2010 (2) TMI 957 - CGOVT - Central Excise

Rebate claims for goods exported - no Central Excise duty was paid in terms of Notification No. 19/2004-C.E. (N.T.) Held that - Rebate of duty paid final goods is permissible only if duty was payable on goods - As no duty was payable on the goods in question, the debiting of Cenvat amount (which was otherwise not permissible) equal to the duty on such goods cannot be considered as payment of duty - It becomes a voluntary deposit with Govt - if there is any excess, debited/paid amount, the same may be allowed re-credit in the cenvat account

Issues Involved:
1. Whether the activity of cutting and slitting jumbo rolls of tissue paper into smaller sheets amounts to "manufacture" under Section 2(f) of the Central Excise Act, 1944.
2. Eligibility for rebate claims on duty paid for exported goods.
3. Applicability of Cenvat credit on inputs used for non-manufacturing processes.
4. Interpretation and application of relevant case laws and notifications.
5. Doctrine of unjust enrichment.

Detailed Analysis:

1. Whether the activity of cutting and slitting jumbo rolls of tissue paper into smaller sheets amounts to "manufacture" under Section 2(f) of the Central Excise Act, 1944:
The applicants argued that their process of cutting and slitting jumbo rolls of tissue paper into smaller sheets constituted "manufacture" under Section 2(f) of the Central Excise Act, 1944. However, the Hon'ble Supreme Court in the case of CCE, Delhi v. SR Tissues Pvt. Ltd. (2005) held that such activities do not amount to manufacture. Consequently, the finished goods could not be considered excisable goods liable to excise duty.

2. Eligibility for rebate claims on duty paid for exported goods:
The applicants filed six rebate claims for the duty paid on the final products exported. The jurisdictional Dy. Commissioner denied these claims, stating that since the activity did not amount to manufacture, no duty was payable on the finished goods. Therefore, the debiting of the Cenvat credit account could not be considered as payment of duty. The Commissioner (Appeals) upheld this decision, and the revision applications filed by the applicants were subsequently rejected.

3. Applicability of Cenvat credit on inputs used for non-manufacturing processes:
The applicants contended that even if the process did not amount to manufacture, the duty paid on inputs should be considered as "deemed to be duty paid" under Rule 3(5) of the Cenvat credit Rules, 2004. They cited the case of In Re: Ispat Industries Ltd. (2007) where rebate was allowed under similar circumstances. However, the Government observed that since no duty was payable on the finished goods, the Cenvat credit on the inputs was not permissible as per Rule 6(1) of the Cenvat credit Rules, 2004.

4. Interpretation and application of relevant case laws and notifications:
The applicants referred to various case laws, including Kores India Ltd. v. UOI (2004), CCE, Surat-II v. Sohum Industries Pvt. Ltd. (2006), and Nav Bharat Impex v. CCE (2009), to support their claim. They also cited Circular No. 489/55/99-CX., dated 13-10-2009, and argued that a manufacturer should not be at a disadvantage compared to a merchant exporter. However, the Government noted that these case laws were not applicable as the applicants did not export the inputs "as such" but claimed rebate on finished goods after paying Central Excise duty.

5. Doctrine of unjust enrichment:
The applicants argued that the doctrine of unjust enrichment should apply to the department, and it was not permissible for the department to collect Central Excise duty and then deny the rebate. They cited cases like In Re: PRG International (1999) and In Re: BPM Industries Ltd. (2001) to support their claim for interest on delayed rebate claims. However, the Government reiterated that since no duty was payable on the goods in question, the debiting of the Cenvat amount could not be considered as payment of duty, and it became a voluntary deposit.

Conclusion:
The Government rejected the revision applications, finding them devoid of merit. However, it allowed the possibility of re-crediting any excess debited/paid amount in the Cenvat account. The revision applications were disposed of accordingly.

← Previous Next →