect that the exporters also made declaration impliedly that no rebate of duty paid on fibres has been obtained under the Central Excise Rules, 1944. He has further observed 'it will be dangerous to infer from the language of the printed declaration of the exporters that they did make the declaration to the effect that duty had been paid of fibres utilised in the manufacture of exported sarees'. Pausing for a minute it may be stated that it was not the contention of the department that duty had not been paid on fibres utilised in the manufacture of exported sarees. There was no dispute at all with regard to the payment of duty on fibres. If duty had not been paid on fibres the Drawback department would not have granted drawback on the yarn content and dye content. Therefore, the observation of the Appellate Collector appears irrelevant. It is difficult to accept the view taken by the Appellate Collector that the declaration does not lend itself to an interpretation to the effect that the exporters also made declaration impliedly that no rebate of duty paid on fibres had been obtained under the Central Excise Rules, 1944. As stated earlier there was a clear declaration that no claim for rebate of duty had been made. If no claim had been made no rebate could have been granted or allowed. If no rebate had been granted or allowed the exporters or the manufacturers could not have obtained the rebate of duty. Thus, in my opinion there was substantial compliance of the requirement of law. It is pertinent to observe that the declaration required was that no rebate of duty paid on fibres had been obtained. Even if the declaration was not in that positive terms the department could very well verify as to whether rebate of duty paid on fibres had been obtained or not. This verification could be made even after the shipment, but no such verification appeared to have been made by the department. The exporters were also not called upon to produce proof regarding the non-obtaining of rebate of duty paid on the fibres. There is considerable force in the contention of Dr. Kantawala that the authorities below had taken a narrow and legalistic view. They had lost sight of the spirit behind the granting of drawback. The drawback is mainly intended to encourage exports. Having regard to the object behind the granting of drawback the authorities below were not justified in taking a legalistic view of the declaration made. Moreover, when it was possible for the department to verify regarding obtaining of rebate, the rejection of drawback without verifying and without giving any opportunity to the exporters to produce proof was not justified.
10. Along with the revision applications the appellants had produced a declaration from the manufacturers to the effect that they had neither claimed rebate and or refund of the duty on the fibres used in the manufacture of 100% polyester sarees sold to the present appellants between period from September, 1978 to 31st March, 1979. It is true that this declaration was not produced before the Assistant Collector or even before the Appellate Collector. But as stated earlier if the Drawback Authorities had any doubt that rebate had been obtained they could have called upon the appellants to produce proof that no rebate had been obtained or as observed earlier they could have made enquiries with the Central Excise Authorities.
11. In the result and for the reasons stated earlier I allow all these appeals, set aside the orders passed by the Authorities below but remand the matter to the Assistant Collector, MCD, for verification as to whether rebate of duty paid on fabrics had been obtained either by the manufacturers or by exporters (if permissible) in respect of fabrics utilised in the manufacture of 100% polyester sarees exported by the present appellants. The Assistant Collector shall consider the declaration dt. 25.7.1980 made by M/s. Morarjee Gokuldas Spinning & Weaving Mills Ltd., (Exhibit B), and such other materials that may be produced by the appellants or the department. If on verification the Assistant Collector is satisfied that rebate of duty had not been obtained he shall admit the drawback claims and grant drawbacks.