2006 (9) TMI 47 - AT - Central Excise

Refund Alleged that misstatement as to fact about not claiming drawback from Customs department Assessee is not entitle for benefit of drawback He has choice among different alternatives and not combination of all

Summary

Issues:
1. Refund claim based on availing multiple benefits on exports.
2. Debiting Central Excise portion of drawback in Cenvat account.
3. Misstatement of facts in claiming export benefits.
4. Interpretation of All Industry Rates of Drawback of Duties.
5. Choice between drawback, Cenvat credit, or rebate for exporters.

Issue 1: Refund claim based on availing multiple benefits on exports
The respondent company, a manufacturer of cotton grey made ups and readymade garments, exported goods and claimed rebate on duty paid inputs used in manufacturing. They also received cash drawback from the Customs department. The Dy. Commissioner rejected the refund claim, stating the company sought double-triple benefits on the same exports. The Commissioner (Appeals) allowed the refund, arguing that since the Central Excise portion of the drawback was debited in the Cenvat account, the company did not claim drawback with Customs.

Issue 2: Debiting Central Excise portion of drawback in Cenvat account
The company debited the Central Excise portion of the drawback in the Cenvat account and sought cash refund from the Central Excise authorities after technically surrendering the amount. The Dy. Commissioner rejected the refund claim, highlighting that the company re-credited only the Central Excise portion of the drawback and not the entire amount received. The Commissioner (Appeals) allowed the refund based on the debiting in the Cenvat account.

Issue 3: Misstatement of facts in claiming export benefits
The company misrepresented facts to the Central Excise authorities by declaring they were not claiming drawback from Customs, while they did receive cash drawback and debited the Central Excise portion in the Cenvat account. This misleading action led to the rejection of the refund claim by the Dy. Commissioner and raised doubts about the company's bona fide intentions in claiming export benefits.

Issue 4: Interpretation of All Industry Rates of Drawback of Duties
The judgment discussed the All Industry Rates of Drawback of Duties, emphasizing that the splitting of the drawback amount into Customs and Excise portions is for accounting purposes and does not affect the exporter availing the benefit. It clarified that the source of raw materials, whether domestic or imported, does not impact the exporter's entitlement to drawback benefits.

Issue 5: Choice between drawback, Cenvat credit, or rebate for exporters
The judgment highlighted that as an exporter, the company had the choice of either drawback, Cenvat credit, or rebate, but not a combination of all. Since there was no evidence of imported raw materials and all inputs were domestically procured, the company was not eligible to claim both drawback and refund from the Cenvat account. The orders of the Commissioner (Appeals) were set aside, and the Dy. Commissioner's orders were restored, allowing the appeals.