2010 (3) TMI 866 - CGOVT - Central Excise

Revision application Rebate claim - applicants exported the goods on payment of duty by way of debiting their cenvat account and filed a rebate claim Held that - Rule 19(1) and 19(2) and Explanation of Notification No. 43/2001-C.E. (N.T.) reveal that the finished goods manufactured out of inputs procured under Rule 19(2) ibid, has to be exported without payment of duty under bond/or letter of undertaking under Rule 19(1) of Central Excise Rules, 2002. Once an exporter chooses to procure input duty free under Rule 19(2) of the Central Excise Rules, 2002, he is bound to export the finished goods under Rule 19(1) of the Central Excise Rules, 2002. This is a mandatory condition to avail benefit of duty free procurement of inputs under Notification No. 43/2001-C.E. (N.T.), dated 26-6-2001, revision application is rejected

Summary

Issues:
Claim of rebate on duty paid for exported goods under Notification 43/2001-C.E. (N.T.) denied by lower authorities.

Analysis:
The case involved a revision application by a company engaged in manufacturing, challenging the denial of a rebate claim on exported goods by the lower authorities. The company exported goods under a claim of rebate after availing the benefit of Notification 43/2001-C.E. (N.T.) by procuring inputs without duty payment. The authorities rejected the claim citing non-compliance with the condition that exported goods must be without payment of duty under Rule 19(1). The company argued that Rules 18 and 19 are independent, and the denial was erroneous as the conditions under Notification 19/2004-C.E. (N.T.) were not contravened. They contended that the conditions of Notification 43/2001-C.E. (N.T.) cannot be extended to Notification 19/2004-C.E. (N.T.). The company cited precedents where benefit under similar notifications was upheld despite minor lapses. They also argued for refund under Section 11B if rebate was denied due to wrong payment of duty.

The government observed that the company procured inputs without duty under Notification 43/2001-C.E. (N.T.) for export, as per Rule 19(2). The Notification prescribed conditions for procuring duty-free inputs for export, including the requirement to export finished goods without duty payment under Rule 19(1). The Explanation II clarified this condition. The government held that once an exporter opts for duty-free inputs under Rule 19(2), exporting under Rule 19(1) becomes mandatory to avail benefits. The government distinguished the cited cases as dealing with procedural lapses, not statutory requirements. Consequently, the government upheld the lower authorities' decision, finding no infirmity in the order-in-appeal, and rejected the revision application for lacking merit.

In conclusion, the judgment addressed the denial of a rebate claim on exported goods due to non-compliance with the conditions of Notification 43/2001-C.E. (N.T.). The analysis highlighted the mandatory requirement to export finished goods without duty payment when procuring duty-free inputs under Rule 19(2). The government's decision was based on the statutory interpretation of the rules and notifications, emphasizing the binding nature of the export conditions for availing benefits. The judgment clarified the distinction between procedural and mandatory requirements, leading to the rejection of the revision application.