1. This order will dispose of C.W. 883/78 & 1079/79. We take the facts from the Civil Writ Petition No. 883/78. It was conceded by both the counsels that our decision in this writ petition will also govern the decision in the order writ petition.
2. This petition relates to the claim of the petitioner company to a drawback of Rs. 7,15,779.60 being the amount of Customs duty paid by it for import of Dimethyl Terepthalate (shortly to be called the DMT) under the Customs and Central Excise Drawback Rules, 1971 (hereinafter to be called the 1971 Rules) which has been rejected by the respondents/Union of India, Ministry of Finance.
3. The petitioner is a public limited company engaged in the manufacture of polyester staple fibre which is sold under the name of trade mark 'Teren'. In April, 1975 the petitioners obtained an order for export of yarn made from a blend of polyester staple fibre. DMT is subjected to payment of Customs duty. The petitioner at one time were able to persuade the Joint Chief Controller of Imports to permit it to import the DMT and carry out manufacturing operation in customs bond and export the yarn manufactured as aforesaid. The apparent advantage of being permitted to manufacture under customs bond is that no customs duty would have been payable on DMT imported by it. The Collector of Customs however, did not agree with this procedure and as he was the appropriate authority the petitioner imported the DMT and paid the customs duty under the Customs Act. The petitioner however, was able to persuade the Ministry of Commerce that instead of the stipulation of manufacturing under customs bond the stipulation of manufacture under supervision of Central Excise provisions be allowed. This had the result that the petitioner was not to pay any excise duty on polyester fibre which was otherwise payable. As there was no exemption from the payment of duty of customs the petitioners had to and did pay the customs duty on the import of DMT. It may be noted that the Central Government in exercise of its powers under Section 25 of the Customs Act issued a notification dated 2-8-1976 exempting the duty of customs livable amongst others on DMT when imported into India. This notification however, was of no assistance to the petitioner because the import of DMT by it was of earlier date. As a matter of fact the polyester fibre manufactured by it out of the imported DMT had even gone into the process of manufacture and the DMT had been cleared from the bonded warehouse on 27-7-1976 by paying the necessary customs duty. The petitioner thereafter took up the matter with the Union of India requesting that it may be given the drawback of the entire customs duty which he had paid on the import of the DMT. The claim was made under the 1971 rules. This request of the petitioners was rejected by the respondent by impugned letter of 12-4-1978. It was thereafter that the present writ petition has been filed.
4. Under Section 12(1) of the Customs Act, 1962, Customs shall be levied at such rates on goods imported into or exported out of India. In order however, to encourage export power is given under Section 25 of the Customs Act to the Central Government that if it is satisfied that it is necessary in the public interest so to do, it may exempt absolutely, or subject to such conditions, goods of specific description from the whole or any part of the duty of customs livable on them. Section 74 of the Customs Act permits drawback of duty paid on import of goods which have been re-exported without undergoing any process. But in order to encourage export Section 75 of the Customs Act permits drawback on imported materials used in manufacture of goods which are exported. Section 75(1) and (2) reads as under :-
'75(1). Where it appears to the Central Government that in respect of goods of any class or description manufactured in India and exported to any place outside India, a drawback should be allowed of duties of customs chargeable under this Act on any imported materials of a class or description used in the manufacture of such goods, the Central Government may, by notification in the Official Gazette, direct that drawback shall be allowed in respect of such goods in accordance with, and subject to, the rules under sub-section (2);
(2) The Central Government may make rules for the purpose of carrying out the provisions of sub-section (1) and, in particular, such rules may provide - ...... ...... ......
..... ..... ..... ..... .....
Similarly, Section 37 of the Central Excises and Salt Act provides for framing of the rules. In case of goods which have undergone a process and are used as ingredients in the manufacture of goods to be exported, drawback of customs duty is allowed on the imported material under 1971 Rules.
