2011 (4) TMI 1013 - HC - Central Excise

Writ Petitions - rebate on export of goods - petitioner herein has sought for a Writ of Certiorarified Mandamus to quash the order of the third respondent and to direct the first respondent to restore a sum of Rs. 12,63,03,430/- by way of rebate on export of goods during the period March 2001 to February, 2002 under Rule 18 of the Central Excise Rules, 1944 - assessee had paid the duty on the exported goods and the factum of export is also admitted by the Revenue and the fact that the assessee s original claim of CENVAT credit is now reversed by the assessee paying duty thereon, there being no leakage of revenue on the assessee giving the particulars relevant to its case, as had been required under Notification No. 41 of 2001, no impediment in considering the claim of the assessee for a rebate under Rule 18 of the Central Excise Rules - first respondent directed to consider the claim of the assessee for rebate - the assessee is hereby directed to comply with the requirements, as are applicable to the assessee s case, as given under Notification No. 41 of 2001 before the first respondent, to enable him to consider the claim for rebate - Writ Petitions are disposed of with the directions as stated above

Issues Involved:
1. Entitlement to rebate on export of goods under Rule 18 of the Central Excise Rules, 1944.
2. Compliance with procedural requirements for claiming rebate.
3. Treatment of activities at the KDP plant as manufacturing or trading.
4. Validity of denial of CENVAT credit and subsequent rebate claims.
5. Binding nature of circulars issued by the Central Board of Excise and Customs.

Detailed Analysis:

1. Entitlement to Rebate on Export of Goods under Rule 18 of the Central Excise Rules, 1944:

The petitioner sought a Writ of Certiorarified Mandamus to quash the orders denying rebate claims amounting to Rs. 12,63,03,430/- and Rs. 5,70,15,438/- for the periods March 2001 to February 2002 and March 2002 to October 2002, respectively. The petitioner argued that the goods exported were entitled to rebate under Rule 18 of the Central Excise Rules, 1944, and that the denial of such rebate was unjustified. The court noted that the petitioner had indeed exported the goods and had remitted the duty on the inputs used, thus satisfying the substantive conditions for rebate.

2. Compliance with Procedural Requirements for Claiming Rebate:

The respondents contended that the petitioner did not comply with the procedural requirements under Rule 18 and Notification No. 41 of 2001, such as filing necessary declarations and verifying input-output ratios. The court emphasized that procedural lapses should not defeat the substantive right to rebate if the fact of export and payment of duty is established. The court cited the decision in 2006 (204) E.L.T. 632 (In Re: Modern Process Printers), which supports a liberal interpretation of procedural requirements in incentive-oriented schemes.

3. Treatment of Activities at the KDP Plant as Manufacturing or Trading:

The respondents argued that the activities at the KDP plant were merely trading and not manufacturing, thus disqualifying the petitioner from availing CENVAT credit. The court examined the activities at the KDP plant, including quality checking, sequencing, and packing, and concluded that these activities could be considered as part of the manufacturing process. The court referenced the Circular No. 283/117/96-CX, dated 31-12-1996, which treated export of inputs under bond as final products, supporting the petitioner's claim.

4. Validity of Denial of CENVAT Credit and Subsequent Rebate Claims:

The court reviewed the history of the petitioner's claims and the rejection by the CESTAT, which had held that the activities at the KDP plant did not qualify as manufacturing. The petitioner had reversed the CENVAT credit and paid the duty, thus nullifying any undue financial advantage. The court found that the petitioner's compliance with the payment of duty and the fact of export should entitle them to the rebate, notwithstanding the earlier denial of CENVAT credit.

5. Binding Nature of Circulars Issued by the Central Board of Excise and Customs:

The court highlighted the binding nature of the circulars issued by the Central Board of Excise and Customs, which clarified the treatment of exports under bond and the entitlement to rebate. The court cited the decisions of the Apex Court in (2008) 13 VST 1 and Civil Appeal No. 4233 of 2007, which affirmed the binding nature of such circulars. The court concluded that the circulars supported the petitioner's claim for rebate and directed the first respondent to consider the rebate claim in light of these circulars.

Conclusion:

The court directed the first respondent to consider the petitioner's rebate claim within eight weeks, emphasizing that the petitioner had complied with the substantive requirements of Rule 18 and Notification No. 41 of 2001. The court underscored that procedural lapses should not bar the entitlement to rebate if the substantive conditions are met, and the fact of export and payment of duty is established. The Writ Petitions were disposed of with the directions to the first respondent to process the rebate claim accordingly.

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