2012 (10) TMI 229 - CGOVT - Central Excise

Rebate export of SS Wire drawn from Rod - rebate claims were rejected by the adjudicating authority on the ground that since the process of drawing of wire from rod does not amount to manufacture Held that - C.B.E.C. vide Circular No. 831/8/06-CX., had clarified that wire drawing units, which has paid a sum equal to duty leviable on drawn wire, would be eligible to avail the credit at duty paid on inputs and utilises the same for payment of duty on drawn wire for the period of amendment. The sum paid by the wire drawing unit in such cases will be treated as duty and shall be allowed as credit to the buyer of drawn wire, in terms of amendment - sum paid by the units during intervening period 29-5-2003 to 8-7-2004 shall be treated as duty. Once such payment is treated as duty, the rebate claims on duty paid on final product can not be denied in terms of Rule 18 of the Central Excise Rules, 2002 - Once such payment is treated as duty and availment of Cenvat credit has been allowed against payment of such duty, payment of duty against cenvat credit is entitle for rebate claim. As such the applicants are entitled for rebate claim on said exported goods (finished products). The rebate on the exported goods may be sanctioned after adjusting the already paid input rebate amount - Revision Application succeeds

Summary

Issues:
- Rebate claims under Rule 18 of Central Excise Rules, 2002
- Interpretation of the Hon'ble Supreme Court judgment on the process of drawing wire from rod
- Eligibility for rebate on duty paid on inputs used in the manufacture of export goods
- Retrospective amendment in Rule 16 of Central Excise Rules, 2002
- Rejection of rebate claims by original authority and Commissioner (Appeals)
- Revision application under Section 35EE of Central Excise Act, 1944

Analysis:
The case involved a revision application by M/s. KEI Industries Ltd. against the rejection of 12 rebate claims under Rule 18 of the Central Excise Rules, 2002. The claims were initially rejected based on the interpretation that the process of drawing wire from rod did not amount to manufacture, following a Supreme Court judgment. However, the Commissioner (Appeals) later allowed rebate on duty paid on inputs used in the manufacture of export goods. This decision was challenged, leading to a series of appeals and writ petitions. The High Court remanded the case back to the original authority for fresh consideration in light of a retrospective amendment in Rule 16 of the Central Excise Rules and a clarification issued by the Central Board of Excise and Customs.

The applicant contended that they were entitled to rebate claims for duty paid on export goods, citing legal precedents and the retrospective amendment in Rule 16. The Government noted that the amendment aimed to regularize credit taken at the input stage and payment of duty on drawn wire for a specific period. The Circular issued by the C.B.E.C. clarified that the sum paid by wire drawing units during the specified period should be treated as duty, making them eligible for rebate claims on exported goods. The Government observed that once such payment was treated as duty, rebate claims on final products could not be denied.

After careful consideration of the case records and relevant orders, the Government found that the original authority and the Commissioner (Appeals) had erred in rejecting the rebate claims. The retrospective amendment and the Circular provided a legal basis for granting the rebate claims on exported goods. Consequently, the Government set aside the impugned orders and allowed the revision application, ruling in favor of the applicant.

In conclusion, the revision application succeeded based on the applicant's entitlement to rebate claims following the retrospective amendment in Rule 16 and the clarification provided by the C.B.E.C. The Government's decision overturned the previous rejections and established the applicant's eligibility for the rebate on exported goods.