2012 (10) TMI 497 - CGOVT - Central Excise

Rebate claim - whether reversal of equal amount of cenvat credit availed on inputs/capital goods under Rule 3(4) of Cenvat Credit Rules, 2002 is to be treated as payment of duty for the purpose of Rule 18 of Central Excise Rules, 2002 read with Notification No. 19/2004-C.E. (N.T.), - Held that - Amount reversed under Rule 3(4) of Cenvat Credit Rules, 2002 when inputs are removed as such, is to be treated as payment of duty of excise for the purpose of Rule 18 of Central Excise Rules, 2002 read with Notification No. 19/2004-C.E. (N.T.), - Circular No. 283/1996 dated 31st December, 1996 has held that amount paid under Rule 57F(1)(ii) of Central Excise Rules, 1944 (which is analogous to the Cenvat Credit Rules, 2002/Cenvat Credit Rules, 2004) on export of inputs/capital goods by debiting RC 23A Part II would be eligible for rebate - denial of rebate on the ground that the duty has been paid by reversing the credit cannot be sustained. Rejection of the rebate claims Held that - All the above clearances were made vide proper Central Excise Invoices, ARE-1s and other particulars submitted to the jurisdictional Central Excise Office. The goods were examined under Central Excise supervision and duty payment was also certified by Central Excise as per endorsements on the ARE-1s. The assessments/value of clearances were stated to be proper transaction value and due duty was calculated/paid as above - such clearances of used capital goods from the factory of their uses which is other than the factory of manufacture of said capital goods when exported are eligible for rebate

Summary

Issues Involved:
1. Whether the goods are required to be exported directly from the factory of manufacture or any other place.
2. Whether the Cenvat reversed is "duty" under Notification No. 19/2004-C.E. (N.T.) for rebate.
3. Whether the duty was paid under Rule 3(4) of CCR or under Rule 8 of the Central Excise Rules, 2002.
4. Whether the Commissioner (Appeals) erred in rejecting the appeal on grounds not mentioned in the Show Cause Notice or Order-in-Original.
5. Whether the rebate claim is admissible when the duty is paid by reversing the credit.
6. Whether the rejection of the rebate claim on the ground that the amount paid is not "duty" but "amount" under Rule 3(4) of Cenvat Credit Rules, 2004 is valid.

Detailed Analysis:

1. Export Directly from Factory of Manufacture:
The applicants argued that the goods were exported directly from their factory under the supervision of Central Excise officers, and the appropriate duty was paid under Central Excise invoice. The Notification No. 19/2004-C.E. (N.T.) requires excisable goods to be exported after payment of duty directly from a factory or warehouse. The applicants contended that the goods were exported directly from their factory, complying with the notification.

2. Cenvat Reversed as "Duty":
The applicants argued that the duty paid on the transaction value was shown in the ARE-1 and certified by the Central Excise officers. The reversal of an amount equal to the credit availed on inputs/capital goods under Rule 3(4) of Cenvat Credit Rules, 2002 should be treated as payment of duty for the purpose of Rule 18 of Central Excise Rules, 2002. The government upheld this view, referencing previous orders and a High Court judgment that confirmed the amount paid by reversing the credit is considered as payment of duty for granting rebate.

3. Duty Paid under Rule 3(4) or Rule 8:
The applicants clarified that they paid the duties on transaction value in terms of Rule 18 of the Central Excise Rules, 2002 under the prescribed Central Excise invoice. The government found that the duty was paid on the transaction value and the clearances were made under proper Central Excise Invoices and ARE-1s, which were certified by Central Excise officers.

4. Grounds Beyond Show Cause Notice:
The applicants argued that the Commissioner (Appeals) rejected the appeal on grounds not mentioned in the Show Cause Notice or Order-in-Original, which is legally unsustainable. The government agreed, stating that the order of the adjudication/appellate authority cannot be beyond the Show Cause Notice, as held in previous Supreme Court cases.

5. Rebate Claim Admissibility:
The government noted that the issue of whether the reversal of an amount of cenvat credit availed on inputs/capital goods is treated as payment of duty for the purpose of Rule 18 has been settled in favor of the applicants in previous orders and upheld by the High Court. The government concluded that the substantial benefit of due rebates should not be denied when the exporter has submitted proof of actual export.

6. Amount Paid as "Duty" or "Amount":
The applicants argued that the documents, particularly invoices, clearly indicated the value of goods exported and the "duty" paid thereon. The government found that the duty paid by reversing the credit does not lose its character as duty, and the rebate is allowable. The government set aside the impugned orders and allowed the revision application, granting the rebate claim to the applicants.

Conclusion:
The government set aside the impugned orders and allowed the revision application, granting the rebate claim to the applicants under Rule 18 of Central Excise Rules, 2002 read with Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004. The revision application was allowed with consequential reliefs.