1. Appellants have filed shipping Bills for export to claim logging endorsements for DEEC Licence applied by them. The goods were ready-made garments of which samples were taken, they were assessed, examined, samples drawn and 'Let Export' orders passed. However, the dispute arose at the time of logging on that the denier of the yarn used in the fabric was not mentioned on the bills. The appellant was contending that it was not mandatory so to mention the denier on the shipping bills, while the Department insisted on such a mention. During this period of dispute, the validity period of the DEEC licence expired. The appellant, therefore, applied for conversion of these Shipping Bills, under DEEC export, to Drawback Claim Shipping Bills, as provided for vide Circular NO. 74/97 as amended. This Circular allows conversion of a Free Shipping Bills, as provided for vide Circular No.74/98 as amended. This Circular allows conversion of a Free Shipping Bills to Drawback Shipping Bills and prescribed guidelines for the same. The applications filed on 27.3.95 and 29.3.95 were not considered favourably. Therefore, the appellant moved the Hon'ble High Court of Calcutta which directed the respondent to dispose of the applications within eight weeks.
2. Therefore, it appears, on or about 13.7.2001 the Show-cause Notice was issued listing the Shipping Bills which were sought to be converted from DEEC Shipping Bills to Drawback Shipping Bills vide applications dt. 27.3.95 & 29.3.95. The notice based on the following grounds proposed consider them is to be deficiencies: "On scrutiny of the mentioned files S60 (DE) 1459/95A and S60(DE)-1460/95A it appears that denier number of the fabrics used to manufacture the product has not been declared in any of eight S/Bills in question or on any other documents like invoice, packing list etc, submitted with S/Bills. Thus the S/Bills could not be fully correlated with the particulars appearing on the advance licence.
Thus the resultant product mentioned on the list of export item attached to the concerned advance licence could not be fully correlated. Owing to this reason logging of the exported goods could not be done on part II of DEEC Book. This deficiency was brought by Customs Dept. to the notice of the exporter by letter No. S60(DE)-1459/95A dated 7.11.97 and letter No.S60(DE)-1460/95A dated 7.11.97. But the deficiency could not be cleared by the exporter. It is therefore, apparent that due to exporter's inaction/ fault that the DEEC book could not be logged in. The exportations have been therefore, irregular ones.
DEEC Scheme and Drawback Scheme are two completely different scheme.
The former allows duty free import of certain specified material shown on the advance licence. The resultant export products should be made of these materials. However, there is no bar in DEEC Scheme to use any input not covered by the advance licence along with those covered by the advance licence. But, drawback in relation to any goods manufactured in India and exported, means - the rebate of duty chargeable or any imported materials or excisable materials used in the manufacture of such goods in India. It is therefore, clear that the requirement of Customs examination of the export goods are different in the case of these DEEC & Drawback scheme. The export consignment in this case was under DEEC scheme and therefore, Customs Dock examination was done only from the angle of DEEC scheme requirement and not from Drawback angle. Except for S/Bill DEEF 1236 dt. 29.3.95 no representative sample was drawn from the export consignments. Even the rep. sample was drawn in the case of S/Bill 1236 dated 29.3.95 was only for group inspection from DEEC angle.
That sample too was presumably released by group after inspection.
Thus no representative sample of the exported goods are now available for examination, test etc. from drawback point of view.
From the attached list Annexure A & A1 it may appear that some of the exported garments contained embroidery work and pekow work. The cost of embroidery work and adds substantially to the export value of the product. The concept of 'All Industry Rate' of Drawback does not allow drawback on this kind of value addition. these are cases where the proper rate of drawback is determinable under 'Brand Rate' of Drawback Scheme as provided under Rule 6 of the Customs & Central Excise Duties Drawback Rules 1971 (Rule 6 of the existing Cus & C. Ex.. Duties Drawback Rules 1995) on an application made by the exporter. But records do no show that the exporter has applied so.
Again, some of the exported goods contained as it appears from the invoice ensembles like metal bottons, cuffs of different colours and patterns. Use of these material obviously resulted in more than normal value addition on which drawback is to admissible. In absence of the availability of any rep. sample of the exported goods it is not possible at this stage the amount of value addition in the mentioned matter, has taken place and consequently the exact value (FOB) of the export product and the drawback amount admissible can not be determined at this stage.
The exporter although has applied for conversion to drawback but has not mentioned the relevant drawback sub-serial under which they intend to claim the drawback.
Submission of certificates regarding non-availment of modvat credit Under Section 57 A of the C. Ex. Rules 1944 are rebate under Rule 12(i)(b), Rule 13(i)(b) ibid from the jurisdictional Superintendent of C. Excise in whose jurisdiction the factory/premises of manufacture of the exported goods falls is an essential requirement to avail drawback benefit. The exporter in this case has not submitted any such certificate although the exporter made declaration on the S/Bills that such Certificates(s) will be submitted. Bank realisation certificates of the export proceeds have not also been submitted by the exporter.
It has not been reported whether the exporter has surrendered the advance licences claimed to have been issued to them. No certificate from DGFT has been produced by the exporter showing that the advance licences were surrendered.
The name of the supporting manufacturer(s) who might have manufactured the exported goods, in case the exporter themselves are not the manufacturer, has/have been mentioned on the shipping bills.
Which made it appear, that Exporter was not entitled to Drawback.
Therefore, the notice asked them to show cause to the (SIC), Customs (Port), Customs House, Calcutta "why the two applications for conversion should not be rejected. The (SIC) after considering the submissions made, rejected the applications and the prayer made for converting shipping bills in question from DEEC to Drawback.