5. The petitioner claims that his case is covered by the 1971 Rules. The respondent contests this claim. That is the whole dispute in the present writ petition. Rule 3 of 1971 Rules provides for a drawback being allowed on the export of goods specified in the schedule at such amount or at such rates which shall be determined by the Central Government. In the Schedule various goods are mentioned in respect of which drawback is allowable on export. Seriall No. 25 is synthetic and regenerated fibre, textile yarn, thread, twines, cords and ropes. The rates of drawback indicated under each Seriall number are issued in the official gazette by a public notice. Under Seriall No. 25 the relevant entry with which we are concerned in the present writ petition reads as under :-
---------------------------------------------------------------Sub-Sl. Description ofNo.---------------------------------------------------------------25.01 Synthetic and regenerated fibre andtextile yarn, twines, cards and ropeselsewhere specified25.02 (A) Yarn of above 21 BWs counts or above14 n.f. counts, spun wholly but ofeither viscose rayon fibre or acetatefibre or polyester fibre, polyamidefibre or Acrylic fibre... ...................................or by any other process :-(a) ....................................(b) Polyster fibre content(c) ..... ..... .....(d) ..... ..... .....(e) Wool Content(f) Dye content if the yarn is dyed.------------------------------------------------------------------------------------------------------------------------------Rate of drawback---------------------------------------------------------------Brand rate to be fixedon an applicationfrom the individualmanufacturer/exporterRs. 43.15 (Rupeesforty three and Ps.fifteen only) per Kg.Rs. 0.85 (eighty fivePs. only) per kg :---------------------------------------------------------------
provided that the drawback at the above rates on account of fibre content may be admissible only if the manufacturer/exporter at the time of shipment declares, that the synthetic fibres mentioned as (a) to (d) above contained in the export goods are duty paid virgin fibres (and not the fibres obtained from fibre wastes, yarn waste or fabric waste by garneting or by any other process).
5A. Now it is not disputed that the goods which are manufactured by the petitioner is yarn. It is also not disputed that the yarn of the petitioner is of the description of 21 BWs counts or above 14 n.f. counts as mentioned is sub-serial number 25.02. Notwithstanding this the petitioner requested the respondent to fix a brand rate under sub-serial No. 25.01 for their goods and determine and ad hoc drawback admissible to it-in fact it wanted a draw back of duty of customs paid by it for DMT, which it had imported. Now admittedly the yarn that the petitioner manufactured and exported comes within the description of yarn in sub-serial No. 25.02. The only reason on which the petitioner's counsel, Mr. Habbu insists that the respondent was duty bound to fix it under sub-serial No. 25.01 is on the grounds that as DMT was imported by the petitioner and as the same was not exempted from duty of customs at that time and as further subsequently by notification of 2-8-1976 DMT had been exempted from payment of duty of customs it was the intention of the Central Government that no duty of customs should be payable on imported DMT and thereforee, a brand rate had to be fixed for the petitioner's case, as it was a special one, obviously suggesting that some kind of concession or special rate or drawback on duty of customs paid on DMT should be given. We cannot agree. There is a fallacy in the argument. Sub-serial 25.01 can only be invoked, if it is a yarn not elsewhere specified. But admittedly the petitioner's yarn is of the description mentioned in 25.02. Hence, it cannot seek to have a special brand rate fixed for it, under sub-serial No. 25.01.
6. Mr. Habbu's argument for invoking sub-serial No. 25.01 seems to be that as in fixing rate of drawback under 25.02 duty of customs on DMT was not included, the petitioner's case would fall under sub-serial No. 2501. But that is not the language of sub-serial No. 25.01 - it is only attracted if the description of goods of the petitioner was 'Yarn' not elsewhere specified. Once it is conceded, that petitioner is also manufacturing yarn of the same description as in sub-serial No. 25.02, the mere fact that DMT used is imported rather than local does not make it a different goods. This argument, thereforee, fails.
