2012 (12) TMI 977 - CGOVT - Central Excise

Denial of rebate claim - Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 - applicant was clearing goods by availing exemption Notification No. 29/2004-C.E. and 30/2004-C.E. simultaneously - Held that - Notification No. 30/2004-C.E., dated 9-7-2004 is a conditional notification. The proviso as at para 8 unambiguously states that nothing contained in this notification shall apply to the goods in respect of which credit of duty on inputs had been taken under the provisions of Cenvat Credit Rules, 2004. The applicants had in fact taken Cenvat credit on inputs used in the manufacture of exported goods as declared on the ARE-1 s and had cleared the goods on payment of duty. When the condition of the notification was not satisfied, there was no way the applicants could have availed exemption under Notification No. 30/2004-C.E., dated 9-7-2004. As such, the applicant though was having an alternative but has stated to have duly maintained the separate account for goods availing of Notification No. 29/2004-C.E. and goods availing of Notification No. 30/2004-C.E. Under such circumstances, Government finds that rejection of applicant s rebate claim for the reasons stated above is not tenable. The applicant is claiming to have maintained proper Cenvat credit accounts for their clearances of exports after payment of duty which stands duly submitted to the jurisdictional Central Excise office. Applicant has claimed that they were availing actual Cenvat credit on the inputs which are to be used only for the goods to be cleared on payment of duty. This pleading has not been considered by lower authorities especially the certifications from the jurisdictional Superintendent of Central Excise, dated 13-5-2010. Applicant exporter herein is eligible for rebate in the manner it was granted by the original rebate sanctioning authority subject to verification that applicant had complied with the procedure laid down in C.B.E. & C. Circular No. 795/28/2004-CX., dated 28-7-2004. - Government sets aside both the impugned Orders-in-Appeal and restores the impugned Order-in-Original No. 513/10-11, dated 5-7-2010 subject to condition that applicant had complied with the procedure laid down in C.B.E. & C. Circular No. 795/28/2004-CX., dated 28-7-2004. - Decided conditionally in favour of assessee.

Issues Involved:
1. Applicability of Notification No. 29/2004-C.E. and Notification No. 30/2004-C.E.
2. Eligibility for rebate claims under Rule 18 of the Central Excise Rules, 2002.
3. Interpretation of Section 5A(1A) of the Central Excise Act, 1944.
4. Compliance with C.B.E. & C. Circulars No. 795/28/2004-CX and No. 937/27/2010-CX.
5. Maintenance of separate records for goods under different notifications.

Issue-wise Detailed Analysis:

1. Applicability of Notification No. 29/2004-C.E. and Notification No. 30/2004-C.E.:
The applicants, M/s. Beekaylon Synthetics Pvt. Ltd., opted for the exemption scheme under Notification No. 30/2004-C.E. for local clearances and the dutiable scheme under Notification No. 29/2004-C.E. for export clearances. The Assistant Commissioner initially sanctioned the rebate claims under Rule 18 of the Central Excise Rules, 2002. However, the jurisdictional Commissioner contended that the goods exported were wholly exempt under Notification No. 30/2004-C.E., and thus, the rebate claims were ineligible. The Commissioner (Appeals) upheld this view, but the applicants argued that they correctly availed credit on inputs and paid duty under Notification No. 29/2004-C.E. The Government noted that the proviso to Notification No. 30/2004-C.E. clearly states that the exemption does not apply if credit on inputs has been taken, thus supporting the applicants' position.

2. Eligibility for Rebate Claims under Rule 18 of the Central Excise Rules, 2002:
The applicants filed for rebate claims amounting to Rs. 12,29,120/- under Rule 18, which were initially sanctioned. However, a show cause notice was issued for recovery of the rebate, which was adjudicated by the Additional Commissioner, demanding back the rebate with interest and imposing a penalty. The Commissioner (Appeals) rejected the applicants' appeal, but the Government found that the rejection was not tenable since the applicants maintained proper Cenvat credit accounts and complied with the procedure laid down in C.B.E. & C. Circular No. 795/28/2004-CX.

3. Interpretation of Section 5A(1A) of the Central Excise Act, 1944:
The Commissioner (Appeals) relied on Section 5A(1A) and C.B.E. & C. Circular No. 937/27/2010-CX to argue that the applicants should have availed the absolute exemption under Notification No. 30/2004-C.E. The Government clarified that Notification No. 30/2004-C.E. is not an absolute exemption but a conditional one, dependent on whether input credit is availed. Therefore, the applicants were correct in paying duty under Notification No. 29/2004-C.E. when input credit was taken.

4. Compliance with C.B.E. & C. Circulars No. 795/28/2004-CX and No. 937/27/2010-CX:
The Government noted that Circular No. 795/28/2004-CX allows simultaneous availment of both notifications, provided separate books of account are maintained. Circular No. 845/3/2007-CX further facilitated this by allowing proportionate input credit at the end of the month. The applicants claimed compliance with these procedures, which was not adequately considered by the lower authorities. The reliance on Circular No. 937/27/2010-CX was deemed inappropriate as it dealt with a different context involving absolute exemptions.

5. Maintenance of Separate Records for Goods under Different Notifications:
The Commissioner (Appeals) questioned the maintenance of separate records, but the Government found this observation irrelevant as the applicants had produced relevant records showing input quantity used for goods cleared on payment of duty. The applicants' compliance with maintaining separate accounts was supported by certifications from the jurisdictional Superintendent of Central Excise.

Conclusion:
The Government set aside the impugned Orders-in-Appeal and restored the original order sanctioning the rebate claims, subject to verification of compliance with C.B.E. & C. Circular No. 795/28/2004-CX. The applicants were found eligible for the rebate claims, and the penalty and demand for recovery were deemed unsustainable. Both revision applications were disposed of in favor of the applicants.

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