2013 (9) TMI 993 - CGOVT - Central Excise

Denial of rebate claim - Reversal of CENVAT Credit - Non payment of excise duty - Held that - The fundamental condition for determining admissibility of rebate claim is that duty paid excisable goods are exported. In this, case equal amount of Cenvat credit was reversed under Rule 16(2) and said reversal of Cenvat credit cannot be treated as payment of duty for the purpose of Rule 18 of Central Excise Rules, 2002. Since, duty paid excisable goods are not exported in this case, the rebate claim is rightly held inadmissible by original authority as well as appellate authority. - imported goods have been re-exported. So the provision of Section 74 of Customs Act, 1962 are applicable and drawback claim was required to be claimed in terms of the provisions of Section 74 which applicant failed to comply and avail. Adjudicating Authority has also noticed that applicant has shown value in ARE-1 Nos. 1 & 2, dated 1-4-2010 as ₹ 3,08,01,500/- but in the Shipping Bill No. 8338872, dated 9-4-2010, the invoice value was shown as ₹ 1,15,16,681/-. Also the rate of duty applied on the said ARE-1 varied from 10.3% to 16.48% to 14.42% whereas he had reversed the equal amount of Cenvat credit under Rule 16(2) - decided against assessee.

Summary

Issues Involved:
1. Eligibility for Cenvat credit under Rule 16 of the Central Excise Rules, 2002.
2. Classification of repacking activities as manufacturing.
3. Eligibility for rebate under Rule 18 of the Central Excise Rules, 2002.
4. Applicability of Section 74 of the Customs Act, 1962 for re-exported goods.

Issue-wise Detailed Analysis:

1. Eligibility for Cenvat credit under Rule 16 of the Central Excise Rules, 2002:
The applicants imported Marker in bulk, repacked it into retail packs, and paid excise duty upon clearance to their depots. When the unsold goods were returned to the factory, the applicants availed Cenvat credit of the duty paid under Rule 16(1) of the Central Excise Rules, 2002. Upon re-exporting the goods in bulk packs, the applicants reversed the Cenvat credit under Rule 16(2). The judgment emphasizes that the reversal of Cenvat credit is not equivalent to the payment of duty for the purpose of claiming a rebate under Rule 18.

2. Classification of repacking activities as manufacturing:
The applicants admitted that repacking Marker from retail to bulk packs does not amount to manufacturing as per Chapter Note 10 of Chapter 29 of the Central Excise Tariff Act, 1985. The judgment notes that the process undertaken by the applicants did not involve manufacturing, and therefore, the goods exported were not considered excisable goods.

3. Eligibility for rebate under Rule 18 of the Central Excise Rules, 2002:
The applicants claimed a rebate of duty paid on the exported goods under Rule 18 of the Central Excise Rules, 2002. The judgment clarifies that for a rebate to be admissible, the goods must be duty-paid excisable goods. Since the reversal of Cenvat credit under Rule 16(2) does not constitute payment of duty, the goods exported by the applicants did not qualify for a rebate under Rule 18. The authorities correctly rejected the rebate claim.

4. Applicability of Section 74 of the Customs Act, 1962 for re-exported goods:
The judgment highlights that the applicants declared the consignment as "Re-export under Section 74 of the Customs Act." Since the goods were re-exported, the provisions of Section 74 of the Customs Act, 1962, which allow for drawback claims, were applicable. The applicants failed to claim the drawback under Section 74, and the adjudicating authority noted discrepancies in the value and duty rates declared in the ARE-1 forms and the Shipping Bill, further supporting the rejection of the rebate claim.

Conclusion:
The judgment upheld the orders of the original and appellate authorities, rejecting the applicants' rebate claim. The reversal of Cenvat credit under Rule 16(2) was not considered payment of duty, and the goods exported were not deemed excisable. The applicants' failure to claim drawback under Section 74 of the Customs Act and discrepancies in documentation further justified the rejection. The revision application was consequently dismissed.