ORDER
P.G. Chacko, Member (J)
1. The lower authorities have demanded duty of Rs. 20,72,511/- from the appellants, denying them the benefit of Customs Notification No. 32/97-Cus. dated 1.4.1997.
2. After examining the records and hearing both sides, we notice that the appellants had imported raw materials duty-free under the above notification which allowed such import for jobbing purpose. The jobber was required to export the final product to the overseas supplier of raw materials. In this process, it was open to the jobber to make a value addition not less than 10% of the CIF value of the imported raw material. In the instant case, the appellants used indigenously procured inputs also in the job work. When the resultant product was exported, there was a value addition resulting from the cost of the indigenous inputs also. On this differential value, the party subsequently took DEPB credit insofar as four shipping bills were concerned and claimed duty drawback in respect of the remaining (8) shipping bills, there being a total number of 12 shipping bills covering export of goods in terms of the above notification. The lower authorities took the view that availment of such benefits as duty drawback and DEPB credit in respect of goods manufactured out of the raw materials imported duty-free under Notification No. 32/97-Cus. and exported in terms of such notification amounted to a breach of the conditions of the said notification. It was on this basis, the above demand was raised.
3. After considering the rival submissions, we find that the defence is based on two circulars issued by the Board, No. 26/02-Cus. dated 16.5.2002 [relating to wrong availment of DEPB benefit in respect of the exports made in discharge of export obligation under Notification No. 32/97-Cus] and 54/02-Cus. dated 27.8.2002 [relating to availment of duty drawback in respect of similar exports]. Applicability of these circulars has been resisted by learned Counsel by submitting that all the exports were made prior to the dates of above circulars. Prima facie, these circulars are clarificatory and hence retrospective in operation. Hence the circulars seem to support the case made out by learned SDR.
3. Learned Counsel has heavily relied on Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 for the purpose of challenging the above demand of duty on a jurisdictional ground. At this stage where our consideration is limited to the question whether the assessee has a prima facie case on merits or not, we need not examine this plea.
4. However, it cannot be lost sight of that the lower authorities recorded a finding to the effect that the availment of DEPB credit and drawback was illegal on the facts of the case. If that be so, the authorities concerned ought to have raised a demand on the ground of DEPB credit/drawback having been wrongly availed. On the other hand, on the very same ground, the benefit of Customs notification has been sought to be denied. Thus, this case turns out to be contentious. The appellants have not made out a case free from doubt, for the sake of waiver of predeposit and stay of recovery. They have not pleaded financial hardships either. In the circumstances we call upon them to deposit Rs. 5,00,000/- (Rupees five lakhs only) within four weeks and report compliance on 24th March 2006. Issued by dasti.
(Dictated and pronounced in open Court)