2013 (9) TMI 1001 - CGOVT - Central Excise

Denial of rebate claim - goods manufactured and cleared for export by 100% EOU, were exempted absolutely from payment of duty in terms of the Notification No. 24/2003-C.E. - Held that - Notification No. 24/2003-C.E., dated 31-3-2003 issued under Section 5A(1) of Central Excise Act, 1944, exempts goods manufactured by 100% EOU and cleared for export from whole of duty unconditionally. Therefore in view of provisions of sub-section (1A) of Section 5A, the applicant manufacturer cannot pay duty. - there is no condition for availing exemption from payment of duty on goods cleared for exports. Normally the 100% EOU has to clear all the goods manufactured by them for exports as per the EOU scheme. Such units can clear the goods in DTA only with prior permission of Development Commissioner. Since there is no condition in the notification for availing exemption to goods manufactured by 100% EOU and cleared for export, the provisions of sub-section (1A) of Section 5A(1) are applicable and no duty was required to be paid on such exported goods. The duty paid without authority of law cannot be treated as duty paid under the provision of Central Excise Law. - Decided against assessee.

Summary

Issues:
Rebate claims rejection based on absolute duty exemption for goods manufactured by 100% EOU under Notification No. 24/2003-C.E. - Applicability of Section 5A(1A) of Central Excise Act, 1944 - Compliance with conditions of notification - Admissibility of rebate claim - Legal interpretation of absolute exemption - Admissibility of Cenvat credit in lieu of rebate claim.

Analysis:
The revision applications were filed by M/s. Watson Pharma Pvt. Ltd. against Orders-in-Appeal rejecting rebate claims on the grounds of absolute duty exemption for goods manufactured by a 100% EOU under Notification No. 24/2003-C.E. The adjudicating authority and Commissioner (Appeals) upheld the rejection based on Section 5A(1A) of the Central Excise Act, 1944.

The applicant contended that the exemption under the notification was not absolute, citing the lack of definition for "absolute exemption" in the Act. They argued that since the notification had conditions, Section 5A(1A) should not apply. However, the Government held that the notification unconditionally exempted goods for export from duty, hence the duty could not be paid, as per the plain reading of the statute.

The applicant also claimed compliance with all conditions of the notification and referenced Circular 510/06/2000-CX, emphasizing that rebate admissibility should not involve assessment correctness. They sought to re-credit the denied rebate amount as Cenvat credit, citing precedents.

The Government, relying on legal provisions and past judgments, determined that the duty paid without legal authority could not be considered as per Central Excise Law, rendering the rebate inadmissible. However, the excess paid amount was to be returned to the applicant as a voluntary deposit, following the High Court's decision on refund mode.

In conclusion, the Government found the rebate claim inadmissible under Central Excise Rules but allowed re-crediting the excess paid amount in the Cenvat credit account. The impugned Order-in-Appeal was modified accordingly, disposing of the revision applications.