2003 (7) TMI 682 - CGOVT - Central Excise

Rebate claims - duty payment - excisable raw materials used in the manufacture of made-up articles - Eligibility of M/s. Creative Mobus Fabrics Ltd. as manufacturers/exporters - Job workers on contractual basis - HELD THAT - In view of the factual and legal position, Govt. is of the opinion that, it cannot be said that M/s. Creative Mobus Fabrics are neither manufacturers nor exporters of the impugned goods. This objection of the Applicant Commissioner is therefore not sustainable. The next objection of the department is that, the disclaimer certificate should have been given on the body ofAR-4/AR5. The Respondents submit that, the concerned firm has given a disclaimer certificate individually in respect of all exports consignments separately and this disclaimer certificate is a valid, legal document and that it is not necessary that the disclaimer should be given on the body of the AR-5/AR-4. The Respondents rely upon the decision of Hon'ble CEGAT in the case of Simplex Global Impex Vs. CCE, Nagpur, 2003 (55) RLT 171 (CEGAT-Del), wherein it was held that, when disclaimer certificate from manufacturer is produced by the merchant-exporter at the time of hearing of appeal and not obtained on AR4 at the time of clearance, export rebate is not to be denied, when there is no dispute about payment of duty and export of goods. Govt. concurs with this view of Hon'ble Tribunal. Hence, this objection of the Applicant Commissioner is also not sustainable. However, Govt. observes Disclaimer certificate is to be obtained nor only from the merchant exporter but also from other Manufacturers of export goods. To this extent, Commissioner (A)'s order is modified. The next objection of the department is in one specific case involving a rebate of ₹ 41,144/- in respect of AR-5 No. 4 dt. 16.4.2001, it is clearly seen that the raw material has been shown as cotton 100% shirting 153 cms whereas the exported goods are bed sheets and pillow covers and it is not possible for using shirting material to manufacturing bed sheets and pillow covers. The Respondents submit that this is a hand written invoice prepared by a clerk and in the column of the description of goods, shirting width 153 cms, is written. The correct reading of the description should be Sheeting and not 'Shirting'. In all other invoices the description is read as sheeting and the converter where the said fabric is received has very clearly in his documents shown the description of the fabrics as 'sheeting'. The whole process is carried out under direct control and supervision of the Central Excise officers. If, this is correct, Govt. is of the opinion that this objection of the department also is not sustainable. Another objection is, the name of the Merchant Exporter, M/s. IKEA Trading is not given on the AR-5/ARE2. Govt. observes that, the Applicant Commissioner has not disputed the fact of sale of goods to M/s. IKEA and their subsequent export. What is objected is the name of Merchant Exporter, i.e. M/s. IKEA Trading is not given on AR-5/ARE2. Govt. observes that this is only a procedural lapse and cannot come in the way of substantive benefit. Govt. also observes that in para 18 of the impugned Order-in-Appeal, Commissioner (A), has given directions to the Assistant/Deputy Commissioner of Central Excise, to be followed, before passing, rebate benefit. Govt. upholds these directions. As discussed, disclaimer certificate from other manufacturers of exported goods is also to be submitted to the lower Authority by the Respondents. The Respondents are also directed to submit documentary evidence to substantiate their submissions made before Revisionary Authority regarding all activities being carried out under the supervision of the Central Excise Authorities. With the above modifications, the impugned Order-in-Appeal is upheld. So ordered.

Issues Involved:
1. Eligibility of M/s. Creative Mobus Fabrics Ltd. as manufacturers/exporters.
2. Requirement of disclaimer certificate on AR-5/ARE-2.
3. Discrepancy in raw material description.
4. Mention of merchant exporter's name on AR-5/ARE-2.

Summary:

1. Eligibility of M/s. Creative Mobus Fabrics Ltd. as manufacturers/exporters:
The department contended that M/s. Creative Mobus Fabrics Ltd. are neither manufacturers nor exporters of the goods, as evidenced by the Shipping Bills. The Original Authority cited Para 8.2 of the Export Procedure in the Central Excise Manual, which states that only a manufacturer or processor of finished goods who exports the goods can claim the benefit of input stage rebate. However, the CBEC Circular No. 602/39/2001-CX dated 21.11.2001 clarified that both manufacturer-exporter and merchant exporter are eligible for rebate, provided the conditions are met. The Government concluded that M/s. Creative Mobus Fabrics Ltd. are indeed manufacturers and exporters, as they purchase cotton yarns, weave fabrics, and process them into finished goods, all under their ownership and supervision. This objection by the Applicant Commissioner was deemed unsustainable.

2. Requirement of disclaimer certificate on AR-5/ARE-2:
The department argued that the disclaimer certificate should be on the body of AR-5/ARE-2. The Respondents provided individual disclaimer certificates for each export consignment, which were deemed valid legal documents. The Government concurred with the Hon'ble CEGAT's decision in Simplex Global Impex Vs. CCE, Nagpur, 2003 (55) RLT 171 (CEGAT-Del), which held that export rebate should not be denied if a disclaimer certificate is produced, even if not on AR-5/ARE-2. However, the Government modified the Commissioner (A)'s order to require disclaimer certificates from all manufacturers of the export goods.

3. Discrepancy in raw material description:
The department noted a discrepancy in one specific case involving a rebate of Rs. 41,144/- where the raw material was described as "cotton 100% shirting 153 cms" while the exported goods were bed sheets and pillow covers. The Respondents clarified that this was a clerical error, and the correct description should be "sheeting." The Government found this explanation plausible and deemed the department's objection unsustainable.

4. Mention of merchant exporter's name on AR-5/ARE-2:
The department objected to the absence of the merchant exporter M/s. IKEA Trading's name on AR-5/ARE-2. The Government considered this a procedural lapse that should not hinder the substantive benefit of rebate. The Government upheld the Commissioner (A)'s directions to the Assistant/Deputy Commissioner of Central Excise to ensure compliance before granting the rebate benefit. The Respondents were also directed to submit documentary evidence of all activities being supervised by Central Excise Authorities.

Conclusion:
The Government upheld the Order-in-Appeal with modifications, emphasizing that procedural lapses should not deny substantive benefits when the factual use of duty-paid goods in export manufacturing is established.

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