2011 (7) TMI 1094 - CGOVT - Central Excise

Summary

Issues Involved:
1. Compliance with Notification No. 21/2004-C.E. (N.T.), dated 6-9-2004.
2. Procedural Lapse vs. Substantive Compliance.
3. Duty Paid Character of Inputs.
4. Input-Output Ratio Approval.

Summary:

1. Compliance with Notification No. 21/2004-C.E. (N.T.), dated 6-9-2004:
The applicant department contended that the respondent failed to comply with the conditions of Notification No. 21/2004-C.E. (N.T.), dated 6-9-2004, which prescribes the conditions for claiming rebate of duty paid on materials used in the manufacture of exported goods. Specifically, the respondent declared inputs as Aluminium Sheets instead of Aluminium Circles, for which the input-output ratio was not approved by the Assistant Commissioner. The department argued that this non-compliance rendered the rebate inadmissible.

2. Procedural Lapse vs. Substantive Compliance:
The respondent argued that the notification is procedural and that procedural lapses should not deny substantive benefits. They cited several judgments supporting the view that procedural infractions can be condoned if the substantive requirement of export is met. The appellate authority had allowed the appeal, directing the adjudicating authority to work out the input-output ratio for Aluminium Circles and finalize the rebate accordingly.

3. Duty Paid Character of Inputs:
The department also argued that the duty-paid character of the inputs was not established, as there was no evidence that the materials were procured directly from the registered factory. The respondent countered that they had produced all necessary documents, including Central Excise invoices issued under Rule 11, which are valid duty-paying documents. The government noted that these invoices could be verified by the jurisdictional Central Excise authorities.

4. Input-Output Ratio Approval:
The government observed that the input-output ratio for Aluminium Sheets was approved, but Aluminium Circles were used instead. Since the respondent followed the laid-down procedure except for this lapse, the input-output ratio for Aluminium Circles could be worked out based on relevant data. The government emphasized that export-oriented schemes should not be unduly restricted by technical interpretations and that procedural deviations should be condoned if the substantive requirement of export is met.

Conclusion:
The government modified the impugned order-in-appeal and remanded the case to the original authority to consider and sanction the claimed rebates as per the observations. The rebates should be sanctioned based on the input-output ratios approved now on the basis of relevant data/records, within prescribed SION Norms, and verified Central Excise invoices. The revision application was disposed of accordingly.