Custom, Excise & Service Tax Tribunal
M/S.S.P. Apparels vs Commissioner Of Customs, Chennai on 1 April, 2009
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.E/364/2002
[Arising out of Order-in-Original No.33/2002 (ACC) dated 08.05.2002 passed by the Commissioner of Customs, Chennai]
For approval and signature:
Honble Ms.JYOTI BALASUNDARAM, Vice-President
Honble Mr. P.KARTHIKEYAN, 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 authoritative report or not? :
3. Whether the Members wish to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
M/s.S.P. Apparels
Appellant/s
Versus
Commissioner of Customs, Chennai
Respondent/s
Appearance :
Shri S. Murugappan, Adv. Shri N.J. Kumaresh, SDR For the Appellant/s For the Respondent/s CORAM: Honble Ms.Jyoti Balasundaram, Vice-President Honble Mr. P. Karthikeyan, Member (Technical) Date of hearing : 01.04.2009 Date of decision : 01.04.2009 Final Order No.____________ Per Jyoti Balasundaram
Vide the impugned order, the Commissioner of Customs has confirmed the demand of duty of Rs.21,17,221/- in terms of Rule 16 of the Customs and Central Excise Duties Drawback Rules, 1995 together with interest, holding that the appellants herein were not entitled to drawback of the above amount under the All Industry Drawback Rates as they exported garments out of fabric processed at M/s.Arun Processors Ltd., a 100% EOU while, as per General Note 2 of the Drawback Notification No.31/99-Cus. Dated 20.05.1999, All Industry Drawback Rates do not apply to products manufactured partly in a warehouse under Section 65 of the Customs Act and a 100% EOU is a warehouse declared under the above statutory provision, and has also imposed a penalty of Rs.2 lakhs upon the appellants in terms of Section 114 (iii) of the Customs Act.
2. We have heard both sides.
3. General Note 2 to the drawback notification is reproduced hereunder:-
The rates of drawback specified in the said Table shall not be applicable to export of a commodity or product if such commodity or product is
(a) manufactured partly or wholly in a warehouse under Section 65 of the Customs Act, 1962 (52 of 1962),
(b) manufactured or exported in discharge of export obligation against an Advance Licence issued under the Duty Exemption Scheme of the relevant Export and Import Policy :
Provided that where exports are made against Advance Licences issued on or after 1st April, 1997, in discharge of export obligations in terms of Notification No.31/97-Customs, dated the 1st April, 1997, or against Duty Free Replenishment Certificate Licence issued in terms of Notification No.48/2000-Customs, dated the 25th April, 2000, or against Duty Free Replenishment Certificate Licence issued in terms of Notification No.46/2002-Customs, dated the 22nd April, 2002, drawback at the rate equivalent to Central Excise allocation of rate of drawback specified in the said Table shall be admissible subject to the conditions specified therein:
(c) manufactured or exported by a unit licensed as hundred percent. Export Oriented Unit in terms of the provisions of the relevant Import and Export Policy;
(d) manufactured or exported by any of the units situated in Free Trade Zones or Export Processing Zones or Special Economic Zone;
(e) manufactured or exported in terms of rule 18 of the Central Excise Rules, 2002;
(f) manufactured or exported in terms of sub-rule (2) of rule 19 of the Central Excise Rules, 2002;
(g) manufactured or exported availing of the facility under the Duty Entitlement Pass Book Scheme as contained in paragraph 7.14, read with paragraph 7.17 of the Export and Import Policy 1997-2002.
4. The commodity or product exported is knitted garments. It is not disputed that only the fabric used for making knitted garments was processed in a 100% EOU. In other words, it is the intermediate material and not the export item which was manufactured in a 100% EOU. The Commissioner has denied the drawback benefit on the ground that since the processing was done in a 100% EOU which is a warehouse under Section 65 of the Customs Act, the garment was manufactured partly in a warehouse and, therefore, not entitled to drawback benefit as per Note 2 (a) of the General Note No.2 of the drawback rules. However, the finding cannot be sustained for the reason that the drawback rates covers a warehouse under Section 65 separately from a unit licensed as a 100% EOU, as seen from clause (a) to (c) of Note 2 to the drawback rates, and further it is the export commodity or product to which drawback is not entitled if such commodity or product is manufactured partly or wholly in a warehouse under Section 65 and in the present case the export commodity namely knitted garments were not manufactured either partly or wholly in a warehouse. A plain reading of the language of Note 2 to the drawback rates lends support to this view. We, therefore, set aside the impugned order and allow this appeal.
(Operative portion of the order was pronounced
in open court on 01.04.2009)
(P.KARTHIKEYAN) (JYOTI BALASUNDARAM)
MEMBER (T) VICE-PRESIDENT
ksr
02-04-2009
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