7. The petitioner's next contention is that Section 75 of the Customs Act casts a duty on the Central Government to allow drawback from duties of customs on all imported materials used in the manufacture of goods and exported to any place outside India. Insofar as the counsel seeks to urge that it is mandatory on the Central Government to necessarily provide for a drawback of duty on customs on all imported materials which are used in the manufacture of goods and exported to any place outside India, the argument is plainly unacceptable. Under Section 75 it is in the discretion of the Central Government, where it appears to it that in respect of any goods manufactured in India and exported outside India a drawback should be allowed, to so notify. It is, thereforee, untenable to say as if the Central Government is under a compulsion of law to provide for drawback for all imported materials used in the manufacture of goods which are exported outside India. The discretion of the Central Government is unfettered. It may or may not provide for drawback and further it may provide in respect of a class of goods and not with regard to the others. In the present case, however, this controversy is not of much consequence because the Central Government had provided for a drawback on the polyester fibre content at the rate of Rs. 43.15 per kg. The respondent has never denied that the petitioner could claim a drawback on the polyester fibre content used in the manufacture of the yarn by it. Though technically the petitioner is eligible for claim to the drawback on the polyester fibre content in actuality in the present case it is unnecessary for the petitioner to resort to this provision. This situation is of course of its own making because the petitioner persuaded the Ministry of Commerce to permit it to manufacture under Central Excise Supervision. The result of which is that no excise duty on polyester fibre was paid by it. Evidently as no excise duty was paid by it the question of claiming a drawback of fibre content could not arise. But that is because of the peculiar situation of the petitioner's case. The grievance when analysed in reality boils down to the rate of drawback fixed for polyester fibre. It appears and as is clear from the impugned letter of 12-4-1978 by the respondent that in determining the rate of drawback the Central Government took into account the factors mentioned in sub-rule (2) of Rule 3 and after taking into consideration - (a) duty incidence of raw material used in the manufacture of viscose fibre + the Central Excise duty on the viscose fibre and (b) the Central Excise duty on polyester fibre in respect of polyester yarn, the said rate was fixed. However, no raw material duty for manufacture of polyester yarn was taken into account as the same DMT was available indigenously and was exempted from Central Excise duty. It is to this statement that petitioners counsel seriously took objection. Mr. Habbu's complaint was that admittedly no consideration was given to the fact that importer of DMT had to pay duty of customs and thereforee in fixing the rate of drawback the considerations that are necessarily to be taken into account under sub-rule (2) of Rule 3 have not been violated. The argument in fact bordered to challenge the virus of the rate of drawback fixed in sub-serial No. 25.02 though Mr. Habbu having raised the argument stepped back from challenging the virus of rates and only urged that because the rate had not been fixed by taking into account the duty of customs paid on DMT by the petitioner, respondent must be directed to fix special rate so far as the petitioner is concerned. I thin this argument is based on misapprehension of the position in law. It is no doubt true that under sub-rule (2) of Rule 3 of 1971 Rules the Central Government has in determining the rate of drawback to have regard to, amongst others to the average amount of duties paid on imported materials or excisable materials used in the manufacture of semi etc. as are used in the manufacture of goods. Now in determining this rate of drawback as has been indicated in the letter of 12-4-1978 and also further clarified in the reply filed by the respondents considerations of clauses (a) to (f) of sub-rule (2) to Rule 3 have been taken into account. It is apparent that while fixing the amount of rate of drawback in respect of polyester and viscose fibre yarn the Central Government was aware and took note of the fact that DMT was used in manufacture of fibre. But since DMT was indigenously available in India in abundance, the Central Government did not, at the time of determining the amount of rate of drawback in respect of polyester fibre and viscose fibre yarn, consider it necessary to give drawback on duty of customs which would have been payable if DMT had been so imported. The reason was the eminently sensible one that as the purpose of giving a drawback on duty of customs paid on import of raw material for manufacture of goods which is exported is that as the Government is keen to earn foreign exchange it wished to give a drawback so as to boost exports. But if it finds that any particular raw material which has to be used in the manufacture of goods for export order is clearly available indigenously it can, as a measure of preserving foreign exchange, come to a conclusion as it did in the present case that giving of drawback on imported raw material will be against the economy of the country both by outgo of foreign exchange and non-utilisation of abundant DMT thus creating imbalance in the internal economy. The petitioner's argument seems to imply as if the Central Government was under a compulsion to deal with each individual case and if the rate has been fixed as in the present case by not providing for an average amount of duties paid on imported material like DMT the petitioner's case should be dealt with as a special case and it be given an enhanced rate of drawback. We cannot agree, the requirement of sub-rule (2) of Rule 3 is only to have regard to various situations mentioned therein. It cannot mean a compulsion to give drawback on import of DMT, when this raw material is indigenously available in plenty.
