100% EOU Procuring Excise Duty Paid Tea Entitled For Drawback: Calcutta High Court

The Calcutta High Court has held that 100% Export Oriented Unit (EOU) which has procured bulk tea from the manufacturer and excise duty is entitled to avail the benefit of drawback.

The bench of Justice Md. Nizamuddin has observed that the petitioner has procured excise duty-paid tea in respect of the subject shipping bills. The sample invoices and shipping bills clearly show duty was paid on procurement by the petitioner. Under such circumstances, there could be no reason to deny a drawback to the petitioner, which is an EOU.

The petitioner/assessee is a 100% export-oriented unit (EOU). The assessee exported 22 consignments of tea. The assessee claimed a duty drawback on central excise duty paid on purchases. Chapter 9 of the Foreign Trade Policy/Export and Import Policy governs the entitlement of EOUs, like the writ petitioner, to claim drawbacks at All Industry Rates (AIR).

The petitioner, being a 100% EOU that exports tea, sought a duty drawback in accordance with the notifications, and the duty drawback was duly granted to the petitioner by the department.

The Customs Department issued a show cause notice to the petitioner for recovery of the duty drawback. In the show cause notice, there was only an allegation that the relevant shipping bills were filed for the exportation of tea under drawback serial No. 9.21, i.e., 9.021, and the export was done after May 31, 2000. It was alleged that, with effect from June 1, 2000, the drawback was not admissible on tea, and the same was erroneously paid by the petitioner.

The petitioner contended that the petitioner, being a 100% EOU that exports tea, sought duty drawbacks in accordance with the said notifications, and the duty drawbacks were duly granted to the petitioner by the department.

The department contended that no document has been annexed by the petitioner showing that the petitioner is the manufacturer of the product and has paid excise duty. The chartered accountant certificate is not correct and is misleading. The other challans do not match the procurement made by the petitioner. On this score, the petitioner also failed to make out a case that the petitioner is otherwise eligible to get a duty drawback. Hence, there is no ground to interfere with the order of the revisional authority, and the writ petition should be dismissed.

The court held that the petitioner is entitled to avail the benefit of drawback under the notification issued by the DGFT (Government of India, Ministry of Finance) in the exercise of powers conferred under paragraph 4.11 of the Export and Import Policy 1997-2002, relating to duty drawback for the period from June 1, 2000, to March 31, 2001.

Counsel For Petitioner: Saurabh Bagaria

Counsel For Respondent: Vipul Kundalia

Case Title: M/s. Narendra Tea Company Private Limited Vs Union of India & Ors.

Case No.: WPA No. 2600 of 2020

Citation: 2023 LiveLaw (Cal) 11

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