LexCHEMICALS AND FIBRES OF INDIA LTD. ETC. versus UNION OF INDIA
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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CHEMICALS AND FIBRES OF INDIA LTD. ETC.
V.
UNION OF INDIA
FEBRUARY 11, 1991
[S. RANGANATHAN, N.M. KASLIWAL AND
S.C. AGRAWAL, JJ.]
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Central Excises & Salt Act, 1944 & Customs Act, 1962-Customs and ~
Central E¥Ccise Duties Drawback Rules, 1971-Section 37 and Sec. 75-
Rules 3, 4, 6 and 7-Di-methyl-terephthalate-Import of-Whether asseS-
C see entitled to full 'drawback' of customs duty paid.
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The appellants are manufacturers of polyester fibre yarn. They
obtained a contract from the Imperial Chemical Industries, Singapore
for the supply of the said yarn and the said concern had agreed to
supply to the appellants free of cost the di-methyl-terephthalate (DMT) Y
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D required for the manufacture of polyester staple fibre yarn. The DMT
was required to be converted into polyester fibre, blended with viscose
indigenously and shipped to a customer of the ICI in Sri Lanka. The
appellant assessees obtained customs clearance permits for import of
392 tons of DMT and also of 178 tons of viscose stable fibre. The
appellants also obtained permission to convert the imported DMT into
E polyester fibre under customs bond. The appellants imported the DMT ?---.. ,_,
and paid the customs duty in respect thereof Section 75 of the Customs
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Act, 1962 empowers the Central Government to allow the drawback of
the duties of customs chargeable under the Act on any imported mate-
rials of a class or description used in the manufacture of such goods in
accordance with and subject to the rules under sub-section (2). There is an
identical provision in section 37 of the Central Excises & Salt Act, 1944
enabling grant of draw back of the excise duty paid in relation to such
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manufacture.
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The Central Government framed the Customs and Central Excise
Duties Drawback Rules 1971 enablin_g drawback being availed of in
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relation to customs as well as in relation to duties of central excise.
Schedule II to the notification listed the items the export of which enti-
tles an assessee to avail of the drawback facility. DMT as such was not
included in the notification in resp_ect of which drawback could have
been availed of by the assessees. The assessee therefore made an appli-
cation to the Ministry of Finance on 23.3.1977 requesting that since it
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H had paid customs duty on DMT, it was entitled to its drawback, more
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CHEMICALS & FIBRES v. U.0.1.
289
particularly when its request for the manufacture of the polyester fibre
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under customs bond had seen declined by the customs authorities. The
· application filed by the appellants was rejected by the Central Govern-
ment on 12.3.1978, though on a representation made by the Members of
the Association of manufacturer:; of Polyester staple fabric a notifica-
tion had been issued on 2.8. 76 under Section 25 of the Customs Act
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exempting DMT from Customs duty. The appellant thereupon filed
writ petition in the Delhi High Court which was dismissed by the High
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,,.. Court. Hence these appeals.
Dismissing the appeals, but recommending to the Central
Government to consider the case of the appellants on equitable grounds
whether the relief could be granted to it, this Court,
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HELD: Though Section 75 of the Customs Act, 1962 and Section
37 of the Central Excises & Salt Act 1944 empower the Government to
- ~ provide for the repayment of the customs and excise duties paid by
individual manufacturers also, the rules as framed (rule 3 in particular) D
provide only for a refund of the 'average amount of duty paid on mate-
rials, of any particular class or description of goods used for the
manufacture of export goods of that class or description by manufactu-
rers generally, except to the extent prescribed under rule 7. [300A-8']
The rules do not envisage a refund of an amount arithmetical!-
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'l\ • equal to the customs duty or central excise duty which may have been
actually paid by an individual importer-cum-manufacturer. If that had
been the statutory intendment, it would have been simple to provide
that in all cases where imported raw materials are fully used in the
manufacturers of goods which are exported, the assessee would be
entitled to a draw back of the customs or excise duties paid by him for
the import or on the manufacture. [300C]
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There is no controversy that, in this case, the goods exported fall
under item 25. It was sought to be contended that the goods fall under
sub-item 2501, but this is clExcerpt shown. Read the full judgment & AI analysis in Lexace.