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2010 (9) TMI 762 - CGOVT - Central ExciseExport Rebate - Rule 18 - Under Notification No. 21/2004-C.E. (N.T.) dated 6-9-2004 - The only objection of the department is that the respondent did not carry out any process of manufacture of the inputs received and exported as such so Notification No. 21/2004-C.E. (N.T.) dated 6-9-2004 is not applicable in their case hence no rebate on the inputs is available to them whereas the respondent has submitted that they carry out testing and re-packing etc. before exporting the inputs received by them - Held that - Government observes that the respondents have used the materials in the processing of export goods and complied with all the conditions/procedures of the Notification No. 21/2004-C.E. (N.T.) dated 6-9-04 which was valid during the period of export and there is no dispute about the actual export of the goods - Therefore respondents were eligible for input stage rebate claim subject to fulfillment of condition mentioned.
Issues Involved:
1. Eligibility for rebate claims under Notification No. 21/2004-C.E. (N.T.), dated 6-9-04. 2. Definition and implications of "manufacture" and "processing" under Central Excise Rules. 3. Validity of the withdrawal of permission to operate under Notification No. 21/2004-C.E. (N.T.). 4. Admissibility of rebate claims for activities not amounting to manufacture. 5. Legal precedents and interpretations supporting rebate claims. Detailed Analysis: 1. Eligibility for Rebate Claims under Notification No. 21/2004-C.E. (N.T.), dated 6-9-04 The assessee, M/s. A.V. Industries, filed rebate claims for excise duty paid on materials used in the manufacture of export goods, under Notification No. 21/2004-C.E. (N.T.). The department's objection was that the goods were exported without any further manufacturing, which they argued disqualified the claims. However, the Commissioner (Appeals) and the Government observed that the notification allows for rebate on materials used in the manufacture or processing of export goods, and the assessee had complied with the notification's procedures and conditions. 2. Definition and Implications of "Manufacture" and "Processing" under Central Excise Rules The department argued that the activities performed by the assessee, such as testing and re-packing, did not constitute "manufacture" as per Chapter 87 of the Central Excise Tariff. However, the Commissioner (Appeals) and the Government noted that the term "processing" in Rule 18 of the Central Excise Rules, 2002, includes activities that do not amount to manufacture. The CBEC's Excise Manual of Supplementary Instructions supports this interpretation, stating that any processing, even if not amounting to manufacture, is eligible for rebate. 3. Validity of the Withdrawal of Permission to Operate under Notification No. 21/2004-C.E. (N.T.) The department contended that the permission granted to the assessee under Notification No. 21/2004-C.E. (N.T.) was withdrawn, and thus, the rebate claims were invalid. However, the Government found that the permission was valid during the period of the disputed exports and was withdrawn only after the exports had taken place. Therefore, the withdrawal could not apply retrospectively to invalidate the rebate claims for the period when the permission was active. 4. Admissibility of Rebate Claims for Activities Not Amounting to Manufacture The Government upheld the Commissioner (Appeals)'s decision that the rebate claims were admissible even if the activities performed did not amount to manufacture. The CBEC's instructions clarify that materials used in any processing, including packing and blending, are eligible for rebate. The Government also referenced several legal precedents supporting the admissibility of rebate claims for goods exported after processing, regardless of whether the processing amounted to manufacture. 5. Legal Precedents and Interpretations Supporting Rebate Claims The Government considered various judgments cited by the assessee, which supported the position that rebate is admissible for duty paid on goods exported, even if the activities performed do not amount to manufacture. The judgments emphasized that once duty is paid and the goods are exported, the rebate cannot be denied. The Government found these precedents applicable and persuasive in affirming the assessee's eligibility for rebate claims. Conclusion The Government found no infirmity in the orders-in-appeal and upheld the decision to grant rebate claims to the assessee. The revision applications filed by the Commissioner Central Excise were rejected as devoid of merit. The judgment reaffirmed the eligibility for rebate claims under Notification No. 21/2004-C.E. (N.T.) for materials used in the processing of export goods, even if the processing does not amount to manufacture.
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