2011 (1) TMI 523 - CGOVT - Customs

Refund - Advance license - Notification No. 21/2004-C.E. (N.T.), dated 6-9-04 or Notification No. 93/2004-Cus dated 10-9-04 - since the applicant has exported the goods under Advance Licence and as per the condition of the Advance Licence mentioned above, the applicant is not entitled for rebate claim of duty paid on inputs used in the manufacture of finished goods under Rule 18 of Central Excise Rules, 2002 and hence the sanction of the rebate claim is erroneous and is required to be recovered from the respondents - In the instant case, the respondent in addition to material imported under Advance Licence had also procured various input material used in the exported goods locally and claimed rebate of duty paid on inputs - Government herein is in conformity with the views of Commissioner (Appeals) in this case that such benefit of rebate of duty paid on indigenous materials/inputs used in addition/alongwith impugned duty free material for the manufacture of resultant product exported in discharge of export obligation as per condition of para (v) of the Notification No. 93/2004-Cus., dated 10-9-04, is not admissible to applicants - Application is rejected

Summary

Issues:
Revision applications challenging orders-in-appeal regarding rebate claims on duty paid on inputs used in the manufacture of exported goods under Central Excise Rules.

Detailed Analysis:
1. Background: The revision applications were filed by M/s. International Tractors Ltd. against orders-in-appeal passed by the Commissioner (Appeals) Central Excise, Jallandhar, related to rebate claims on duty paid on inputs used in the manufacture of exported tractors.

2. Grounds of Appeal: The department contended that since the goods were exported under an Advance Licence, the applicants were not entitled to claim rebate on duty paid on inputs under Rule 18 of Central Excise Rules, 2002. The Commissioner (Appeals) upheld the department's position and set aside the orders sanctioning the rebate claims.

3. Applicant's Arguments: The applicant argued that they were entitled to claim refund on inputs used in export under Rule 5 of Cenvat Credit Rules, 2004, emphasizing the government's schemes to promote exports and earn foreign exchange for the country.

4. Legal Precedents: The applicant cited legal precedents such as Punjab Stainless Steel Industries v. CCE, Delhi-I and Malbros Stone Exports v. CCE, Jaipur to support their claim for refund on inputs used in export goods, irrespective of whether the goods were dutiable or exempted.

5. Government's Observations: After considering oral and written submissions, the government noted that the applicant had exported products to fulfill export obligations under an Advance Licence, using both duty-free imported raw materials and locally procured inputs. The government highlighted the specific conditions of the Advance Licence scheme, which disallowed rebate claims on duty paid on materials used in the manufacture of exported products.

6. Decision: The government upheld the Commissioner (Appeals)'s decision, stating that the amended condition of the Advance Licence scheme explicitly prohibited the applicants from claiming rebate on duty paid on indigenous materials used alongside duty-free imported materials in the manufacture of exported goods. Consequently, the revision applications were rejected for lacking merit.

7. Conclusion: The government's decision affirmed that the applicants were not entitled to rebate claims on duty paid on indigenous materials used in the manufacture of exported goods under the specific conditions of the Advance Licence scheme.

Judgment: The revision applications were rejected, and the impugned order-in-appeal was upheld as legal and proper.