2006 (11) TMI 32 - HC - Central Excise

Rebate claim- Petetioner used duty paid inputs for manufacture of final goods exported to notified countries SCN issued in one claim but on other claim (80% of rebate claimed) agreed by the authority

Summary

Issues:
1. Eligibility for excise duty rebate on exported products.
2. Discrepancy in input procurement for manufacturing final products.
3. Admissibility of excise duty rebate claims.
4. Timely processing of rebate claims and show cause notices.

Analysis:

Issue 1: The Petitioner claimed excise duty rebate on exported goods manufactured using excise duty paid inputs. The Petitioner sought rebate for various final products, including Menthol crystals and Peppermint Oil, totaling Rs. 15.97 crores, and other goods amounting to Rs. 7.48 crores. The Petitioner filed rebate applications, but the Respondents issued show cause notices questioning the manufacturing process for some final products, alleging that it did not qualify as manufacture.

Issue 2: The Respondents raised concerns about the discrepancy in input procurement by the Petitioner. They found that the quantities of inputs obtained from manufacturers in Jammu and Kashmir were insufficient to cover the input requirements for the final products. It was discovered that a significant portion of inputs was sourced from manufacturers in Uttar Pradesh and other states, potentially affecting the eligibility for excise duty rebate under Rule 12 of the Cenvat Credit Rules, 2004.

Issue 3: The Court noted that while show cause notices were issued for some final products, no notice was served regarding the rebate claim of Rs. 15.97 crores for Menthol crystals and Peppermint Oil. The Court directed the release of 80% of this rebate amount to the Petitioner immediately, subject to an affidavit of undertaking ensuring repayment if found ineligible. The Respondents were instructed to decide on the rebate claims within four weeks, emphasizing the need for expeditious processing.

Issue 4: The Court refrained from passing interim orders on the rebate claim of Rs. 7.48 crores pending the outcome of show cause notices. However, it directed the immediate release of 80% of the rebate claim of Rs. 15.97 crores, highlighting the importance of timely resolution and the need for the Department to promptly address pending show cause notices to ensure procedural efficiency and fairness in dealing with excise duty rebate claims.