Duty drawback on deemed exports is available without needing to furnish actual customs duty payment evidence if All Industry Rates are specified, irrespective of prior cenvat credit claims.

JUDGMENT

Rajiv Shakdher, J.

TABLE OF CONTENTS

Preface:

1. This writ petition seeks to challenge Policy Circular No.9(RE-2013)/2009-14 dated 30.10.2013 [hereafter referred to as "2013 Circular"] and orders dated 26.04.2016 and 17.11.2016, passed by the Deputy Development Commissioner (`Deputy DC') and the Deputy Director General of Foreign Trade (`Deputy DGFT'), respectively.

2. The central issue which arises for consideration is: whether the petitioner is entitled to duty drawback, confined to customs duty component, against deemed exports, even where it has claimed cenvat credit.

2.1. The concomitant issue which is required to be addressed is: whether the petitioner should be allowed to claim duty drawback on the customs duty component based on All Industry Rates (`AIR'), without having to furnish evidence concerning actual duty suffered on imported or indigenous inputs used in the manufacture of goods.

3. Before proceeding further, it would be useful to set out the broad backdrop in which the instant writ petition has been instituted in this Court.

Background:

4. The petitioner is a manufacturer and exporter of pharmaceutical products. The petitioner claims that it has been in this business for over 15 years and has resultantly gained the status of a two-star export house. The petitioner also avers, an aspect which is not disputed, that it converted its Domestic Tariff Area (`DTA') unit into a 100% Export Oriented Unit (`EOU') w.e.f. 28.09.2012.

4.1. The conversion of the DTA Unit into 100% EOU, according to the petitioner, has been physically verified and certified by the jurisdictional central excise authority.

5. After the conversion to 100% EOU unit had taken place, the petitioner claimed duty drawback qua custom duty component, on the premise that deemed export had taken place.

5.1. An application, in this behalf, was filed on 08.04.2013. Via this application, the petitioner claimed the duty drawback benefit for the period ending in September 2012, amounting to Rs.38,35,686/-.

5.2. The Assistant DC, however, had a different view and consequently, via order dated 10.05.2013 rejected the petitioner's claim. The principal reason given by the Assistant DC was that the claim for duty drawback (as a measure of deemed export benefit) could not be entertained, as the goods against which duty drawback was claimed, had been received in the unit, prior to it being declared an EOU.

5.3. The petitioner, it appears, revised the claim via a fresh application dated 17.06.2013.

5.4. The office of the Deputy DC, via order dated 08.08.2013 declined to consider the petitioner's claim.

5.4.(a) The analogy drawn in the communication dated 08.08.2013 was that where duty paid by EOUs is ab initio exempted from payment of duty, the refund of terminal excise duty (`TED') is not granted.

5.4.(b) The petitioner attempted to persuade the office of the Deputy DC, via a return response dated 09.09.2013. According to the petitioner, it did not receive any response to the same, despite having served a reminder on the said office on 07.12.2013.

6. The aforementioned application and the order passed, including the communication that was exchanged by the petitioner with the office of the Deputy DC, concerned the claim of duty drawback on goods, which were received prior to the DTA unit being convert