2007 (2) TMI 415 - AT - Central Excise

Summary

Issues involved: Eligibility for rebate under Rule 12 of the Central Excise Rules for a 100% EOU manufacturer of disposable gas cylinders who supplied to Advance Licence Holder against Advance Release Orders without payment of excise duty equivalent to additional duty of customs and special additional duty of customs.

Summary:

Issue 1: Eligibility for rebate under Rule 12 of the Central Excise Rules
The appellant company, a 100% EOU manufacturer of disposable gas cylinders, supplied to Advance Licence Holder against Advance Release Orders without payment of excise duty equivalent to additional duty of customs and special additional duty of customs. The buyers were eligible to take credit of excise duty equivalent to additional duty of customs. The appellant claimed refund of central excise duty corresponding to special additional duty of customs paid by them on the ground that it was not available to the buyer as Cenvat. The original authority and the Commissioner (Appeals) held that as the appellant company did not physically export the goods out of India, they were not eligible for rebate under Rule 12 of the Central Excise Rules.

Issue 2: Treatment of deemed exports
The learned DR argued that deemed exports are treated on par with exports only for limited purposes like fulfillment of export obligation, but cannot be considered exports for all purposes under the Customs Act and the Central Excise Act. Therefore, the claim of refund by the appellant company was rightly rejected by the original authority and the Commissioner (Appeals).

Judgment:
The Tribunal noted that Rule 12 empowers the Central Government to provide export benefits. Since the appellant company did not directly export the disposable gas cylinders, they were not eligible for rebate. The Advance Licence Holder who procured the gas cylinders would be eligible for rebate when exporting the finished goods. Deemed export entitles the appellant company to approach DGFT authorities for terminal benefit of excise, but it does not equate to physical exports for all purposes. The right to claim rebate on raw materials used in finished products lies with the exporter of finished goods, not the supplier of inputs. The Tribunal cited precedents to support this view. Consequently, the appeals were rejected.

(Pronounced in the open court on 15-2-2007)