3. We have heard Shri Sudhir Mehta, Advocate for the appellant and Shri D.K. Bhowmik, JDR for the Revenue and considered the submissions, and we find (a) Reason for rejection of the request for conversion, briefly are as follows: " The description of the goods appearing of the S/Bills and (SIC) shipping documents did not fully correlate to the description appearing on the licence. This is a deficiency which the present exportation has suffered.
It is, therefore, due to exporter's own fault that they have not been able to avail DEEC benefit. This is not a case where DEEC benefit was rightfully due to the exporter but the exporter shifted their choice from DEEC benefit to drawback benefit.
Explanations offered by the exporter on the non-availment of benefit under Rule 57A (Modvat), Rules 12(i)(b) & Rule 13(i)(b) of the C. Excise Rules are confusing & suspicious.
Examination of the export consignments has not been done in this case from drawback angle and In absence of any representative samples the actual drawback due on the exported goods can not be determined in this case at this stage.
With all these in view I find that the exporters applications dated 16.10.2000 and 3.11.2000 for conversion are devoid of any merit and the same are accordingly rejected." (b). The learned DR for the Revenue on a question from the Bench, fairly, has admitted that there was no standing order or Public Notice issued for examination and consignment under claim of drawback and for claim under DEEC, nor could he points out any material differences in the examinations to be conducted for these items i.e. garments.
(c) The learned DR drew our attention to the Customs Central Excise Drawback Rules, 1995 especially Rule (3) thereof, to submit that in the present case, there were lot of adornments which had increased the value of the goods and such adornments were not taken into consideration by the Central Government while fixing the drawback under All Industries Rate, which the appellant was seeking in his claim. It was therefore, submitted that the appellant should have gone for a 'Brand rate' fixation of his claim if they so desire, they were not entitled the drawback under the 'All Industry Rate'. The DR conceded that 'Brand Rate' Drawback may be higher since it would take into consideration value/duty on Adornments. He mentioned that the description of the goods also, as seen from the documents, did not specify whether garments in question were made from fabric or knitted material. He submitted, since the Drawback rates for the garments the two kinds of base fabrics were different, it was not possible at this stage to determine which rate would the appellant be entitled, in the absence of the base fabric descriptions.
(d) We have gone through the Drawback Rules and the descriptions as available on the S/Bills, the packing list & other documents. It has been submitted and accepted that goods garments were examined by the Customs Authorities and found to be as per the description. Since the dispute for the DEEC export was only as regards the non-mention of denier and samples have been drawn, the objections of Revenue are found to be hypothetical phantoms. The admission of as/Bill, under claim for Drawback, in entirety necessarily would not mean that the Drawback as eligible. On these exports Drawback would be settled before the same is sanctioned after examination of the claims is conducted in the Drawback Department. The question, to our mind, before the Commissioner, under the Circular was, to permit the shipment and admit the S/Bills under claim for drawback. This in itself, would not be construed or considered to be an admission for the claim of drawback payment. We have examined the instructions in Circular No. 74/97 dated 30.12.97 and find that the Circular permits the conversion of free shipping bills, as in the present case, since DEEC shipping bills are free shipping bills and not duty paying shipping bills are free shipping bills and not duty paying shipping bills, to drawback shipping bills or DEEC-cum- Shipping bills. It does not in any way imply that the drawback claim would be suo moto be paid, if such conversion is granted. In the present case, no doubt the shipping bill was presented, examined, assessed and passed under claim of DEEC scheme, but Revenue has failed to establish as to what were those vital and relevant examination points which were required to be done for Drawback Shipping Bills which could not have been done in this case. The Commissioner's orders also raise a presumptive doubt, without concluding any such vital deficiency in the examination. We find that the appellants have submitted that samples were drawn, and they would be available for value, price, base fabric etc. determinations; if any further documentation was required or material evidence was required, the same could be sought from the exporter and considered for completing the claim for Drawback. For example, Centra. Excise Duty on Garments came only in the year 2001, earlier being fully exempt no MODVAT was eligible on Garments as end product; or the Commissioner has rejected the claim for non-mention of the drawback schedule number under the claim. These are procedural and ministrial lacunae, which can be rectified. The substantial benefit of the claim for drawback, cannot be rejected for such clerical curable deficiencies, if any. The rejection by the Commissioner on the grounds, as we find, is indicative of a predetermined mind to a manner that he was examining a drawback claim and no a claim for conversion of a shipping bill under claim for drawback. While certain certification and material evidences may be necessary for eligibility to a drawback claim we do not find any absence of the same to be a case to deprive an exporter to file a S/Bill under claim for drawback. As the Circular could be complied with only in post exportation cases before the Drawback amounts is determined.
(e) We have considered the submission made by the learned DR which we fail to understand. It is for the appellant to determine and decide whether he wants to opt for 'All Industry Rate' or 'Brand Rate' fixed for his exports. That 'All Industry Rate' has not considered the duty element of certair adornments is a presumptions the 'All Industry Rate' cannot be denied on that ground and the appellant be forced to adopt the 'Brand Rate' as has been made out in this case. When we find that appellant is submitting that there was a cap on the value of Garments in the 'All Industry Rate' at the relevant time, if that be so, we find no reason to reject the claims of the Garments.
(f) We find that the samples have been drawn and due verification of the nature of fabric and the market value etc. can be got conducted and drawback claim determined under appropriate 'All Industry Rate' schedule. We find no force in the reasons for denying the conversion of the S/Bills into drawback claim of S/Bills. The order is therefore, required to be set aside. We order accordingly. The conversion request is allowed and that drawback amount available should be determined by the proper officer of the Customs House, after giving an opportunity to the exporter, to submit such collateral evidence as may be available with them to substantiate the claim. The order impugned is set aside, appeal allowed as regards the conversion of shipping bills allowed only and matter disposed of in the above terms.