Judgment:
1. Although the above appeals arise out of two separate orders of the Commissioner of Customs, since both the appeals involve a single common issue, they are heard together and disposed of by this common order.
2. Mr. Y.K. Doshi is the proprietor of M/s. Jalaram Overseas Corporation while Mr. B.K. Doshi is the proprietor of M/s. Bayoma Exports. They are exporters of made ups, garments etc. They filed shipping bills for goods described as Powerloom Cotton Ladies Night Gown (M/s. Jalaram Overseas Corporation) and powerloom viscose cotton ladies night gown (M/s. Bayoma Exports) under claim of drawback under Chapter 62.07 of the Drawback schedule. The goods were examined and found to be misdeclared to the extent that these were embroidered ladies night gowns. This resulted in violation of the provisions of Section 50(2) of the Customs Act, 1962 read with Rule 11 of Foreign Trade (Regulations) Rules, 1993 and therefore, the goods were held to be liable to confiscation under Section 113(d)(i) of the Customs Act.
Both exporters waived issue of show cause notice but requested for personal hearing which was granted to them. The Commissioner held that drawback cannot be sanctioned on the embroidered portion, as per C.B.E.C. Circular No. 105/2000, dated 20-12-2000 clarifying that although drawback on embroidered garments will be admissible, the cost of embroidery has to be excluded from the FOB value. He confiscated the goods with option to redeem on payment of fine of Rs. 1,50,000/- to M/s. Jalaram Overseas Corporation, and fine of Rs. 2 lakhs to M/s.
Bayoma Exports. A penalty of Rs. 50,000/-was imposed upon the proprietor of M/s. Jalaram Overseas Corporation and a penalty of Rs. One lakh on the proprietor of M/s. Bayoma Exports, both under Section 114(i) of the Customs Act. Hence, these appeals.
3. We have heard both sides. We find that by subsequent Circular No.69/2001, dated 26-11-2001 and Public Notice No. 133/2001, dated 20-12-2001 issued by the Office of the Commissioner of Customs, Mumbai, it has been clarified that All Industry Rates of Drawback for Embroidered Ready-made Garments are admissible subject to individual drawback caps. The Circular and the Public Notice are reproduced below: "Sub: Admissibility of All Industry Rates of Drawback to Embroidered Ready-made Garments and Quilted Made-ups - regarding.
Representations have been received from the trade that field formations have not been allowing All Industry Rates of Drawback fixed for Readymade Garments to Embroidered Garments and the rates fixed for Textile made-ups to Quilted Textile Made-ups: 2. The issue has been examined in the Board. It is clarified that the All Industry Rates of Drawback for ready-made Garments are subject to individual drawback caps. Therefore, these rates are applicable to Embroidered Garments also as any fluctuation on account of embroidery, etc. is taken care of such drawback caps.
3. It is also clarified that the All Industry Rates of Drawback for Made-ups too have drawback caps for various categories. Hence, Quilted Made-ups or any other variants of such Made-ups involving predominant use of textiles are eligible for drawback rates available for Made-ups. The drawback caps take care of any fluctuation on account of Quilting or other processes which are unevitable due to international demands in vogue.
4. Field formations may clear both the current exports and the past claims of the exporters on the above lines.
5. Suitable public notices for the trade and standing orders for the staff concerned may be issued at your end." "Sub: Admissibility of All Industry Rates of Drawback to Embroidered Ready-made Garments and Quilted Made-ups - Reg.
Attention of all Exporters, CHA's is invited to the Circular No. 69/2001-Cus., did. 26-11-2001 vide F. No. 609/159/2001-DBK issued by Govt. of India, Ministry of Finance, Department of Revenue on the above mentioned subject.
2. Representations have been received from the trade that field formations have not been allowing All Industry Rates of Drawback fixed for Readymade Garments to Embroidered Garments and the rates fixed for Textile Made-ups to Quilted Textile Made-ups.
3. The issue has been examined in the Board. It is clarified that the All Industry Rates of Drawback for Readymade Garments are subject to individual drawback caps. Therefore, these rates are applicable to Embroidered Garments also as any fluctuations on account of Embroidery etc. is taken care of by such drawback caps.
4. It is also clarified that the All Industry Rates of Drawback for Made-ups too have drawback caps for various categories. Hence, quilted Made ups or any variants of such made-ups involving predominant use of textiles are eligible for drawback rates available to made-ups. The drawback caps take care of any fluctuations on account of quilting or other process which are inevitable due to international demand in vogue.
4. In view of the above, we hold that the appellants herein are entitled to drawback on embroidered night gowns exported by them.
However, this is subject to the individual drawback caps for such goods. As this material is not available before us, we remand the case to the jurisdictional Commissioner to determine the issue as to the individual drawback caps for the exported goods.