2012 (9) TMI 274 - CGOVT - Central Excise

Rebate claim rejection of claim for not following the procedure laid down in C.B.E. & C. Circular No. 294/10/97-CX. Held that - Procedural infraction of Notification, circular, etc. are to be condoned if exports have really taken place, and the law is settled now that substantive benefit cannot be denied for procedural lapses - core aspect or fundamental requirement for rebate is its manufacture and subsequent export. As long as this requirement is met other procedural deviations can be condoned - duty paid goods have been exported in this case and rebate claim is admissible to the applicant - orders-in-appeal are hereby set aside and case is remanded back to the original authority to sanction the rebate claim after verifying the duty deposit particulars as stated in ARE-I forms

Issues Involved:
1. Rejection of rebate claims due to non-compliance with procedural requirements.
2. Whether goods were cleared directly from a registered factory or warehouse.
3. Applicability of C.B.E. & C. Circular No. 294/10/97-CX., dated 30-1-1997.
4. Verification of duty paid nature and correlation of exported goods.
5. Procedural lapses and their impact on rebate claims.

Detailed Analysis:

1. Rejection of Rebate Claims Due to Non-Compliance with Procedural Requirements:
The applicants, M/s. Vinergy International Pvt. Ltd., filed 55 rebate claims for the supply of furnace oil to foreign-going vessels. The jurisdictional Assistant Commissioner rejected these claims for not following the procedure laid down in C.B.E. & C. Circular No. 294/10/97-CX., dated 30-1-1997. The Commissioner (Appeals) upheld this decision, leading to the current revision applications.

2. Whether Goods Were Cleared Directly from a Registered Factory or Warehouse:
The applicants argued that 5 out of 55 consignments were supplied directly from BPCL's Mahul Refinery, and the remaining 50 consignments were supplied from BPCL's Sewree Terminal, which is registered as a First Stage Dealer under Rule 9 of Central Excise Rules, 2002. The applicants contended that the Sewree Terminal qualifies as a warehouse under Rule 2(h) of Central Excise Rules, 2002, and thus, the condition of direct export from a factory or warehouse is fulfilled.

3. Applicability of C.B.E. & C. Circular No. 294/10/97-CX., Dated 30-1-1997:
The applicants argued that the circular in question is not applicable as it pertains to Notifications Nos. 41/94-C.E. (N.T.) & 44/94-C.E. (N.T.) issued under Rule 12 of Central Excise Rules, whereas their exports were made under Rule 18 of Central Excise Rules, 2002, and rebate is claimed under Notification No. 19/04-C.E. (N.T.), dated 4-9-2004. The department, however, maintained that the circular is still relevant for correlating the goods cleared from the factory with those exported.

4. Verification of Duty Paid Nature and Correlation of Exported Goods:
The applicants provided detailed documentation to establish a correlation between the goods cleared from the factory and those exported. This included Central Excise Invoices, ARE-1 forms, Shipping Bills, Bunker Delivery Notes, and endorsements by Customs Officers. The applicants argued that the goods were examined by Customs at the port, and the entire operation was supervised by jurisdictional Customs Officers, thereby fulfilling the requirement for correlation.

5. Procedural Lapses and Their Impact on Rebate Claims:
The applicants contended that procedural lapses, such as not getting the triplicate copy of ARE-1 endorsed by the jurisdictional Range Superintendent, should not lead to the denial of rebate claims if the substantive conditions of export and duty payment are met. They cited several judgments supporting the view that procedural infractions should be condoned if exports have taken place.

Judgment Summary:
The Government observed that the applicants had indeed supplied furnace oil from both BPCL's Mahul Refinery and Sewree Terminal, the latter being registered as a warehouse under Rule 9 of Central Excise Rules, 2002. The objections raised by the department were found to be procedural rather than substantive. The Government noted that the documentation provided by the applicants sufficiently established the correlation between the goods cleared and those exported.

The Government held that the procedural lapses cited by the department should not outweigh the substantive evidence of export and duty payment. The judgment emphasized that export-oriented schemes should not be unduly restricted by technicalities, and a liberal interpretation should be adopted to promote exports.

The Government directed the original authority to sanction the rebate claims after verifying the duty deposit particulars as stated in the ARE-1 forms, thereby setting aside the impugned orders-in-appeal. The case was remanded back to the original authority with instructions to provide a reasonable opportunity of hearing to the applicants.

Conclusion:
The revision applications were disposed of with the direction to the original authority to verify and sanction the rebate claims, emphasizing the need to focus on substantive compliance over procedural lapses.

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