2013 (6) TMI 678 - CGOVT - Central Excise

Denial of rebate claim - applicant cleared the exported goods by payment of 10% duty instead of 8% duty payable and received rebate claim of duty paid @10% - Held that - erroneous refund/rebate sanctioned under an order can be recovered by invoking provisions of Section 11A of Central Excise Act 1944 without taking recourse to provisions of Section 35E ibid and filing appeal against the assessment on the basis of which refund was initially sanctioned. Hence Government finds that appellate authority erred in holding that since the assessment at the time of export was not challenged the rebate claim cannot be reduced with reference at time of assessment.- export goods shall be assessed to duty in the same manner as the goods cleared for home consumption are assessed. Further the classification and rate of duty should be as stated in Schedule of Central Excise Tariff Act 1985 read with any exemption notification and/or Central Excise Rules 2002. These C.B.E. & C. Instructions clearly stipulate that applicable effective rate of duty will be as per the exemption notification. The said instruction is issued specifically with respect to sanctioning rebate claim of duty paid on exported goods and therefore assessee has to pay the effective rate of duty and claim rebate accordingly. Government holds that duty was required to be paid @ 8% on said goods on 24-2-2009 and rebate is admissible of duty paid @ 8% only under Rule 18 of Central Excise Rules 2002 read with Notifn. No. 19/2004-C.E. (N.T.) dated 6-9-2004. Any plea of ignorance of law cannot be admitted as legal and proper - any amount paid in excess of duty liability on one s own volition cannot be treated as duty and it has to be treated as a voluntary deposit with the Government which is required to be returned to the assessees/respondents in the manner in which it was paid as the said amount cannot be retained by Government without any authority of law. - Impugned order is set aside - Decided in favour of Revenue.

Summary

Issues Involved:
1. Excess rebate claims due to incorrect duty rate application.
2. Legality of initiating proceedings under Section 11A without reviewing the original assessment.
3. Applicability of the effective rate of duty as per the notification.
4. Treatment of excess duty paid as a voluntary deposit.

Detailed Analysis:

1. Excess Rebate Claims Due to Incorrect Duty Rate Application:
The case involved the Assistant Commissioner (Rebate), Central Excise, Raigad, sanctioning rebate claims where the manufacturer had cleared exported goods by paying Central Excise duty at 10% instead of the reduced rate of 8% as per Notification No. 4/2009-C.E., dated 24-2-2009. The Commissioner (Appeals) rejected the Department's appeals against these orders, leading to the revision applications.

2. Legality of Initiating Proceedings Under Section 11A Without Reviewing the Original Assessment:
The appellate authority held that the Department could not initiate proceedings under Section 11A of the Central Excise Act, 1944, without reviewing the original assessment. However, the judgment cited the Hon'ble High Court of Bombay in the case of M/s. Indian Dye Stuff Industries Ltd. v. UOI, which stated that Section 11A is an independent substantive provision for the recovery of excise duty erroneously refunded. The Hon'ble Supreme Court upheld this decision, affirming that recovery under Section 11A is valid without needing to first appeal against the assessment.

3. Applicability of the Effective Rate of Duty as Per the Notification:
The Government observed that the notification changing the effective rate of duty takes effect from the date of publication in the Official Gazette, as held in UOI v. Ganesh Das Bhajraj. Therefore, on 24-2-2009, the duty payable on the goods was 8%, and the rebate should correspond to this rate. The C.B.E. & C. Instructions also stipulated that the effective rate of duty should be as per the exemption notification, reinforcing the requirement to pay duty at 8% and claim rebate accordingly.

4. Treatment of Excess Duty Paid as a Voluntary Deposit:
The judgment noted that any amount paid in excess of duty liability on one's own volition cannot be treated as duty but as a voluntary deposit. This amount must be returned to the assessee in the manner it was paid. The Hon'ble High Court of Punjab & Haryana in M/s. Nahar Industrial Enterprises Ltd. v. UOI ruled that refund in cash of higher duty paid on export products is not admissible, and refund by way of credit is appropriate.

Conclusion:
The Government set aside the impugned Orders-in-Appeal and allowed the revision applications, directing that the excess amount paid should be allowed as re-credit in the Cenvat credit account from which the duty was initially paid. The revision applications succeeded based on the principles established in the cited judgments and legal provisions.