Custom, Excise & Service Tax Tribunal
M/S Aurobindo Pharma Limited vs Cce, Hyderabad-I on 1 July, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD SMB Court I Appeal No. E/26525-26526/2013 (Arising out of Order-in-Appeal No. 12/2013 & 20/2013 (H-I) CE dt. 31.01.2013 passed by CC, CE & ST (Appeals- I&III), Hyderabad) For approval and signature: Honble Ms. Sulekha Beevi, C.S., Member (Judicial) 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 their Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s Aurobindo Pharma Limited, ..Appellant(s) Vs. CCE, Hyderabad-I ..Respondent(s)
Appearance Shri N. Ram Reddy, Advocate for the Appellant.
Ms. Soumya, Deputy Commissioner (AR) for the Respondent.
Coram:
Honble Ms. Sulekha Beevi, C.S., Member (Judicial) Date of Hearing: 13.06.2016 Date of Decision: 01.07.2016 FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.] The issue involved is whether the appellants claim of draw back at the rate of 4% on the FOB value of the impugned export product Metformin HCL USP/PH EUR against Tariff item no. 2925209002 in the drawback schedule under Notification No. 68/2011-Cus (NT) dated 22.09.2011 can be allowed or not as against the department contention that the said goods fall under Tariff item no. 2925000099 (others) attracting 1% of drawback on FOB.
2. The facts are that the appellants are engaged in the manufacture of Bulk Drugs. The appellants filed one drawback claim on 13.9.2012 for an amount of Rs. 5,39,279/- claiming 4% of FOB value under the drawback schedule No. 295209002 against the product Metformin HCL PH EUR & Metformin HCL USP. The department was of the view that the drawback schedule S.No. 2925209002 pertains to Metformin Hydrochloride BP and since the products exported are Metformin HCL PH EUR & Metformin HCL USP the products have to be re-classified under draw back schedule No. 2925000099 and that draw back at the rate of 1% only can be allowed. A show cause notice was issued and after adjudication, the original authority restricted the draw back claim to Rs. 1,34,820/- which was sanctioned. Being aggrieved, the appellant filed appeal before the Commissioner (Appeals). As per the order impugned herein, the Commissioner appeals upheld the same. Hence this appeal.
3. I have heard both sides.
4. The case of the department is that the product Metformin Hydrochloride BP is shown in draw back schedule S.No. 2925209002 and the All Industry rate is 4% on FOB value. The schedule does not show All Industry Rates for Metformin HCL Ph EUR & Metformin HCL USP. Department contends that therefore the goods have to be reclassified as others under S.No. 2925000099 and only 1% of FOB value can be allowed as draw back.
5. The learned counsel for appellant has adverted attention to the Circular No. 48/2011-Cus-dated 31.10.2011 and Circular No. 37/2013-Cus-dated 14.09.2013. The relevant portion of Circular No. 48/2011-Cus-dated 31.10.2011 is extracted as under:
Certain doubts have been expressed about classification of few erstwhile DEPB items in the drawback schedule wherein it has been pointed out that the classification under drawback schedule does not match with the classification as provided in the Customs Tariff. In this regard attention is invited to the para (1) of the notes and conditions of the Notification No. 68/2011-Cus. (N.T.), dated 22-9-2011. It is hereby reiterated that the tariff items and descriptions of goods in the drawback schedule are aligned with the tariff items and descriptions of goods in the Customs Tariff only upto four-digit level. Hence, so long as the alignment is there at the four digit level, there should not be any difficulty for exporters to claim drawback as per the rate specified in the Drawback Schedule, notwithstanding the fact that there may be difference in the classification of the said item at six or more digit level.
6. Again, the relevant portion of Circular No. 37/2013-Cus-dated 14.09.2013 is reproduced as below:
For entries in the Schedule that are related to pharmacopeia, where the product descriptions bear suffix like IP and/or BP and/or USP, it is hereby clarified that the pharmacopies standards IP, BP, USP, EP, JP shall be treated as inter-changeable.
7. The letter issued by the Foreign Trade Development Officer for Joint Director General of Foreign Trade to the Deputy Commissioner of Customs, Andhra Pradesh states as under:
In line with DGFT Policy Circular No. 35 dated 3.6.2010 and subsequent committee meeting No. 4 dated 29.03.2011, the product under export Metformin HCL with suffixes shown as BP / EP / IP / USP in the product group Chemicals depending upon the suffix used in the export order may be added alongwith the description of the export product for the purpose of claiming the export benefits under DEPB/Drawback schemes.
Based on the above clarification, you may allow the exporter to file the shipping bills with suffixes IP/ Bp/ EP/ USP for the purpose of claiming DEPB/Drawback Schemes.
The above clarification is given as per your request letter dated 7.6.2011.
8. The policy Circular No. 35/2009-14 dated 03.06.2010 is with regard to the subject interchangeability of pharmocopeia suffix USP/ EP/ BP/ UP/ IP with the export product fulfillment of Export obligation. The relevant portion reads as under:
From the above, it seen that even if a firm does not use any suffix, they are allowed to export the product with suffix BP or JP or USP as the case may be. It is thus clarified here that if an advance authorization is issued for the export product suffixing pharmacopeia say USP, the export documents containing the export product suffixing any other pharmacopoeia, viz., BP or EP or JP or IP may also be accepted towards fulfillment of export obligation against relevant Advance Authorization. Thus pharmacopeia IP, BP, EP, JP or USP may be treated as interchangeable for the purpose of fulfillment of export obligation.
9. All the above make it candid that pharmacopeia IP, BP, EP, JP, or USP may be treated as interchangeable. The Circulars are binding on the department and the contention of the department, that basing on pharmacopeia suffixed the product has to be reclassified as others is not tenable. The Tariff item 2925209002 pertains to Metformin HCL BP. Mere difference in pharmacopeia cannot make the product fall under others. The Circulars as well as letter from the office of DGFT makes this clear. Therefore the benefit of 4% at the rate on FOB value in drawback schedule cannot be denied. The restriction of drawback claim to Rs. 1,34,820/- (calculating @ 1%) by classifying the product as others is not legal or proper. The appellant is eligible for the drawback claim of Rs. 5,39,279/-. The disallowance of Rs. 1,34,820 is unsustainable.
10. In the result, the appeal is allowed with consequential reliefs, if any.
(Pronounced in court on 01.07.2016) (SULEKHA BEEVI C.S.) MEMBER (JUDICIAL) Jaya.
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