2013 (2) TMI 308 - CGOVT - Central Excise

Notification No. 33/99-C.E., dated 8-7-1999 C.B.E. & C. Circular dated 8-12-2006 (F. No. 209/11/2005-CX-6) Claim of rebate of duty - The applicants purchased the inputs i.e. menthol - which was manufactured by M/s. Eldorado Holdings Pvt. Ltd., a unit located in the North East who cleared (input) menthol by availing exemption under Notification No. 33/99, dated 8-7-1999 Rebate claim rejected because the same was not admissible in terms of Notification No. 37/2007-C.E. (N.T.), dated 17-9-2007 read with Rule 18 of the Central Excise Rules, 2002 Held that - As per the Central Excise invoices, in the hand of the buyers, all such goods are duty paid, despite the fact that the manufacturers availed exemption by way of refund. The buyers are eligible to avail Cenvat credit of duty so borne by them or rebate of duty so paid on the inputs in case of export Board s instructions dated 8-12-2006 cannot be applied to such units as it clarifies that the term duty paid used in Rule 18 of the Central Excise Rules, 2002 does not include that portion of duty, which is subsequently refunded to the manufacturer (units availing area based exemption). Units located in other parts of the country are permitted to take full credit of duty paid on the inputs (procured from J&K North East, Sikkim and Kutch) under Rule 12 of the Cenvat Credit Rules, 2004. This rule is a special dispensation to ensure that the manufacturing units in North East etc., are not placed at disadvantage vis- -vis units outside such areas. Further, there is no bar on utilizing this credit for payment of duty on goods cleared for exports. The units located in other parts of the country manufacture the goods, and pay the applicable excise duty on export of goods, and therefore, they are eligible to claim rebate of said duties under Rule 18 of the Central Excise Rules, 2002. In the present case, the units located in other parts of the country are the manufacturers, and no portion of duty paid by them is refunded to them, therefore rebate cannot be denied to such units.

Summary

Issues Involved:
1. Admissibility of rebate claim under Notification No. 21/2004-C.E. (N.T.), dated 6-9-2004.
2. Interpretation of C.B.E. & C. Instructions and Notifications.
3. Eligibility of rebate for inputs procured from manufacturers availing area-based exemptions.
4. Compliance with procedural requirements for export.

Issue-wise Detailed Analysis:

1. Admissibility of Rebate Claim:
The applicant, a manufacturer and exporter of menthol and essential oils, claimed a rebate of Central Excise Duty on inputs used in the manufacture of export goods under Notification No. 21/2004-C.E. (N.T.), dated 6-9-2004. The jurisdictional authorities rejected this claim, asserting that the duty paid character of inputs cleared under Notification No. 32/99-C.E. and 33/99-C.E., both dated 8-7-1999, was not established. The appellate authority upheld this decision.

2. Interpretation of C.B.E. & C. Instructions and Notifications:
The applicant argued that Notification No. 37/2007-C.E. (N.T.), dated 17-9-2007, which amended Notification No. 19/2004-C.E. (N.T.), did not amend Notification No. 21/2004-C.E. (N.T.). The applicant further contended that the C.B.E. & C. Instruction dated 8-12-2006, which clarified that "duty paid" does not include the refunded portion, applied only to manufacturers availing the exemption under Notification No. 33/99-C.E., and not to those purchasing goods from such manufacturers. The government noted that the rebate of duty paid on excisable goods cleared from the factory under area-based notifications was allowed by amending Rule 18 of the Central Excise Rules, 2001/2002, retrospectively for the period 8-7-99 to 7-12-2006.

3. Eligibility of Rebate for Inputs Procured from Manufacturers Availing Area-Based Exemptions:
The applicant, located in West Bengal, did not avail of area-based exemptions. The inputs were received under duty-paid invoices, and thus, the goods could not be treated as "non-duty paid." C.B.E. & C. clarified on 3-4-2007 that units located in other parts of the country could claim a rebate for inputs procured from manufacturers availing area-based exemptions. The government concluded that input rebate could not be denied on the ground that duty on inputs was paid by manufacturers availing area-based exemptions.

4. Compliance with Procedural Requirements for Export:
The government noted that it was unclear whether the prescribed procedures under Notification No. 19/2004-C.E. (N.T.) and Notification No. 42/2001-C.E. (N.T.) were followed. The applicant and the department did not submit relevant documents like ARE-2, Central Excise Invoice, and Shipping Bill to ascertain whether the export goods manufactured from the duty-paid inputs were exported.

Conclusion:
The government set aside the impugned orders and allowed the rebate claims, subject to the condition that the procedures laid down in Notification No. 19/2004-C.E. (N.T.) and Notification No. 42/2001-C.E. (N.T.) were followed and the export of goods manufactured from the duty-paid inputs was established. The revision application was disposed of accordingly.