8. It should be emphasised that sub-rule (2) of Rule 3 requires that in determining the amount of rate of drawback the Central Government shall have regard to the various eventualities mentioned therein. All that it means is that these various considerations will be borne in mind when fixing the rate of drawback. This does not mean that under every sub-head a rate of drawback has to be provided for. Thus while the Central Government notices that DMT is available in plenty locally and does not provide for the drawback on the average amount of duty paid on imported raw materials the rate fixed could not be faulted on the ground that no rate of drawback on imported materials has been fixed. The reason is that having noticed that the raw material was available indigenously it would be acting against the interest of national economy nevertheless have permitted a drawback on imported material. That to accept the argument of Mr. Habbu that simply because DMT had been imported, drawback on the duty of customs must be allowed in every case, can in circumstances of the availability of the DMT locally lead to very serious consequences for the economy. A news item (In Economics Times of India of 2-5-1980, page 4) discloses that the unsold stocks of polyester staple fibre in the country at the end of March, 1980 are estimated to be 4,300 tonnes valued at rupees fifteen crores. The result of these stocks is that production has now been curtailed leading to a lower off-take of DMT which is manufactured by the state owned IPCL of Baroda. As a result the IPCL is nursing stocks of 6,000 tonnes of DMT valued at rupees nine crores. Could there by any justification for the Central Government to allow a drawback on duty of customs on imported DMT when the availability of this commodity was going a begging inside the country. The Central Government could well legitimately consider that if no drawback was permitted the manufacturers of polyester fibre will necessarily then buy from the local market, thus relieving the over-stocking of DMT and also avoiding other unfortunate consequences of not only over-stocking but also under-utilisation of the production capacity of polyester fibre. Any Government necessarily has to take this public interest in view when fixing the rate of drawback. Public policies cannot be made to suit the peculiar and the special interests of individual entrepreneur. In the present case, the peculiar situation of the petitioner is because of the fact that it has an association with multinational corporation like the ICI, Singapore which has made a condition of its order that the supply to the petitioner in India of the DMT will be made by ICI. Now it may be all right for the multinational corporation to pass on its extra undisposed DMT to a company in India in get its export order manufactured by them. But that is no reason why the Central Government should give the petitioner extra rate for importing a material which is easily available inside the country. Any other local company was in a position to buy from the local market. Why the petitioner company should not, if it wishes to compete on the same lines, also resort to local purchase when the very same raw material is available, is of course a decision to be made by it keeping its own business interests in view. But then the business interests of the company cannot permit it to insist that the Central Government should allow it a drawback on the imported raw material when it could have got the same material inside the country without any worry. There is no unfairness involved because like other manufacturers buying locally, it was open to the petitioner company to do so and thus avoid paying duty of customs on imported DMT.
9. The petitioner thus cannot find fault with the fixation of the rate on the ground that in his case a separate rate of drawback should have been fixed for polyester fibre content as against that fixed for all industry. This objection further becomes of no consequence when the petitioner's right to invoke Rule 7 of 1971 Rules is not rejected at the threshold. The said rule provides that where the manufacturer or exporter finds that the rate of drawback determined under Rule 3 is less than three-fourths of the duties paid on the materials or components used in the production or manufacture of the said goods, he may apply to the Central Government of fixation of appropriate rate of drawback. Thus rule in fact, thereforee, permits the petitioner to approach the Central Government, if he can show that the rate of drawback fixed for polyester fibre content at Rs. 43.15 per kg. is less than three-fourth of the duties paid on the material or components used in the production of yarn by him. The yarn which was exported by the petitioner was formed out of a blend of viscose and polyester fibre. The rate of drawback is given with regard to the polyester fibre content. DMT is one of the items used in the manufacture of polyester fibre. Now if the petitioner could show that the total duties paid by it in connection with the polyester fibre was more than Rs. 53.95 per Kg. than