2013 (1) TMI 728 - CGOVT - Central Excise

Denial of rebate claim - Applicable rate of duty - Applicable notification Notification No. 2/08-C.E. dated 1-3-2008 or Notification No. 4/06-C.E. dated 1-3-2006 - Held that - there cannot be any strict statutory relied upon citation which can be taken as guiding precedents because each one of above citation have different background of factual merits pertaining to manufacturers manufacturing goods of different sub-headings following different set of Notifications choosing different beneficial schemes and changing thereof in between a given financial year thereby leading to arise of different question of law. Both the Notifications prescribed effective rates of duty. Notification No. 30/2004-C.E. prescribed nil rate of duty provided manufacturer does not avail Cenvat credit on inputs. This clarification does not say that duty can be paid at tariff rate when the exemption notification is existing. Simultaneously availment of these notifications is allowed in the said circular as they pertain to different situation like whether he is availing cenvat credit or not. This circular is of no help to the applicant as in their case there are no two conditional notifications prescribing two effective rates. Moreover there is no such circular issued in case of pharmaceutical products pertaining to Notification in question allowing their simultaneous availment. The other Circular No. 937/27/2010-CX. dated 26-11-2010 is not applicable as in the instant case there is no applicability of provisions of Section 5A(1A) of Central Excise Act 1944. 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 the 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. There is no mandate to sanction rebate claim of obviously excess paid duty and then initiate proceeding for recovery of the erroneously paid rebate claim. Therefore the Circular of 2000 as relied upon by applicant cannot supersede the provisions of Notification No. 19/2004-C.E. (N.T.). Adjudicating authority has rightly passed the order-in-original in accordance with law. The amount paid in excess of duty payable on one s own volition cannot be retained by Government and it has to be returned to manufacturer/applicant in the manner in which it was paid. Applicant are not eligible to claim rebate of duty paid @ 10% i.e. General Tariff Rate of Duty ignoring the effective rate of duty @ 4% or 5% in terms of exemption Notification No. 4/2006-C.E. dated 1-3-2006 as amended. As such Government is of considered view that rebate is admissible only to the extent of duty paid at the effective rate of duty i.e. 4% or 5% in terms of Notification No. 4/2006-C.E. dated 1-3-2006 as amended as applicable on the relevant date on the transaction value of exported goods determined under Section 4 of Central Excise Act 1944. - rebate claims are admissible of the duty paid at effective rate of duty @ 4% or 5% in terms of Notification No. 4/2006-C.E. dated 1-3-2006 as amended as applicable on the relevant date on the transaction value of exported goods determined under Section 4 of Central Excise Act 1944. The amount of duty paid in excess of duty payable at effective rate of 4% or 5% as per Notification No. 4/2006-C.E. is to be treated as voluntary deposit with the Government. - Moreover Government cannot retain the said amount paid without any authority of law. Therefore Government allows the said amount to be re-credited in the Cenvat credit account of the concerned manufacturer - Decided partly in favour of assessee.

Issues Involved:
1. Eligibility to claim rebate of duty paid at a higher rate.
2. Applicability of multiple exemption notifications.
3. Assessment of export goods at the effective rate of duty.
4. Rebate sanctioning authority's jurisdiction.
5. Refund of excess duty paid.

Issue-wise Detailed Analysis:

1. Eligibility to claim rebate of duty paid at a higher rate:

The applicants contended that they are eligible for a rebate of duty paid on export goods at 10% under Notification No. 2/08-C.E., asserting that they should be able to choose the more beneficial notification. However, the judgment clarified that the rebate is only admissible to the extent of the duty paid at the effective rate of 4% or 5% as per Notification No. 4/2006-C.E. The excess duty paid is considered a voluntary deposit and should be returned to the manufacturer in the Cenvat credit account.

2. Applicability of multiple exemption notifications:

The applicants argued that both Notifications No. 2/08-C.E. and No. 4/06-C.E. co-exist and do not exclude each other, allowing them to choose the more beneficial one. The judgment referenced the Supreme Court's decision in HCL Ltd. v. Collector of Customs, which supports the option to choose between co-existing notifications. However, the judgment emphasized that the applicants cannot avail both notifications simultaneously for different clearances (export and home consumption) and must choose one notification consistently.

3. Assessment of export goods at the effective rate of duty:

The judgment highlighted that export goods should be assessed in the same manner as goods for home consumption, as per C.B.E. & C. instructions. The export goods must be assessed at the effective rate of duty prescribed by Notification No. 4/2006-C.E., not the general tariff rate. The applicants' practice of paying a higher duty rate for export goods to encash accumulated Cenvat credit was not permissible.

4. Rebate sanctioning authority's jurisdiction:

The applicants claimed that the rebate sanctioning authority cannot question the assessment of export consignments. The judgment clarified that the rebate sanctioning authority must ensure that the rebate claim is in order and can sanction the claim only to the extent of the duty paid at the effective rate. The authority cannot sanction claims for excess duty paid and then initiate recovery proceedings.

5. Refund of excess duty paid:

The judgment concluded that the excess duty paid by the applicants should be refunded in the Cenvat credit account. This aligns with the principles laid out in the case of M/s. Nahar Industrial Enterprises Ltd. v. UOI, where the High Court of Punjab & Haryana ruled that excess duty paid should be refunded in the Cenvat credit account, not in cash.

Conclusion:

The judgment partially allowed the revision applications, affirming that the rebate is admissible only to the extent of the duty paid at the effective rate as per Notification No. 4/2006-C.E. The excess duty paid is to be re-credited in the Cenvat credit account of the concerned manufacturer. The judgment emphasized the importance of consistent application of one notification for all clearances and upheld the binding nature of C.B.E. & C. instructions on departmental authorities.

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