2011 (4) TMI 997 - CGOVT - Central Excise

Rebate - Misdeclaration, suppression of facts and fraud with intent to evade duty and misuse the export incentive schemes - Held that - there were misdeclaration, suppression of facts and fraud with intent to evade duty and misuse the export incentive schemes, benefit of rebate can be denied when there is short payment by reasons of fraud, collusion or any wilful misstatement or suppression of facts, no infirmity in the order and therefore upholds the same, revision application is rejected being devoid of merit

Issues Involved:
1. Eligibility for rebate claim under Rule 18 of the Central Excise Rules, 2002.
2. Compliance with conditions of Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004.
3. Impact of fraud and misdeclaration on rebate claims.
4. Procedural compliance regarding export of goods.
5. Validity of duty payment subsequent to detection of fraud.

Issue-wise Detailed Analysis:

1. Eligibility for rebate claim under Rule 18 of the Central Excise Rules, 2002:
The applicant, a merchant-exporter, claimed a rebate of Rs. 15,65,088/- for goods exported, which were initially cleared under bond without payment of duty. The adjudicating authority rejected the rebate claim, stating that the duty was paid due to fraudulent activities and not as part of the regular export process. The applicant argued that the duty was paid and the goods were exported under the supervision of Central Excise Officers, fulfilling the necessary conditions for rebate.

2. Compliance with conditions of Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004:
The adjudicating authority found that the applicant failed to comply with the conditions specified in the notification, particularly regarding the direct export from the factory or warehouse and the timely export within six months. The goods were initially cleared under bond without payment of duty and subsequently exported after the detection of fraud and payment of duty. The applicant did not obtain the necessary extension for exporting the goods beyond the stipulated period.

3. Impact of fraud and misdeclaration on rebate claims:
The respondent-department highlighted that the applicant indulged in fraudulent activities, including the substitution of export goods and misdeclaration of goods to avail export incentives. The duty was paid as a result of the Settlement Commission's order, which was due to the detection of fraud by the Directorate of Revenue Intelligence (DRI). The Supreme Court in Omkar Overseas Ltd. v. Union of India held that rebate benefits could be denied when there is fraud, collusion, or wilful misstatement.

4. Procedural compliance regarding export of goods:
The applicant argued that they had obtained necessary permissions and followed the procedures laid down in the relevant circulars. However, the adjudicating authority noted that the goods were initially cleared under bond, and the subsequent duty payment and export were due to the detection of fraud. The applicant did not submit the necessary documents, such as the Central Excise invoice and disclaimer certificate, violating the conditions of the notification.

5. Validity of duty payment subsequent to detection of fraud:
The respondent-department contended that the duty paid due to the Settlement Commission's order could not be treated as duty of excise for rebate purposes. The adjudicating authority upheld this view, stating that the duty was paid as a result of fraudulent activities and not as part of the regular export process. The applicant's claim for rebate was rejected as they failed to fulfill the conditions of the relevant notification and procedural requirements.

Conclusion:
The revision application was rejected, and the impugned order-in-appeal was upheld. The applicant's rebate claim was denied due to non-compliance with the conditions of Notification No. 19/2004-C.E. (N.T.), procedural lapses, and the fraudulent nature of the activities involved. The judgment emphasized the importance of adhering to the prescribed conditions and procedures for claiming export rebates.

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