02 September 2014

Drawback - Brand rate can be claimed after availing All Industry Rate

An exporter is not barred from seeking fixation of brand rate of Duty Drawback under Rule 7 of the Drawback Rules merely because, at the time of export, he had applied for and was granted drawback at the All Industry Rate (AIR) under Rule 3. The Bombay High Court, in its judgement dated 1-9-2014, while holding so, has also struck down clause (d) of the Circular dated 30-12-2011 issued by the Central Board of Excise & Customs (CBEC), imposing restrictions.

The High Court noted that there is no prohibition in the Drawback Rules debarring an exporter from seeking determination of brand rate of drawback and claim differential amount in such circumstances. Observing that the word “finds” appearing in Rule 7 after the words “manufacturer or exporter”, indicates that it is only after the exporter concludes that the AIR of drawback is less than specified amount, that he can make an application for determining the brand rate, the High Court held that there could be instances where the exporter cannot, at the time of export, determine that the AIR of drawback is in fact less. Provisions under Rule 7(3) of the Rules providing for provisional drawback during pendency of brand rate claim were also considered by the court in this context.

Earlier the High Court exercised its discretion and entertained the writ petition though there was alternative remedy available with the petitioner against the order declining to accept application for brand rate of drawback. The court noted that the CBEC Circular itself was challenged in the petition and that there was no remedy available under the Act/Rules to challenge the said Circular. According to it, the issues raised were purely legal with no dispute on facts and availing alternative remedy would be futile inasmuch as the revisionary authority had decided the matter which was in turn relied upon in the impugned order.


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