2010 (2) TMI 958 - CGOVT - Central Excise

Rebate - exemption from payment of duty under Notification No. 30/2004-C.E. - applicants had also not availed cenvat credit of the duty paid on inputs which was a condition of the aforesaid notification - applicants were effecting their clearance for export on payment of duty 4% or 8% and accordingly filed their claims for rebate of the duty so paid Held that - Applicants were entitled to the rebate claims in cash in respect of duty paid under Notification No. 29/2004-C.E. - If any duty debited in excess of rates specified in the said Notification by the applicant, the same is nothing but a deposit made voluntarily by them which is refundable in the manner of allowing re-credit in cenvat credit account from where it was debited

Issues Involved:
1. Eligibility for rebate claims under Rule 18 of the Central Excise Rules, 2002.
2. Applicability and interaction of Notification No. 29/2004-C.E. and Notification No. 30/2004-C.E.
3. Conditions for availing Cenvat credit and the implications of not availing it.
4. Legal interpretation of exemption notifications and the right to opt-out.
5. Finality of previous judgments and the doctrine of estoppel.

Issue-wise Detailed Analysis:

1. Eligibility for Rebate Claims Under Rule 18 of the Central Excise Rules, 2002:
The applicants, engaged in manufacturing textile goods, exported their finished goods on payment of duty and filed claims for rebate of duty paid under Rule 18 of the Central Excise Rules, 2002. The adjudicating officer allowed a portion of the rebate in cash and ordered the rest to be re-credited in the Cenvat account. The department filed appeals arguing that the applicants, working under Notification No. 30/2004-C.E., were not required to pay duty, thus not eligible for cash rebate. The applicants contended that Rule 18 entitles them to a rebate of the actual duty paid on exported goods, irrespective of the applicable or effective duty rate.

2. Applicability and Interaction of Notification No. 29/2004-C.E. and Notification No. 30/2004-C.E.:
Notification No. 29/2004-C.E. allows clearance of goods on payment of duty at concessional rates (4% or 8%), while Notification No. 30/2004-C.E. provides full duty exemption if no Cenvat credit is availed on inputs. The applicants claimed they were entitled to avail both notifications simultaneously, as clarified by C.B.E.C. Circular No. 795/28/2004, provided separate accounts were maintained. The Commissioner (Appeals) concluded that the applicants, by not availing Cenvat credit on inputs, were working under Notification No. 30/2004-C.E. The government observed that this conclusion was baseless, as the applicants were declaring their operation under Notification No. 29/2004-C.E. while clearing goods for export and domestic markets.

3. Conditions for Availing Cenvat Credit and the Implications of Not Availing It:
The applicants were not availing Cenvat credit on inputs to claim higher duty drawback and were clearing goods on payment of duty under Notification No. 29/2004-C.E. The government noted that there is no bar on using accumulated Cenvat credit for clearing finished goods manufactured from non-credit availed inputs. The option to avail Cenvat credit is beneficial and at the discretion of the manufacturer.

4. Legal Interpretation of Exemption Notifications and the Right to Opt-Out:
The applicants argued that claiming an exemption notification is a matter of choice and cannot be forced upon an assessee. They cited several tribunal decisions, including Everest Convertors v. CCE and Bombay Dyeing & Manufacturing Co. Ltd. v. CCE, which held that an exemption notification does not delete the tariff rate of duty and an assessee has the right to pay duty at the tariff rate. The government recognized this principle, noting that exemption notifications are beneficial provisions and do not alter the tariff rate.

5. Finality of Previous Judgments and the Doctrine of Estoppel:
The applicants contended that the issue of 4% cash rebate under Notification No. 29/2004-C.E. had attained finality as it was consistently allowed by the original adjudicating authority and not challenged by the department. The government observed that the revisionary authority's order allowing 4% cash rebate was upheld by the Hon'ble High Court of Punjab and Haryana. The government also cited the doctrine of estoppel, preventing the department from taking a contrary stand on an issue that had reached finality in previous judgments, as supported by cases like Marsons Fan Industries v. CCE and Indian Oil Corporation v. CCE.

Conclusion:
The government set aside the impugned orders-in-appeal and allowed the revision applications to the extent that the applicants maintained separate accounts for goods availing of Notification No. 29/2004-C.E. and Notification No. 30/2004-C.E. The applicants were entitled to cash rebate claims for duty paid under Notification No. 29/2004-C.E., with any excess duty paid refundable as a re-credit in the Cenvat account. The revision applications were disposed of accordingly.

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