Drawback Not Allowed Where Refund Exceeds Market Value Of Goods: CESTAT

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that drawback not allowed where refund exceeds market value of goods. Dr. Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) opined that if the transaction value (FOB value) is so high, that the drawback due on the goods exceeds the market value of the goods, then, as per section 76(1) (b), no drawback shall be allowed. In this case, the assessee/appellant filed two shipping bills for export of Girls Frocks Woven Made of Manmade Fibre. The assessee declared total FOB value of Rs. 4,10,52,321/- in the shipping bills which worked out to about Rs. 274.13 per piece. Receiving intelligence these goods were overvalued in order to claim excess benefits of drawback. However, it felt that the value was highly inflated in order avail ineligible export benefits. The goods were however allowed to be exported after obtaining a bond and bank guarantee and they were accordingly exported. A show cause notice was issued to the assessee proposing to reject the FOB value declared by the assessee in the two shipping bills under Rule 8 of the Customs Valuation (Determination of Value of Export Goods) Rules, 2007. The demand was confirmed by the Joint Commissioner. The assessee had filed an appeal to the Commissioner (Appeals), challenging the order passed by the Joint Commissioner, which upheld the impugned order. The assessee contested the redetermination of the value of the goods and the finding that it had grossly over-valued the goods in order to avail the higher export benefits under MEIS and Drawback Schemes. The Tribunal observed that the goods were not liable for confiscation under Section 113 (i) because there is no assertion in the show cause notice or finding in the order-in-original or in the impugned order that the value declared in the shipping bill was not the transaction value. The Tribunal opined that no drawback will be allowed unless the amount of drawback which will be due on the goods itself is more than the market value of the goods. As long as the drawback due is less than the market value, it is payable. It is equally evident that the transaction value (FOB value) on which drawback has to be paid need not be the same as the market value of the goods, added the bench. In view of the above, the Tribunal allowed the appeal. Case Title: M/s Modak Dyeing & Printing Co. Pvt. Ltd. v. Commissioner of Customs Case Number: CUSTOMS APPEAL NO. 53962 OF 2023 Counsel for Appellant/ Assessee: R.K. Hasija Counsel for Respondent/ Department: Rajesh Singh Click Here To Download Order/Judgement

Drawback Not Allowed Where Refund Exceeds Market Value Of Goods: CESTAT

Mehak Dhiman

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