POLYSPIN LIMITED Vs. CC

JUDGEMENT

(1.) THIS appeal is directed against the Order dated 18.11.2004 passed by the Commissioner of Customs, Tuticorin. In the impugned order, Commissioner has demanded an amount of Rs. 5936812/ - under Rule 16 of Drawback Rules, 1995 from M/s Polyspin Ltd., Rajapalayam being erroneously paid drawback amount.

(2.) FACTS of the case are that, during 1999 -00 to 2002 -03, M/s Polyspin Ltd., Rajapalayam, (henceforth, also, importer, PSL or appellants) had exported Polypropylene woven bags, made out of raw materials imported using DEPB licences purchased from the market, under claim for drawback and received Rs. 5936812/ - as drawback at all industry rate. All the exports were made without claiming DEPB benefit. PSL had sourced the raw materials needed for production of the goods exported for claiming the disputed drawback either by discharging the basic customs duty and additional duty of customs with DEPB credit or, in certain cases only the basic customs duty discharged with DEPB scrip and additional duty of customs paid in cash. In all cases, however, no Modvat/Cenvat credit of CVD was availed. All the material exports had been made under claim for drawback and no DEPB benefit was claimed. In reply to the Show Cause Notice, PSL had submitted that they had claimed the impugned drawback and the same had been sanctioned in accordance with law. They could avail either the DEPB benefit or claim drawback in respect of the exports made. As they had not availed DEPB benefit, they were eligible for drawback.

(3.) PSL claimed that an exporter could obtain a DEPB licence provided he/she did not claim Modvat/Cenvat benefit of CVD paid on raw materials imported and did not avail drawback on export of finished goods. Alternatively, an exporter could obtain drawback without claiming DEPB and Modvat/Cenvat benefit of CVD paid on raw materials imported. In their case they had not filed DEPB shipping bills and did not obtain DEPB credit on exports. They had used DEPB scrips purchased from the market for all their exports. They did not operate under the DEPB scheme and were therefore eligible for drawback on the finished goods exported. Therefore General Note 2(g) to the Draw Back Rules to the effect that the rates of drawback in the schedule shall not apply to export of a commodity if the same was manufactured and/or exported following the facility under DEPB scheme did not apply to the impugned exports as PSL had not operated under the DEPB scheme.