2013 (1) TMI 894 - HC - Central Excise

Summary

Issues involved: Challenge to order for recovery of excess rebate and imposition of penalties, limitation period for show cause notice, revenue neutrality.

Challenge to order for recovery of excess rebate and imposition of penalties:
The petitioners, a company engaged in manufacturing goods, challenged an order for recovery of excess rebate of &8377; 16.78 Lacs and imposition of penalties by the Revisional Authority. The company exported goods through merchant exporters and claimed rebate on excise duty paid. The Department alleged overvaluation of goods and sought to recover the excess rebate amount. The petitioners contended that rebate should be calculated based on actual export valuation of &8377; 9.44 Crores, not the amount received from merchant exporters. The Department argued that excise duty should be paid only on the amount realized by the company. The petitioners also raised objections regarding the limitation period for the show cause notice and claimed revenue neutrality.

Limitation period for show cause notice:
The petitioners argued that the show cause notice was barred by limitation, as the Department could only invoke extended period of limitation in cases involving fraud, collusion, or willful misstatement. They maintained that necessary details were provided to the Department at the time of rebate claim sanction, and longer limitation period was not applicable. The Court noted that majority of rebate claims fell outside the six-month limitation period under Section 11-A of the Act. The petitioners had paid the total excise duty of &8377; 81.31 Lacs, which was not disputed, and claimed rebate on this amount.

Revenue neutrality:
The Court considered the case as one of revenue neutrality, where the petitioners essentially paid higher excise duty and received rebate from the Department. Even if the excess duty amount was not paid by the petitioners, the cenvat credit of equivalent value remained in their account. The Court accepted the argument that the petitioners should not be directed to pay the differential duty amount and then claim cenvat credit, as it would not affect the revenue position. The impugned order of the Government and the excise authority were quashed, and the petition was allowed based on the principle of revenue neutrality.