Order Date: 24 June 2022

Facts-

• The Petitioner, M/s Tufropes Pvt. Ltd. is engaged in the manufacture of Twine/Ropes made of High Density Polyethylene (HDPE). Petitioner obtained four advance licenses in terms of Export Import Policy. In terms of these licenses, petitioner was permitted to import HDPE granules without payment of import duty.
• The Petitioner did not import the raw materials, HDPE against any of the licences, instead, petitioner got the licences invalidated and procured the HDPE from indigenous suppliers and procured HDPE from Reliance Industries Ltd on payment of excise duty without availing the benefit of Notification No.44/01-CE (NT).
• A show cause notice was issued to petitioner seeking to recover the amount paid as drawback to petitioner, wherein reliance was placed upon Note 2(b) of General Notes to All Industry Rates of Drawback, wherein it is stipulated that All Industry Drawback is not available to export made in discharge of export obligation under advance licences and hence the drawback amount was paid erroneously to Petitioner. The said allegation was confirmed by the Commissioner of Customs (Appeals) and department of revenue.

Issue-

• Whether the excise duty paid by the petitioner can be claimed as drawback?

Order-

• The Hon’ble High Court observed that the advance licences of petitioner were invalidated for direct import of relevant HDPE/P Granules/ Chips and Petitioner was allowed to procure the same indigenously from Reliance Industries Ltd, Mumbai. The fact that the granules used in the ropes exported had been procured from Reliance Industries Ltd by paying excise duty also is not disputed.
• In the present advance licences, against which the goods were exported, were issued under Notification No.43/02/Cus which exempted all duties of Customs on import of inputs used for the manufacture of export product. 
• The exempted material in the present case for the export product is HDPE granules. As per the licence conditions direct import of inputs was not permitted and petitioner procured the inputs indigenously from Reliance Industries Ltd.” Therefore, it is indisputable that Petitioner did not use any HDPE granules procured under the advance licences by direct import but procured the granules from indigenous source, i.e., Reliance Industries Ltd. If that is the factual position, Petitioner should be entitled for the drawback. It is fairly submitted that locally procuring the products on which excise duty is paid and those products are used in manufacture for export goods, the excise duty paid can be claimed as drawback.
• In view of the same, the factual position notwithstanding the error in the shipping bills, which an alert petitioner could have amended on time. Hence the petitioner will be entitled and should be granted the drawback as it was rightly granted earlier by the DGFT.
• The impugned order is quashed and set aside.