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2012 (9) TMI 916 - CGOVT - Central ExciseDenial of rebate claim - respondent cleared export goods on payment of duty @ 10% in terms of Notification No. 2/2008-C.E. dated 1-3-2008 as amended whereas they were clearing goods for home consumption on payment of duty @ 4% in terms of Notification No. 4/2006-C.E. dated 1-3-2006 as amended - original authority sanctioned the rebate claims to the extent of duty paid @ 4% and allowed recredit of balance amount in their Cenvat credit account - Held that - 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. This 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 the whole issue will have to be examined in the light of these instructions. The Notification No. 4/2006-C.E. dated 1-3-2006 as amended prescribed effective rate of duty @ 4%. As such it is not correct to say that it is a case of applicability of two notifications only and assessee as exporter is at liberty to choose any one notification which is beneficial to him. In this case Notification No. 2/2008-C.E. providing for General Tariff Rate of duty and Notification No. 4/2006-C.E. providing for effective rate of duty have the effect of prescribing General Tariff rate and effective rate of duty respectively and therefore they have to be read together as stipulated in para 4.1 of Part-I of Chapter 8 of C.B.E. & C. Excise Manual. In fact this confusion has arisen since in this case the General Tariff rate was reduced through Notification when special economic stimulus package was announced in 2008 by Government to deal with ongoing economic recession. There is no merit in the contentions of the respondent that they are eligible to claim rebate of duty paid @ 10% i.e. tariff rate ignoring the effective rate of 4%. - adjudicating original authority was legally right in holding that duty was payable @ 4% in terms of exemption Notification No. 4/2006-C.E. dated 1-3-2006 as amended and rebate is admissible only to the extent of duty paid at the effective rate of duty i.e. 4% in terms of Notification No. 4/2006-C.E. dated 1-3-2006. Commissioner (Appeals) has erred in allowing rebate of duty paid in general tariff rate @ 10% in terms of Notification No. 2/2008-C.E. ignoring the above discussed C.B.E. & C. Instructions. W.e.f. 1-7-2000 the concept of transaction value was introduced for valuation of goods under Central Excise Act and therefore said Circular issued prior to introduction of transaction value concept cannot be strictly applied after 1-7-2000. As per para 3(b)(ii) of Notification No. 19/2004-C.E. (N.T.) dated 6-9-2004 the rebate sanctioning authority has to satisfy himself that rebate claim is in order before sanctioning the same. If the claim is in order he shall sanction the rebate either in whole or in part. - original authority has rightly restricted the rebate claim to the extent of duty paid @ 4% in terms of Notification No. 4/2006-C.E. dated 1-3-2006. The amount of duty paid in excess of duty payable at effective rate of 4% as per Notification No. 4/2006-C.E. on the exported goods is also rightly treated as voluntary deposit made by applicant with the Government Government cannot retain the said amount paid without any authority of law. Therefore the original authority has rightly allowed the re-credit of said excess paid amount of duty in their Cenvat credit account - impugned order-in-original is not legal and proper and therefore is not sustainable as per law - Decided in favour of Revenue.
Issues Involved:
1. Applicability of different duty rates for export and home consumption. 2. Eligibility for rebate claims under different notifications. 3. Authority of rebate sanctioning authority to question the assessment. 4. Interpretation of exemption notifications and their mutual exclusivity. 5. Refund of excess duty paid and its treatment. Issue-wise Detailed Analysis: 1. Applicability of Different Duty Rates for Export and Home Consumption: The respondents, manufacturers/exporters, paid duty at different rates for home consumption (4%) and export (10%) under different notifications. The department argued that the same rate should apply to both, citing C.B.E. & C. Excise Manual instructions which state that "goods shall be assessed to duty in the same manner as the goods for home consumption." The effective rate prescribed under Notification No. 4/2006 was 4%, and any duty paid above this rate was considered a deposit. 2. Eligibility for Rebate Claims Under Different Notifications: The respondents claimed rebate on the duty paid at 10% for exports, arguing that both notifications (No. 4/2006 and No. 2/2008) co-exist and do not exclude each other, allowing them to choose the beneficial notification. However, the department contended that the effective rate of 4% should apply to both home consumption and export goods, and the rebate should be restricted to this rate. The Joint Secretary's letter and C.B.E. & C. instructions supported this view, emphasizing that the effective rate of duty must be followed. 3. Authority of Rebate Sanctioning Authority to Question the Assessment: The respondents argued that the rebate sanctioning authority cannot question the assessment of export consignment duty. However, the department maintained that the authority must ensure the rebate claim is in order as per Notification No. 19/2004-C.E. (N.T.), which includes verifying the correct duty rate. The Government upheld that the rebate sanctioning authority has the mandate to sanction claims based on the effective rate of duty. 4. Interpretation of Exemption Notifications and Their Mutual Exclusivity: The respondents cited various Supreme Court judgments to support their choice of beneficial notification. However, the Government noted that these judgments did not allow simultaneous availing of both notifications. The respondents should choose one notification for all clearances. The Government emphasized that the effective rate of duty as per Notification No. 4/2006 must be applied, and the rebate cannot be granted on the higher tariff rate paid under Notification No. 2/2008. 5. Refund of Excess Duty Paid and Its Treatment: The Government concluded that any excess duty paid above the effective rate of 4% should be treated as a voluntary deposit and refunded in the Cenvat credit account. This view was supported by the Supreme Court and High Court judgments, which held that excess duty paid should be adjusted or refunded as Cenvat credit. The original authority's decision to restrict the rebate to the effective rate and allow re-credit of the excess amount was upheld. Conclusion: The Government set aside the orders-in-appeal and restored the orders-in-original, concluding that the rebate should be restricted to the effective duty rate of 4%, and any excess duty paid should be refunded as Cenvat credit. The revision applications succeeded on these grounds.
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