2010 (8) TMI 934 - HC - Central Excise

Rebate claim - only dispute raised, is that the Petitioners have failed to establish that the goods sold by the Petitioners to the Exporter under 7 invoices, form part of the goods purchased by the Petitioners from the manufacturer under the 11 invoices raised by the said manufacturer - Held that - documents produced by the Petitioners, establishes beyond any doubt that the goods purchased by the Petitioners from the manufacturer are the goods sold by the Petitioners to the exporter and the same have been exported by the said exporter. The Respondent No.2 has, therefore, erred in concluding that the Petitioners could not prove beyond doubt that the goods cleared on the payment of duty for home consumption, were subsequently exported through shipping bills. The Order dated 29th May 2006 passed by the Respondent No.2, is erroneous and perverse and is hereby quashed and set aside - rebate allowed - petition allowed - decided in favor of petitioner.

Issues Involved:
1. Validity of the Revisional Authority's Order dated 29th May 2006.
2. Compliance with procedural requirements under the Central Excise Rules, 2002.
3. Establishment of the identity and correlation of exported goods with goods purchased from the manufacturer.
4. Applicability of Supreme Court judgments on procedural lapses and substantive benefits.

Issue-wise Detailed Analysis:

1. Validity of the Revisional Authority's Order dated 29th May 2006:

The Petitioners sought to set aside the Order dated 29th May 2006 passed by the Respondent No.2, which rejected their rebate claim of Rs. 9,87,777/-. The Revisional Authority had set aside the earlier Order of the Commissioner of Central Excise (Appeals) dated 22nd December 2004, which had allowed the Petitioners' appeal and granted the rebate claim. The Revisional Authority's decision was based on discrepancies in the description and quantity of goods between the manufacturer's and the Petitioners' invoices, and the alleged failure to comply with procedural requirements.

2. Compliance with Procedural Requirements under the Central Excise Rules, 2002:

The Revisional Authority rejected the rebate claims on grounds that the Petitioners did not follow the procedure required under the Board's Circulars and failed to prove that the goods exported were the same as those procured from the manufacturer. The Petitioners argued that the substantive requirement of Rule 18 of the Central Excise Rules, 2002, which is the export of goods on which duty has been paid, was met. They emphasized that procedural lapses should be condoned if the core requirement of export is fulfilled, citing the Supreme Court's stance on procedural infractions.

3. Establishment of the Identity and Correlation of Exported Goods with Goods Purchased from the Manufacturer:

The main contention was whether the goods sold by the Petitioners to the exporter and subsequently exported were the same as those purchased from the manufacturer. The Petitioners provided invoices and ARE-1 forms showing the description of the goods, albeit in abbreviated form, and argued that the goods were physically examined and endorsed by Central Excise and Customs Authorities. The Court found that the documents provided by the Petitioners established beyond doubt that the goods purchased from the manufacturer were the same as those exported, thus fulfilling the substantive requirement for rebate.

4. Applicability of Supreme Court Judgments on Procedural Lapses and Substantive Benefits:

The Petitioners cited several Supreme Court judgments, including Mangalore Chemicals and Fertilizers Ltd. vs. Deputy Commissioner and Formika India vs. Collector of Central Excise, which held that substantive benefits should not be denied due to procedural lapses. The Court agreed with this view, noting that the procedural requirements are meant to facilitate verification of the substantive requirement of export. The reliance on the Supreme Court judgment in Indian Aluminium Company Limited by the Respondents was deemed not well-founded as the facts were distinguishable.

Conclusion:

The Court concluded that the Order dated 29th May 2006 by the Revisional Authority was erroneous and perverse. It held that the Petitioners successfully established the correlation between the goods purchased from the manufacturer and those exported. The procedural lapses cited by the Revisional Authority did not warrant denial of the rebate claim. Consequently, the Court quashed and set aside the impugned Order and directed the Respondents to pay the rebate amount of Rs. 9,87,777/- to the Petitioners. The Writ Petition was disposed of with no order as to costs.

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