2006 (1) TMI 42 - CGOVT - Central Excise

Issues:
Claim of rebate on exported goods, availing Cenvat Credit, duty drawback claims, rejection of rebate claim, appeal against rejection, interpretation of relevant rules and notifications.

Analysis:

1. Claim of Rebate on Exported Goods:
The applicant, a textile manufacturer, filed a rebate claim for duty paid on terry towels exported by a merchant-exporter. The claim was based on Rule 18 of the Central Excise Rules, 2001, and Notification No. 40/2001. The applicant contended that they endorsed on the export documents that they were availing Cenvat credit and not claiming drawback. The government observed that the conditions under the notification were met, and there was no explicit condition against claiming duty drawback for rebate eligibility.

2. Availing Cenvat Credit and Duty Drawback Claims:
The government noted that the manufacturer had availed Cenvat Credit on inputs used for manufacturing the exported goods, making them ineligible for drawback under Rule 13 of the Drawback Rules. Although the merchant-exporter claimed and obtained drawback, both parties declared no duty drawback claimed, leading to a contravention of the drawback rules. The government acknowledged the contravention but stated that it was not a ground for denying the rebate to the manufacturer.

3. Rejection of Rebate Claim and Appeal:
The adjudicating authority rejected the rebate claim on the grounds of misdeclaration and intent to avail double benefits. The appeal filed by the applicant was also dismissed by the Commissioner (Appeals) without relief. The applicant argued that they were not at fault for the drawback claimed by the merchant-exporter and had taken corrective actions upon discovering the issue.

4. Interpretation of Rules and Notifications:
The applicant cited legal precedents and circulars to support their case, emphasizing that they followed the prescribed procedures and did not mis-declare any information. They highlighted that the rejection of the claim was based on a presumption of agreements with the exporter rather than specific legal grounds. The government, after reviewing the submissions and orders, found that the impugned Order-in-Appeal was not maintainable and remanded the case for rebate sanction if found in order.

In conclusion, the government set aside the Order-in-Appeal and remanded the case back to the original authority for further action, emphasizing that the contravention of drawback rules by the merchant-exporter should not be a basis for denying the rebate to the manufacturer who had complied with the relevant regulations.