he could possibly urge that the rate of drawback being less than three-fourth of the duties paid by it he was entitled to have his case considered under Rule 7. As a matter of fact Mr. Chardrashekharan the learned counsel for the respondents on instructions from the departmental representative, (Mr. Mahesh Kumar, Under Secretary (drawback) Ministry of Finance, who was present in the count), and who also permitted by us to clarify orally certain matters before us stated clearly that why the petitioner's claim had been rejected under Rule 7 was not on the ground of any technical ineligibility but only on the sole ground that the petitioner had not in fact paid more than 1/4th of duties on the rate of drawback which had been fixed. Mr. Habbu had put up a technical plea that the rate of drawback is only permissible if a declaration is given that the petitioner had paid duty on virgin fibres. The suggestion was that as the petitioner had carried out manufacture under Central Excise supervision no duty in fact was paid and the claim would not be entertained on this technical ground. We do not read the proviso to sub-serial No. 25.02 in such a restricted manner. It is quite clear to us and in fairness to the respondent it was conceded by it that the mere fact that the petitioner had not paid duty because of the fact that it had been allowed the manufacture under Central Excise supervision (in which case duty is not payable) does not mean that it could not invoke Rule 7. Of course the petitioner in order to obtain relief under Rule 7 would have to go further and show that totalling the duty paid on polyester fibre and adding the import duty paid on DMT the rate of drawback of Rs. 43.15 per Kg. so far as the petitioner was concerned comes to less than three-fourth of duties paid by it. We were told by Mr. Chardrashekharan that according to the department the duty of customs paid on DMT would work out to be about Rs. 7/- per Kg. Thus the petitioner could at the most claim that he had paid duty on Rs. 43.15 + 7 = Rs. 50.15 per Kg. but as there is a drawback of Rs. 43.15 per Kg. it cannot claim that it has paid duties more than three-fourth of rate of drawback and thereforee Rule 7 would not benefit the petitioner. Mr. Chardrashekharan emphasises and we agree with it that it is not as if the respondent had rejected the case under Rule 7 on account of any technical ineligibility. The respondent even went further and showed its fairness by stating that even now if the petitioner could bring its case on facts within Rule 7 by pointing that the total duties paid by it including that of DMT and the notional on polyester fibre content works out to more than three-fourth of the rate of drawback of Rs. 43.15 per Kg. the department will certainly consider the matter on merits. In that view we cannot find that the respondent arbitrarily refused to consider the case of the petitioner under Rule 7, because if in fact the petitioner's case does not satisfy the requirement of Rule 7, the department cannot be blamed.
10. The contention of the petitioner really becomes meritless if we examined the case separated from the present case. Now if the petitioner had not manufactured under Central Excise supervision, he would have paid excise duty on polyester fibre which we understand was Rs. 43.15 per Kg. at that relevant time. In that case the petitioner would have paid excise duty of Rs. 43.15 + Rs. 7 on the imported DMT, making a total of Rs. 50.15 per Kg. In such a case if the petitioner had applied under Rule 7 to the respondent it would have been met with the plea that as the rate of drawback of Rs. 43.15 per Kg. was not less than three-fourth of the total duties paid by it on the materials in the manufacture of the yarn, it could get no benefit under Rule 7. If in that case, and in our opinion correctly, no relief could be given, how can the petitioner in all equity or justice ask that it is entitled to some further relief simply because it manufactured the goods under Central Excise supervision. The fortuitous chance of the manufacture being done under Central Excise supervision or that of manufacture after paying excise duty cannot make a difference to the amount of drawback that each manufacturer is entitled to. If I thus compare these two illustrations which are similar excepting that of manufacture under Central Excise supervision, it will clearly show the highly inequitable claim that the petitioner is putting forth.
11. As the petitioner has not been been able to show any violation of the statute or 1971 Rules, the claim of the petitioner for being given ad hoc relief being outside law was rightly rejected by the respondent. I am thus satisfied that there is no merit in the petition. The same is thereforee, dismissed with costs.
S.N. Kumar, J.
12. I agree with my learned brother that both the petitions deserve to be dismissed with costs.
13. Material facts are that the petitioners manufacture polyester staple fibre which is produced from Dimethyl Terepthalate (hereafter called DMT). Polyester staple fibre may be blended with natural and/or synthetic yarn.
