2011 (3) TMI 1272 - HC - Central Excise

Revision - rebate of duty paid on export of inputs/capital goods by reversing the amount equal to the amount of Cenvat credit taken on the said inputs/capital goods denied - Held that - Contention of the revenue is without any merit because, firstly there is nothing on record to suggest that the amount paid on clearance of inputs/capital goods for export as duty under Rule 3(4) 3(5) of 2002 Rules cannot be considered as payment of duty for granting rebate under the Cenvat Credit Rules. If duty is paid by reversing the credit it does not loose the character of duty and therefore if rebate is otherwise allowable, the same cannot be denied on the ground that the duty is paid by reversing the credit. Secondly, the Central Government by its Circular No. 283/1996, dated 31st December, 1996 has held that amount paid under Rule 57F(1)(ii) of Central Excise Rules, 1944 (which is analogous to the Cenvat Credit Rules, 2002/Cenvat Credit Rules, 2004) on export of inputs/capital goods by debiting RG 23A part II would be eligible for rebate. In these circumstances denial of rebate on the ground that the duty has been paid by reversing the credit cannot be sustained. Argument of the Revenue that identity of the exported inputs/capital goods could not be corelated with the inputs/capital goods brought in to the factory is also without any merit because, in the present case the goods were exported under ARE 1 form and the same were duly certified by the Customs Authorities. In favour of assessee.

Summary

Issues:
Claim for rebate of duty paid on export of inputs/capital goods.

Detailed Analysis:
The case involved a dispute regarding the claim for rebate of duty paid on the export of inputs/capital goods by the assessee. The Commissioner of Central Excise was aggrieved by the order allowing the rebate claim, which was based on the assessee being treated as a deemed manufacturer for the exported goods. The key contention raised by the Revenue was that the assessee was not entitled to claim the rebate due to specific conditions outlined in various notifications and circulars. The Revenue argued that the goods were not exported directly from the factory/warehouse, a mandatory requirement for rebate eligibility under the relevant notifications. Additionally, the Revenue challenged the clearance of inputs/capital goods for export by reversing the credit availed on them, stating that it did not constitute clearance on payment of duty as per the rules. The Revenue also highlighted the absence of establishing the identity of the exported goods with the duty-paid inputs/capital goods as a basis for disallowing the rebate claim.

On the other hand, the assessee contended that they were entitled to claim the rebate under the Central Excise Rules, citing specific provisions that deemed the assessee as a manufacturer for the exported goods. The assessee emphasized that the exports were made during a specific period and met the requirements under the relevant rules for claiming the rebate. The assessee also pointed out that the exports were certified under the prescribed form, ARE 1, which facilitated the rebate claim by establishing the identity of the exported goods with the duty-paid inputs/capital goods.

The Court analyzed the relevant provisions under the Cenvat Credit Rules, 2002, and highlighted the requirements for availing and utilizing the credit of duty paid on inputs/capital goods. The Court referred to specific rules that mandated payment of duty on inputs/capital goods removed from the factory without being utilized in the final product. It also discussed the historical context under the Modvat Scheme and the Circular issued by the Central Government, clarifying the entitlement to claim rebate for exported goods under similar circumstances.

Ultimately, the Court found no merit in the Revenue's contentions. It upheld the order allowing the rebate claim, emphasizing that the payment of duty by reversing the credit was valid for claiming the rebate. The Court rejected the Revenue's arguments regarding the identity of the exported goods, noting that the certification under the ARE 1 form established the necessary correlation. Consequently, the Court discharged the rule in favor of the assessee, with no order as to costs.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved, the arguments presented by both parties, and the Court's reasoning leading to the decision in favor of the assessee regarding the claim for rebate of duty paid on the export of inputs/capital goods.