2011 (5) TMI 719 - CGOVT - Central Excise

Revision Application - rebate - reversal of the cenvat credit, the respondents have not availed the benefit of cenvat credit and hence, there is no violations of para 1.5(iii) of Part V of C.B.E.C. Excise Manual of Supplementary Instructions - respondents are eligible for rebate. It was observed by the Hon ble Delhi High Court in the case of Grasim Industries Ltd. v. Union of India (2010 -TMI - 76123 - DELHI HIGH COURT) that rebate of duty paid on finished product is not available where rebate has been granted on duty paid on inputs. In the instant case, the subject matter of dispute is not simultaneous availment of input stage rebate and finished goods rebate. The crux of Hon ble Delhi Court s judgment is that such double benefit should not be extended. This subject case is not about double benefit of input stage and output stage rebate claim. Moresoever, the respondents have reversed the cenvat credit used for payment of duty on removal of scraps and as such there is no availment of double benefit of availing cenvat credit as well as input stage rebate claim. Revision application filed by commissioner of central excise rejected being devoid of any merit

Issues Involved:
1. Rebate claims of duty paid on inputs used in the manufacture of exported goods.
2. Procedural lapses concerning the submission of Form ARE-2.
3. Double benefit of Cenvat Credit and rebate claims.
4. Interpretation of Rule 18 of the Central Excise Rules, 2002, and relevant notifications.
5. Adherence to procedural and substantive requirements for claiming rebates.

Issue-wise Detailed Analysis:

1. Rebate Claims of Duty Paid on Inputs Used in the Manufacture of Exported Goods:
The case revolves around the rebate claims filed by the respondent for the duty paid on inputs used in manufacturing stainless steel utensils, which were exported. The initial rejection by the adjudicating authority was based on the non-fulfillment of conditions in Notification No. 41/2001-C.E. (N.T.), dated 26-6-2001. The Commissioner (Appeals) later condoned the procedural lapses and allowed the rebate claims, which was contested by the Commissioner, Central Excise, Delhi-I.

2. Procedural Lapses Concerning the Submission of Form ARE-2:
The respondent did not submit Form ARE-2, which requires certification by the Customs Officer. The High Court noted that procedural lapses could be ignored if there is substantial proof of export, referencing the Supreme Court's stance on interpreting exemption or concession provisions. The High Court emphasized the doctrine of substantial compliance, which allows some latitude in procedural requirements if the essence of the statute is met.

3. Double Benefit of Cenvat Credit and Rebate Claims:
The core issue was whether the respondent availed double benefits by claiming Cenvat Credit and rebate. The High Court observed that the term "availed" in the context of Cenvat Credit implies actual utilization. The respondent argued that they sought a rebate for un-utilized Cenvat Credit. The High Court remanded the case for re-examination of whether the respondent had indeed availed double benefits.

4. Interpretation of Rule 18 of the Central Excise Rules, 2002, and Relevant Notifications:
The High Court's observations clarified that Rule 18 allows for rebate claims on either the excisable goods exported or the inputs used, but not both. The Government of India, upon re-examination, noted that the respondent had reversed the utilized Cenvat Credit, thus not availing double benefits. This interpretation aligned with the High Court's judgment in Grasim Industries Ltd. v. UOI, which prohibits simultaneous rebate on inputs and finished goods.

5. Adherence to Procedural and Substantive Requirements for Claiming Rebates:
The High Court emphasized distinguishing between substantive provisions, which must be strictly adhered to, and procedural provisions, which can be liberally construed if the essence of the statute is met. The Government of India concluded that the respondent's reversal of Cenvat Credit meant there was no violation of the substantive requirements, thus upholding the rebate claims.

Conclusion:
The Government of India upheld the order of the Commissioner (Appeals), concluding that the respondent had not availed double benefits after reversing the Cenvat Credit and had met the substantial compliance requirements. The revision application was rejected for lack of merit.

← Previous Next →