2011 (5) TMI 788 - CGOVT - Central Excise

Revision application - rebate claim for the duty paid on materials used in the processing or manufacture of exported goods under Rule 18 of the Central Excise Rules, 2002 read with Notification No. 21/2004-C.E. (N.T.), dated 6-9-04 - goods were got exported by the respondent through their merchant exporter under B-1 bond without payment of duty under the provisions of Rule 19 of the Central Excise Rules, 2002 - claimed input stage rebate is not admissible in this case of exports made under Drawback scheme, revision application allowed

Summary

Issues:
Whether rebate of excise duty paid on inputs is inadmissible when the benefit of drawback has been claimed on the exported goods.

Analysis:
The revision application was filed against the orders-in-appeal passed by the Commissioner (Appeals), Central Excise, Kanpur. The case involved a rebate claim by M/s. A.G. Enterprises for duty paid on materials used in manufacturing exported goods under Rule 18 of the Central Excise Rules, 2002. The goods were exported under a B-1 bond without payment of duty, and the rebate claim included necessary supporting documents. However, during scrutiny, it was observed that the merchant exporter had claimed drawback on the exported goods. The department denied the rebate claim citing para 1.5(i) of the CBEC's Excise Manual, which states that input stage rebate cannot be claimed if finished goods are exported under a duty drawback claim.

The applicant department appealed the decision, arguing that industry rates of Duty Drawback do not differentiate between Customs duty and Central Excise duty components. They contended that the distinction should not be made for granting rebate when a duty drawback claim has been taken. The department also requested consideration of their defense reply as grounds of appeal. A Show Cause Notice was issued to M/s. A.G. Enterprises, who argued that they had not claimed only the customs portion but were claiming rebate of excise duty on inputs. They also highlighted that Form ARE-2 does not permit drawback of Excise Duty.

The Government carefully reviewed the case records and orders-in-appeal. It was observed that the benefit of input stage rebate cannot be claimed if finished goods are exported under a duty drawback claim, as per the CBEC's Excise Manual. The government, referring to relevant Supreme Court cases, emphasized strict adherence to statutory provisions. Considering the plain language of the statute and the nature of exports made under the Duty Drawback scheme, the claimed input stage rebate was deemed inadmissible. Consequently, the order-in-appeal was set aside, and the revision application was allowed.

In conclusion, the judgment addressed the issue of whether rebate of excise duty paid on inputs is admissible when a duty drawback has been claimed on exported goods. The decision highlighted the importance of statutory compliance and upheld the denial of the rebate claim due to the export being made under a duty drawback scheme.