2003 (9) TMI 500 - AT - Central Excise

Issues:
1. Refund of duties paid on diesel oil engines procured by manufacturers/exporters.
2. Compliance with Notification No. 47/94-C.E. and Rule 13 of the Central Excise Rules.
3. Debiting 8% of the price of diesel engines as per Rule 57C(1) of the Central Excise Rules.
4. Entitlement to refund and interest under Sec. 11BB.

Analysis:

Issue 1: Refund of duties paid on diesel oil engines
The appeals arose from orders of the Commissioner of Central Excise granting refund of duties paid on diesel oil engines by the manufacturers/exporters. The manufacturers/exporters applied for registration to avail benefits under Notification No. 47/94-C.E. for manufacturing specific export products. Despite no orders being passed on their application, they procured diesel engines, manufactured centrifugal pump sets, and exported them. The Revenue issued show cause notices proposing rejection of the refund claims due to non-production of required forms and evidence. However, the Commissioner (Appeals) upheld the refund claim, emphasizing substantial compliance with Notification No. 47/94 and Rule 13 of the Central Excise Rules.

Issue 2: Compliance with Notification No. 47/94-C.E. and Rule 13
The Revenue's main contention was the non-debiting of 8% of the diesel engine price as per Rule 57C(1) of the Central Excise Rules. However, this ground was not raised in previous notices or orders. The Tribunal noted that the diesel engines were indeed used in manufacturing export goods, and the permission sought by the manufacturers/exporters was eventually granted, dating back to the application date. The Tribunal also highlighted the substantial compliance with procedural conditions as per previous Supreme Court judgments, emphasizing that substantive benefits cannot be denied based on procedural shortcomings.

Issue 3: Debiting 8% of the price of diesel engines
The Tribunal clarified that the non-debiting of 8% of the diesel engine price by the manufacturer could not be held against the manufacturers/exporters. The Tribunal also pointed out that Notification 47/94 did not restrict the availment of drawback, unlike Rule 12 of the Central Excise Rules. Moreover, the Tribunal emphasized that the manufacturers/exporters could not have followed the procedure prescribed as their application was pending when they exported the goods.

Issue 4: Entitlement to refund and interest under Sec. 11BB
The Tribunal concluded that the manufacturers/exporters were entitled to the refund of duties paid on diesel engines and also to interest under Sec. 11BB after the specified period. Upholding the impugned orders, the Tribunal rejected the appeals of the Revenue, affirming the manufacturers/exporters' entitlement to the refund and interest.

In summary, the Tribunal ruled in favor of the manufacturers/exporters, emphasizing compliance with relevant rules and notifications, substantial procedural compliance, and entitlement to the refund and interest under the law.

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