14. In April 1975, the petitioners obtained an order from I.C.I. (Singapore) for export of yarn made from a blend of polyester staple fibre and viscose staple fibre. Under the terms of the said order, ICI (Singapore) was to supply to the petitioner in India DMT. The polyester staple fibre was to be manufactured by conversion at the petitioner's factory at Thana and sent to Rajasthan Spinning and Weaving Mills, Bhilwara for being blended with viscose and from the blend, yarn was to be spun at the aforesaid mills and exported. Viscose fibre was to be indigenous. Blended yarn was to be exported. The Joint Chief Collector of Imports, Bombay issued a Customs Clearance Permit dated 2nd June, 1975 to the petitioners to import the DMT, carry out the manufacturing operations in Customs bond, and export the yarn manufactured as aforesaid. Since the manufacture was to be under Customs bond, no Customs duty was payable on the DMT supplied by ICI (Singapore). The petitioners received the imported DMT towards the end of 1975 and kept it in the Customs Warehouse without payment of duty. When the petitioners approached the Collector of Customs, Bombay early in 1976 to carry out the manufacture in Bond as stipulated in the Customs Clearance Permit, the permission was refused. The petitioners then approached the Ministry of Commerce to get this Customs Clearance Permit so amended that instead of the stipulation of manufacture in Customs Bond, the stipulation of manufacture under Central Excise supervision could be inserted. The amendment was allowed. The petitioners paid the import duty, got the DMT released from Customs, manufactured the yarn and then exported the same. Import duty paid was Rs. 15,779.60. The petitioners then made an application for full drawback of the Customs duty paid on DMT which was rejected by order dated 12-4-1978. Hence the petition. The above facts are not in dispute. I am called upon to find whether the impugned order suffers from any illegality.
15. Scheme of the legal provisions to receive drawback is as under :-
Chapter X of the Customs Act, 1962 deals with Drawback. Section 75 is the relevant provision. It provides :-
'75. (1) Where it appears to the Central Govt. that in respect of goods of any class or description manufactured in India and exported to any place outside India, a drawback should be allowed of duties of customs chargeable under this Act on any imported materials of a class or description used in the manufacture of such goods, the Central Government may, by notification in the Official Gazette, direct that drawback shall be allowed in respect of such goods in accordance with, and subject to, the rules made under sub-section (2).
(2) The Central Government may make rules for the purpose of carrying out the provisions of sub-section (1) and, in particular, such rules may provide -
(a) for the payment of drawback equal to the amount of duty actually paid on the imported materials used in the manufacture of the goods or as is specified in the rules as the average amount of duty paid on the materials of that class or description used in the manufacture of goods of that class or description either by manufacturers generally or by any particular manufacturer;
(b) for the production of such certificates, documents and other evidence in support of each claim of drawback as may be necessary;
(c) for requiring the manufacturer to give access to every part of his manufactory to any officer to customs specially authorised in this behalf by the Assistant Collector of Customs to enable such authorised officer to inspect the processes of manufacture an to verify by actual check or otherwise the statements made in support of the claim for drawback.'
16. There is a similar provision in the Central Excises and Salt Act. Under both the Acts one set of rules has been framed and are called Customs Central Excise Duties Drawback Rules, 1971. Relevant rules are 3, 4, 6(1)(a) and 7 which read :-
'3. Drawback : (1) Subject to the provisions of -
(a) the Customs Act, 1962 (52 of 1962) and the rules made there under,
(b) the Central Excises and Salt Act, 1944 (1 of 1944) and rules made there under, and
(c) these rules a drawback may be allowed on the export of goods specified in the Schedule at such amount of at such rates, as may be determined by the Central Government;
Provided that where any goods are produced or manufactured from imported materials or excisable materials, on some of which only duty chargeable thereon has been paid and not on the rest, or only a part of the duty chargeable has been paid, or the duty paid has been rebated or refunded in whole or in part or given as credit under any of the provisions of the Customs Act, 1962 (52 of 1962), and the rules made there under or of the Central Excises and Salt Act, 1944 (1 of 1944) and the rules made there under, the drawback admissible on the said goods shall be reduced taking into account the lesser duty paid or the rebate, refund or credit obtained :
Provided further that no drawback shall be allowed :-
(i) if the said goods, except tea chests used as packing materials for export of blended tea, have been taken into use after manufacture; or
(ii) if the said goods are produced or manufactured using imported materials or excisable materials in respect of which duties have not been paid.
