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2013 (5) TMI 91 - HC - Central ExciseDrawback benefit - denial of claim as alleged in the SCN is a concealment, suppression of fact of procurement of inputs without payment of duly for use in the manufacture of export goods and not exporting the said goods on the application in Form ARE-2 which make the Applicant non eligible - Held that - the petitioner used packing material to manufacture and export of skimmed milk powder, full cream milk powder, butter oil etc. The aforesaid packing material was imported by the petitioner. The petitioner deposited the CENVAT credit and excise duty on the aforesaid material. In such circumstances, the petitioner is eligible to receive benefits of drawback in terms of proviso to Rule 3 (1) of the Rules of 1995. The argument of the revenue that since the petitioner paid the excise duty or CENVAT credit subsequently after issuance of show cause notice, hence, the petitioner is not eligible for the aforesaid benefit is not acceptable because there is no such condition mentioned in the proviso to Rule 3 (1) of the Rules of 1995. See Chandrapur Magnet Wires (P) Ltd. Vs. Collector of C. Excise, Nagpur (1995 (12) TMI 72 - SUPREME COURT OF INDIA) wherein held that the claim for exemption of duty on the disputed goods cannot be denied on the plea that the assessee has taken credit of the duty paid on the inputs used in manufacture of these goods. Also see Commissioner of C. Ex., Mumbai Vs. Bombay Dyeing & Mfg. Co. Ltd. reported in 2007 (2007 (8) TMI 2 - Supreme Court). Thus because the petitioner in the present case had paid the excise duty subsequently to issuance of show cause notice and deposited the CENVAT credit, he was eligible the benefit of drawback - In favour of assessee.
Issues Involved:
1. Eligibility for duty drawback under Rule 16 of Customs & Central Excise Duties Drawback Rules, 1995. 2. Compliance with Rule 19(2) of Central Excise Rules, 2002. 3. Applicability of Notification No. 68/2007-CUS (NT) and Notification No. 103/2003-CUS (NT). 4. Validity of the orders passed by the Assistant Commissioner, Commissioner (Appeal-I), and Revisional Authority. Detailed Analysis: 1. Eligibility for Duty Drawback: The petitioner, a public limited company engaged in manufacturing and exporting dairy products, was initially sanctioned a drawback amount. However, notices were later issued for recovery on the grounds of ineligibility under Rule 16 of the Customs & Central Excise Duties Drawback Rules, 1995. The Assistant Commissioner of Customs held that the petitioner was not eligible for the drawback due to non-compliance with Notification No. 42/2001, which required clearance of goods in Form ARE-2. The petitioner had allegedly suppressed the fact of procuring input materials without paying duty and availed double benefits. 2. Compliance with Rule 19(2) of Central Excise Rules, 2002: The respondents argued that the petitioner procured inputs like MS drums and multi-wall papers without paying excise duty under Rule 19(2) of the Central Excise Rules, 2002, and used these in manufacturing exported goods. Hence, the petitioner did not meet the conditions of Rule 19(2), making them ineligible for the drawback. The petitioner contended that they paid the excise duty on these inputs after receiving a show cause notice and were thus eligible for the drawback. 3. Applicability of Notifications: The petitioner claimed eligibility for the drawback under condition Nos. 7(f) of Notification No. 68/2007-CUS (NT) and condition No. 8(f) of Notification No. 103/2003-CUS (NT), which state that drawback is available irrespective of whether the exporter availed CENVAT credit. The department countered that since the petitioner initially did not pay excise duties, they contravened the conditions of these notifications, making them ineligible for the drawback. 4. Validity of Orders: The petitioner challenged the orders passed by the Assistant Commissioner, Commissioner (Appeal-I), and Revisional Authority, which upheld the recovery of the drawback amount. The petitioner argued that the drawback should be reduced in proportion to the lesser duty paid, as per the proviso to Rule 3(1) of the Rules of 1995. Court's Findings: 1. Admitted Facts: The petitioner imported MS drums and multi-wall papers without initially paying excise duty, which they later paid after a show cause notice. 2. Rule 3 of the Rules of 1995: Defines 'drawback' and specifies that no drawback is allowed if goods are manufactured using materials on which duties have not been paid. However, if duties are paid subsequently, the drawback should be adjusted accordingly. 3. Rule 16 of the Rules of 1995: Mandates repayment of erroneously paid drawback amounts along with interest. 4. Rule 19 of the Rules of 2002: Allows export without payment of duty, subject to conditions specified by the Board. 5. Notifications: The court found that the petitioner met the conditions of the relevant notifications since they paid the excise duty and CENVAT credit subsequently. 6. Supreme Court Precedents: The court referred to the judgments in Chandrapur Magnet Wires (P) Ltd. Vs. Collector of C. Excise, Nagpur and Commissioner of C. Ex., Mumbai Vs. Bombay Dyeing & Mfg. Co. Ltd., which support the petitioner's stance that subsequent payment of duties fulfills the conditions for claiming exemptions or drawbacks. Conclusion: The court concluded that the petitioner was eligible for the drawback benefits as per the proviso to Rule 3(1) of the Rules of 1995, despite the initial non-payment of excise duties. The orders passed by the Assistant Commissioner, Commissioner (Appeal-I), and Revisional Authority were quashed. The matter was remanded back to the authority to calculate the drawback benefits due to the petitioner. Order: The petition was disposed of with directions to recalculate the drawback benefits. No order as to costs.
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