Page 108 - ELT_1st July 2020_Vol 373_Part 1

18 EXCISE LAW TIMES [ Vol. 373

case of L.T. Karle (supra) holding that the claim of drawback by the assessee in
that case was not liable to be accepted.
17. The Learned Single Judge in the case of First Garments (supra) has
accepted the contention of the petitioner to the effect that any Notification that
runs counter to the statutory provisions would have necessarily to be ignored,
relying in this connection on the decision of the Division Bench in the case of L.T.
Karle (supra). The Learned Single Judge also records the contention of the re-
spondents therein that the decision of the Division Bench in L.T. Karle (supra)
had been challenged by way of Special Leave, however, without it being stayed.
18. Before me, this contention was not raised and neither was a report
placed on progress, if any, in that matter.
19. The Division Bench in L.T. Karle (supra) has considered all Notifica-
tions referred to before me as also the decisions of the CESTAT in Leela Scottish
Lace Ltd., though reversed by the High Court of Karnataka. After an exhaustive
discussion in regard to the relevant Notifications, the Bench concludes at para-
graph 12.2.9 as follows :
‘12.2.9. The harmonious reading of Circular No. 67 of 1998, dated 14-
9-1998 and Circular No. 31 of 2000, dated 20-4-2000 in the light of Clause
2(c) of the Notification No. 67 of 1998, dated 1-9-1998 and the proviso men-
tioned therein, therefore, makes it clear that the DTA units are eligible to
send out the goods to the 100% EOUs for job work outside the DTA units
and they are also eligible for the grant of duty drawback against the duties
suffered on their inputs, which are processed by 100% EOUs for manufac-
turing the finished goods, which are exported directly from 100% EOUs,
without sending them back to the DTA units.’
20. The legal issue raised in this case is thus liable to be answered in fa-
vour of the petitioner and I do so holding that the petitioner is entitled to draw-
back at All Industry Rate in respect of the duty suffered on inputs utilised by
100% EOU/units in EPZ for manufacture.
21. The difficulty does not stop there, since in the present case, admit-
tedly, the goods have not been exported directly from the 100% EOU, but have
come back to the DTA for further processing. In such a case, it becomes necessary
for the authorities to categorically ensure that the duty in respect of raw materi-
als have, in fact, been remitted, prior to export.
22. I may make, in this connection, useful reference to Rule 3 of the
Customs and Central Excise Duties and Service Tax Drawback Rules, 1995 that
reads as follows :
‘Rule 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 the rules
made thereunder,
(bb) the Finance Act, 1994 (32 of 1994), and the rules made there-
under; and
(c) these rules, a drawback may be allowed on the export of
goods at such amount, or at such rates, as may be determined
by the Central Government :
Provided that where any goods are produced or manufac-
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