(2) In determining the amount or rate of drawback under this rule, the Central Government shall have regard to :-
(a) the average quantity or value of each class or description of the materials from which a particular class of goods is ordinarily produced or manufactured in India;
(b) the average quantity or value of the imported materials or excisable materials used for production or manufacture in India of a particular class of goods;
(c) the average amount of duties paid on imported materials or excisable material used in the manufacture of semis, components and intermediate products which are used in the manufacture of goods;
(d) the average amount of duties paid on materials wasted in the process of manufacture and catalytic agents :
Provided that if any such waste of catalytic agent is re-used in any process of manufacture or is sold, the average amount of duties on the waste or catalytic agent re-used or sold shall also be deducted;
(e) the average amount of duties paid on imported materials or excisable materials used for containing or packing the export goods;
(f) any other information which the Central Government may consider relevant or useful for the purpose.
4. Revision of rates : The Central Government may revise the amounts or rates determined under rule 3.
Where no amount or rate of drawback has been determined in respect of any goods, any manufacturer or exporter of such goods may, before exporting such goods, apply in writing to the Central Government for the determination of the amount or rate of drawback thereof stating all relevant facts including the proportion in which the materials or components are used in the production or manufacture of goods and the duties paid on such materials or components.
7. Cases where amount or rate of draw back determined is loss.
(1) Where, in respect of any goods the manufacturer or exporter finds that the amount or rate of drawback determined under rule 3 or, as the case may be, revised under rule 4 for that class of goods is less than three-fourths of the duties paid on the materials or components used in the production or manufacture of the said goods, he may make an application in writing to the Central Government for fixation of appropriate amount or rate of drawback stating all relevant facts including the proportion in which the materials or components are used in the production or manufacture of goods and the duties paid on such materials or components.
(2) On receipt of the application referred to in sub-rule (1) the Central Government may, after making or causing to be made such enquiry as it deems fit, allow payment of drawback to such exporter at such amount or at such rate as may be determined to be appropriate if the amount of rate of drawback determined under rule 3 or, as the case may be, revised under 4, is in fact less than three-fourths of such amount or rate determined under this sub-rule.'
17. The Schedule mentioned in Rule 3 provides for 59 kinds of goods in respect of which drawback is allowable on export. Item 25 in the Schedule admittedly includes the goods exported by the petitioners. In respect of each item in the Schedule the Central Government determines the rate/amount of drawback having regard to factors mentioned in sub-rule 2 of Rule 3. The rates so determined are then published through a Public Notice are sub-divided. Items are called Seriall nos. and sub-items are called sub-serial nos. Then is description of goods and the rate of drawback for each. With effect from 1-6-1975 the Central Government amended the table. It is common case that the said table is applicable to the present case and the relevant entries under Seriall No. 25 in the table are sub-serial nos. 25.01 and 25.02 which reads :-
25 Synthetic and Regenerated fibre and TextileYarn, Thread, Twines, Cords and Ropes :25.01 Synthetic and regenerated fibre and textileyarn, twines, cards and ropes notelsewhere specified.25.02 (A) Yarn of above 21 BWs counts or above 14 n.f.counts, spun wholly out of either viscose rayonfibre or acetate fibre or polyester fibre orpolyamide fibre or acrylic fibre or wool, orfrom a combination of two and not morethan two of the above mentioned fibres or acombination of any one of the abovementioned fibres with either cotton or silk(but excluding yarn spun out of fibres obtainedfrom fibre wastes, yarn wastes, or fabricwastes, by garneting or by any other process :-(a) Cellulose fibre content.(b) Polyster fibre content.(c) Acrylic fibre content.(d) Polyamide fibre content.(e) Wool Content -.........................................