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4. For the purpose of the present bunch of petitions, Special Civil Application No.1884 of 2024 is taken as the lead matter and the facts of the said case are discussed hereinbelow to provide a broad consepectus upon which the instant decision is being based. 5.1 The Petitioner is engaged, inter alia, in the export of agricultural products, including De-Oiled Cake, as a merchant exporter. During the years 2006-07, 2007-08, and 2008-09, the Petitioner exported de-oiled cake and claimed a Drawback of Rs. 1,67,14,797/-, calculated at a rate of 1% of the Free on Board (FOB) value of Rs. 167,14,79,700/- of the exported goods (for the Customs portion only). These goods were procured from various oil manufacturers ("Suppliers"). The Suppliers were engaged in the manufacture of oil and de-oiled cake through a solvent extraction process, utilizing Hexane as the solvent, and sold the de-oiled cake to the Petitioner.

5.2 According to the Show Cause Notice (SCN), intelligence was gathered by the Directorate General of Central Excise Intelligence NEUTRAL CITATION C/SCA/1884/2023 JUDGMENT DATED: 19/03/2025 undefined ("DGCEI"), Regional Unit, Indore, indicating that the Petitioner had exported Soya Meal and Soya De-Oiled Cake while availing the Duty Drawback. It was further alleged that the de-oiled cake purchased by the Petitioner from the Suppliers had been manufactured claiming the benefit of Rule 19(2) of the Central Excise Rules, 2002 (CERs, 2002), by purchasing Hexane without payment of Central Excise duty, following the procedure prescribed under Rule 19(2) of CERs, 2002 and the relevant notification. 5.3 It is stated in the SCN, that according to Condition Nos. 7(e) and (f) of Notification No. 81/2006-Cus. (NT) dated 13.07.2006 and Rule 3(1) of the Customs, Central Excise and Service Tax Drawback Rules, 1995, the notification disallows the drawback claim on the entire schedule (including both Excise and Customs components) if the benefit of Rule 19(2) of the CERs, 2002 is availed. 5.4 Following the investigation conducted at the Suppliers' end, documents related to the duty-free procurement of Hexane under Rule 19(2) of CERs, 2002 were seized. Based on the statements of NEUTRAL CITATION C/SCA/1884/2023 JUDGMENT DATED: 19/03/2025 undefined the authorized persons of the Suppliers and the applicable legal provisions, it was inferred that the Petitioner had improperly claimed an irregular Duty Drawback of Rs. 1,67,14,797/- on the export of de- oiled cake purchased from the Suppliers, which had been manufactured under bond by procuring duty-free Hexane, thereby availing the benefit of Rule 19(2) of CERs, 2002. 5.5 Consequently, a Show Cause Notice (F. No. IV(6)INV/RUI/45/10 dated 28.03.2011) was issued by the Joint Director, DGCEI, Indore, directing the Petitioner to show cause to the Additional Commissioner (DBK), Customs, Kandla (Respondent No. 3), as to why the Duty Drawback of Rs. 1,67,14,797/- should not be recovered under Rule 16 of the Customs, Central Excise Duties, and Service Tax Drawback Rules, 1995, read with Section 75 and the proviso to Section 28(1) of the Customs Act, 1962, invoking the extended period of limitation, along with applicable interest and penalties under Sections 114 and 114AA of the Customs Act, 1962, on the Petitioner No. 2 and Petitioner No. 3, as well as on the Suppliers under Section 114(iii) of the Customs Act, 1962.

8. DISCUSSION & FINDINGS :

8.1 The undisputed facts of the present case indicate that the suppliers of the Petitioners were engaged in the manufacture of oil and de-oiled cake by solvent extraction process using hexane as solvent. The de-oiled cake thus manufactured by the suppliers named in the petition, were in turn, sold to the Petitioners under Form-H. It is the specific case of the DGCEI that the Petitioners had exported the said goods and availed the duty drawback. It is also the specific case of the DGCEI that the suppliers of the Petitioners had manufactured the de-oiled cake availing benefit of Section 19(2) of the Central Excise Rules, 2002 by purchasing hexane "without payment of Central Excise Duty". Therefore, the drawback at the rate of 1% of FOB was not eligible to the Petitioners because the suppliers had not paid the excise duty for the hexane used for the manufacture of de-oiled cake, which was exported by the Petitioners.
8.5 Thus, the issue before this Court in the present bunch of petitions is similar to the issue which was decided in Dewas Soya(Supra), wherein, on merits, the said petition was allowed. This Court in Dewas Soya (Supra) has held as under:-
"8. Having heard learned advocates for the respective parties and considering the facts of the case, it is not in dispute that the petitioner did not issue the ARE-2 while removing the DOC manufactured by using the Hexane without payment of Central Excise duty. However, as held by the Commissioner (Appeals) such non-issuance of the ARE-2 would not be for removal of the DOC manufactured out of the duty free procured Hexane by availing the benefit under Rule-19(2) of the Rules would not make any difference as there is no intention established Adjudicating NEUTRAL CITATION C/SCA/1884/2023 JUDGMENT DATED: 19/03/2025 undefined Authority by the and the only allegation levelled against the petitioner stand on pre-condition that the petitioner exporter had knowingly or intentionally claimed the duty drawback erroneously. However, the Commissioner (Appeals) has categorically held that the legality of claiming custom portion of the drawback by the merchant exporter, the allegation made by the Adjudicating Authority was devoid of any merit and there was no finding or discussion by the Adjudicating Authority whereby any conclusive evidence as how non-issuance of ARE-2 by the petitioner would tantamount to the intentional involvement in abetement of erroneous claim of the drawback by the exporter which purely relates to the custom portion of the drawback when the exporter manufacturer is not unduly getting the double benefit. This aspect of the entire issue of removal of the goods without issuing ARE-2 is missed out by the Revisional Authority and the Revisional Authority has placed reliance only on the non-issuance of the ARE- 2 and the likelihood of the exporter getting double benefit of duty drawback in case when the percentage of the duty drawback also includes the Central Excise portion. We are of the opinion that the Revisional Authority while Considering the aspect in the facts of the case of the petitioner has not taken into consideration the fact that the rate of duty drawback is 1% in the facts of the case which relates to the custom portion only and not the Central Excise portion and therefore, the exporter did not get any double benefit in the facts of the case. In such circumstances, it cannot be said that the petitioner has committed any breach of the Rules by issuing the DOC without issuing ARE-2. In such circumstances, the impugned order passed by the Revisional Authority is not sustainable and is accordingly, quashed and set aside so far as the petitioner is concerned with regard to the levy of penalty which is deleted Commissioner of Customs (Appeals).