2013 (2) TMI 672 - CGOVT - Central Excise

Denial of rebate claim - payment of duty at higher rate - Denial on the ground that duty was required to be paid @ 8% and not at 10% on 24-2-2009 - 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. 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. Provision of Notifn. No. 19/2004-C.E. (N.T.) dated 6-9-2004 will prevail over the C.B.E. & C. Circular dated 3-2-2000. Further the notification issued under Rule 18 of Central Excise Rules 2002 prescribes the conditions limitations and procedure to be followed for claiming as well as sanctioning rebate claims of duty paid on exported goods. The satisfaction of rebate sanctioning authority requires that rebate claim as per the relevant statutory provisions is to be in order. He does not have the mandate to sanction claim of obviously excess paid duty. Therefore the circular of 2000 as relied upon by respondents cannot supersede the provisions of Notification No. 19/2004-C.E. (N.T.) dated 6-9-2004. 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. - Decided against assessee.

Summary

Issues Involved:
1. Applicability of reduced Central Excise Duty rate as per Notification No. 4/2009-C.E.
2. Legality of rebate claim sanctioned at a higher duty rate.
3. Role and authority of the Rebate Sanctioning Authority.
4. Treatment of excess duty paid due to ignorance of law.

Issue-wise Detailed Analysis:

1. Applicability of Reduced Central Excise Duty Rate:
The core issue revolves around the applicability of the reduced Central Excise Duty rate from 10% to 8% as per Notification No. 4/2009-C.E., dated 24-2-2009. The manufacturer cleared the goods on the same date but paid the duty at the old rate of 10%. The department argued that the duty should have been paid at the new rate of 8%, thus making the extra 2% duty payment invalid for rebate purposes. The Commissioner (Appeals) initially upheld the rebate claim at 10%, citing ignorance of the new rate by the assessee and jurisdictional officer.

2. Legality of Rebate Claim Sanctioned at a Higher Duty Rate:
The department contended that the rebate claim sanctioned at 10% was improper, as the effective duty rate had been reduced to 8% on the date of clearance. The Commissioner (Appeals) had accepted the rebate claim based on the duty paid at 10%, relying on C.B.E. & C. Circular No. 510/06/2000-CX, dated 3-2-2000, which stated that the duty assessed and paid at the time of clearance should be sanctioned as rebate. However, the Government noted that the legal position, as per the Supreme Court decision in Union of India v. Ganesh Das Bhojraj, dictates that a notification changing the duty rate takes effect from its publication date, making the applicable duty rate 8%.

3. Role and Authority of the Rebate Sanctioning Authority:
The Government emphasized that the Rebate Sanctioning Authority must ensure the correctness of the rebate claim before sanctioning it. As per para 3(b)(ii) of Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004, the authority is empowered to sanction the rebate only if the claim is in order, which includes verifying the correct duty rate. The Rebate Sanctioning Authority should not sanction a rebate claim based on an incorrect duty rate, even if it was paid due to ignorance.

4. Treatment of Excess Duty Paid Due to Ignorance of Law:
The Government ruled that any excess amount paid beyond the duty liability, even if due to ignorance, cannot be treated as duty but as a voluntary deposit. This excess amount should be returned to the assessee in the manner it was paid, as retaining it without legal authority is improper. The Government referenced the Punjab & Haryana High Court decision in M/s. Nahar Industrial Enterprises Ltd. v. UOI, which held that refund of excess duty paid should be made in the same mode as the initial payment.

Conclusion:
The Government set aside the impugned order, ruling that the duty was required to be paid at 8% on 24-2-2009, and thus, the rebate is admissible only at this rate. The excess amount paid should be returned as a re-credit in the Cenvat credit account. The revision application was allowed, reinforcing the principle that ignorance of law is not a valid excuse for incorrect duty payment and rebate claims.