(f) Dye content if the yarn is dyed.Provided that :(i) the drawback at the above rates on account offibre content and wool content may be admissibleonly if the manufacturer/exporter at the timeof the shipment declares, and if necessaryproduces proof to the satisfaction of theCollector that the synthetic fibre mentionedat (a) to (d) above contained in the exportgoods are duty paid virgin fibres (and notthe fibres obtained from fibre wastes, yarnwaste of fabric waste by garneting or byany other process); and the wool mentionedat (c) above is only imported duty paid wool;(ii) no rebate of the duty paid on fibres hasbeen obtained under the Central ExciseRules, 1944;(iii) the drawback at the above rates on fibrecontent may not be allowed in respect ofthose fibres for which the declaration asaforesaid has not been made and proof asaforesaid has not been produced;(b) All wool worsted hand knitting yarnof 21 BWs or less counts...... ..... .....(c) All wool worsted yarn (excluding allwool worsted hand knitting yarn) of21 BWs or less counts -..... ..... .....(d) Dyed yarn spun out of fibres containingsynthetic fibres and/or wool andobtained from, fibre wastes, yarnwastes, or fabric wastes by garnetingor by any other process.'-------------------------------------------------------------------Brand rate to befixed on an applicationfrom the individualmanufacturer/exporter.Rs. 1.80 (Rupees oneand paise eighty only)per Kg.Rs. 43.15 (Rupeesforty three and paisefifteen only) per Kg.Rs. 23.20 (Rupeestwenty three andpaise twenty only)per Kg.Rs. 17.90 (Rupeesseventeen and ninetypaise only per Kg.Rs. 0.85 (eighty fivepaise only) per Kg :Rs. 0.85 (Eightyfive paise only) perKg of the yarn.-------------------------------------------------------------------
18. I do not find the expression 'Brand Rate' mentioned against sub-serial No. 25.01 either in the rules or the Customs Act. However, a copy of the Public Notice dated 1-6-1979 was placed on record for our perusal. The last two paragraphs of this notice which runs into 135 pages read :-
'..... ..... ..... 'All the goods in respect of which drawback is allowed by Government on export are covered by the 59 main heads in the table. 'All Industry' rates of drawback have been prescribed in respect of as many products as possible. Where a particular export product falling within the general description of any of the 59 main heads is not covered by the 'all industry' rates, the exporters may get the brand rates fixed under Rule 6. The exporters can also avail of the facility of fixation of rate of amount of drawback up to the drawback claimed in terms of rule 6(2) of the Rules. Where an exporter finds that in his case the rate or amount of drawback is less than three-fourths of the duties paid on the materials and components used in the production or manufacture of goods, the facility of fixation of special brand rate may be availed of under rule 7 of the Rules.'
19. During the course of arguments also it was explained to us that rates are fixed for a particular industry as a whole and the same are called 'ALL Industry' rates. There may however be goods which although fall within a Seriall but still are not covered under any sub-serial. To provide for the exporters of such goods the table stipulates under the first sub-serial of each Seriall for the fixation of rates which are called brand rates. The power to fix such rates named as Brand Rates is under Rule 6(1)(a). To relieve hardship in cases which fall under the 'all industry' rates Rule 7 is provided.
20. The dispute in the present petition is quite narrow. The petitioner contends that his goods fall under sub-serial 25.01 whereas the respondents contend that the goods fall under Rule 7.
21. The validity of the Rules is not under challenge. It is also not in dispute that if rule 7 is applicable then the petitioner cannot get any relief by way of drawback. If the goods fall under sub-serial 25.01 then under Rule 6(1)(a) the respondents have to be directed to fix the rate of drawback, which when fixed may lead to some relief.
22. The learned counsel for the plaintiff was not able to point out anything to establish that the description of goods given in sub-serial 25.02 in the table aforementioned was not the description of goods exported by the petitioners. This means that the 'All Industry' rates are already fixed as far as the exported goods in question are concerned. He, however, submitted that the rates of drawback fixed for sub-serial 25.02, on the showing of the respondents themselves, do not take into account the Customs duty on DMT. This means that the attack is on the quantum of rate fixed and not on the description of goods. To meet such hard cases rule 7 is provided and not rule 6. Rule 6 applies to goods in respect of which no rate is fixed. In other words the goods under different sub-serial numbers. Excepting the first, that is 25.01, rates for all other sub-serial numbers were fixed. Unfortunately, under Rule 7 the petitioner admittedly does not come within the area of eligibility for refixation of a rate because the rate of drawback allowed to him is not less than three-fourths of the duties paid on the materials and components used in the manufacture of exported goods. As I have noticed above the rules are not under challenge. I do not find any illegality in the view taken by the respondents that the petitioner's case was covered by Rule 7 and the petitioner does not satisfy the conditions of the said rule.