2009 (12) TMI 698 - CGOVT - Central Excise

Summary

Issues Involved:
1. Denial of rebate claims due to improper duty payment certification.
2. Responsibility for ensuring duty payment on goods.
3. Validity of transactions between exporter and manufacturer.
4. Recovery of wrongly availed Cenvat Credit.

Issue-wise Detailed Analysis:

1. Denial of Rebate Claims Due to Improper Duty Payment Certification
The applicant, M/s. Vikram International, filed rebate claims for duty paid on goods they manufactured. The claims were initially rejected because the Duty Payment Certificate was not submitted in a tamper-proof sealed cover. The lower authority concluded that proper Central Excise duty had not been discharged on the exported goods based on an Alert Circular and a letter indicating that the manufacturer had issued bogus invoices. This led to the rejection of the rebate claims.

2. Responsibility for Ensuring Duty Payment on Goods
The applicant argued that it is the manufacturer's responsibility to ensure duty payment on grey fabrics, not the exporter's. They cited precedents where actions were taken against manufacturers for evasion of Cenvat Credit, not against exporters who had no link to the defaults. The applicant relied on several judgments to support their claim that they should not be penalized for the manufacturer's defaults.

3. Validity of Transactions Between Exporter and Manufacturer
The government observed that there was no doubt that the goods were exported out of India and that the applicant had made payments inclusive of Central Excise Duty. There was no evidence of any non-bona fide transactions or mutual interest between the applicant and the manufacturer. The applicant had followed all procedural requirements, and the transactions were at arm's length and in the normal course of business.

4. Recovery of Wrongly Availed Cenvat Credit
The government noted that sufficient legislative provisions exist to recover wrongly availed Cenvat Credit from the manufacturer, not the exporter. The wrongly availed credit is recoverable from the manufacturer along with interest and penalties. The applicant/exporter, who purchased and exported the goods legitimately, cannot be penalized by denying the rebate claim, especially when no evidence showed any connivance or intention on their part.

Conclusion:
The government concluded that the rebate claim is admissible to the applicant. It set aside the impugned order-in-appeal and original order, allowing the revision application with consequential relief. The decision emphasized that the responsibility for ensuring duty payment lies with the manufacturer and not the exporter, provided the transactions are bona fide and at arm's length. The revision application succeeded, and the order was so directed.