2010 (1) TMI 945 - CGOVT - Central Excise

Rebate claim export of bye-product final product is exempt from duty - rebate claim in respect of Central Excise Duty involved on raw materials - Commissioner rejected rebate claim on the ground that the said assessee has not followed the procedures laid down in Part-V of Chapter 8 of CBEC Manual neither prepared ARE-2 nor mentioned in export documents that the export is under claim of rebate. Also the claimant has not followed the procedures as laid down in Notification No. 21/2004-C.E. (N.T.) dated 6-9-2004 - Notification No. 21/2004-C.E. (N.T.) is issued under Rule 18 and prescribes certain conditions which has to be fulfilled by the assessee in order to get exemption Held that - rebate claim on the total quantity of hexane used as input in the production of DOC is allowed on the ground that Rule 18 and Notification No. 41/2001-C.E. (N.T.) dated 26-6-2001 issued there under does not mandate that all the goods manufactured by the claimant should be exported so as to be entitled for rebate of duty paid on inputs and as per SION Norms the quality of hexane to be used for production of DOC has been specifically mentioned in the Import/Export Policy. In the said orders the similar procedural lapses were also condoned and rebate claim were held admissible by following the input-output ratio as per SION Norms fixed in EXIM Policy Govt. of India vide para 3.2 in part V of CBEC s Central Excise Manual have clarified as it is clarified for the sake of convenience and transparency that input and output norms notified under the Export Import Policy may be accepted by the department unless there are specific reasons for variance. In the instant case input output norms for hexane and DOC have been fixed in the EXIM Policy and the applicant is eligible for claiming the rebate of duty on the basis of said norms as held by in orders of revisionary authority (GOI) rebate claims are admissible and may be sanctioned by following the input-out ratio as fix in SION norms of EXIM POLICY remand order-in-appeal is upheld with these modifications Revision application is rejected being devoid of merits and impugned order-in-appeal is upheld with above said modifications

Summary

Issues:
Claim of rebate on Central Excise Duty for export of De-Oiled Cake (DOC) - Procedural compliance with Notification No. 21/2004-C.E. (N.T.) - Input-output ratio fixation - Substantive vs. procedural requirements - Legal interpretation of conditions under exemption notification.

Analysis:
The revision application was filed against the order-in-appeal by the Commissioner, Central Excise, Nasik regarding the rebate claim on Central Excise Duty for the export of De-Oiled Cake (DOC). The case involved M/s. Deesan Agro Tech Ltd., Dhule, registered under Central Excise Law, exporting DOC after stuffing the consignment into containers at their factory. The rebate claim was for raw materials used in the manufacture of DOC. The Dy. Commissioner rejected the claim citing non-compliance with procedures and Notification No. 21/2004-C.E. (N.T.).

The Commissioner (Appeals) set aside the rejection order and directed to sanction the rebate claim. The revision application challenged this decision on various grounds. It argued that the input-output ratio fixation is a substantive requirement under the notification, and non-compliance with such ratio renders the claim invalid. The application cited judicial precedents emphasizing strict compliance with exemption notification conditions.

The Government observed that Hexane is essential for producing DOC, a regular export product, and procedural lapses are condonable if the substantive requirement of law is met. The input-output norms were amended, and the use of hexane was crucial for DOC production. The Government referred to previous orders where similar procedural lapses were condoned, and rebate claims were allowed based on input-output ratio as per SION norms in the EXIM Policy.

Furthermore, the Government clarified that input-output norms notified under the Export Import Policy may be accepted unless specific reasons for variance exist. In this case, the applicant was eligible for claiming the rebate based on the norms set in the EXIM Policy. Consequently, the Government upheld the remand order-in-appeal with modifications, stating that the rebate claims are admissible and should be sanctioned following the input-output ratio as fixed in SION norms of the EXIM Policy. The revision application was rejected for lack of merits, and the impugned order-in-appeal was upheld with the mentioned modifications.