2013 (5) TMI 459 - HC - Central Excise

Rebate claims under Rule 18 of the Central Excise Rules 2002 - rejection of claim in the absence of the original and duplicate copies of the ARE-1 forms - contention of the Petitioner that the original and duplicate copies of the ARE-1 forms were lost by their CHA and the Petitioner had lodged an FIR - Held that - Non-production of the ARE-1 form would not ipso facto result in the invalidation of the rebate claim. In such a case, it is open to the exporter to demonstrate by the production of cogent evidence to the satisfaction of the rebate sanctioning authority that the requirements of Rule 18 of the Central Excise Rules 2002 read together with the notification dated 6 September 2004 have been fulfilled. As the primary requirements which have to be established by the exporter are that the claim for rebate relates to goods which were exported and that the goods which were exported were of a duty paid character. As at this stage that the attention of the Court has been drawn to an order dated 23 December 2010 passed by the revisional authority in the case of the Petitioner itself by which the non-production of the ARE-1 form was not regarded as invalidating the rebate claim and the proceedings were remitted back to the adjudicating authority to decide the case afresh after allowing to the Petitioner an opportunity to produce documents to prove the export of duty paid goods in accordance with the provisions of Rule 18 read with notification dated 6 September 2004 Order No.1754/10-CX dated 20 December 2010 of D.P. Singh, Joint Secretary, Government of India under Section 35 EE of the Central Excise Act 1944 also placed on the record other orders passed by the revisional authority taking a similar view Garg Tex-O-Fab Pvt. Ltd. (2010 (10) TMI 880 - GOVERNMENT OF INDIA), Hebenkraft 2001 (3) TMI 124 - GOVERNMENT OF INDIA , Shreeji Colour Chem Industries v. CCE 2007 (10) TMI 523 - CESTAT, AHMEDABAD , Model Buckets Attachments (P) Ltd. v. CCE (2007 (2) TMI 520 - CESTAT, BANGALORE) and CCE v. TISCO 2003 (2003 (3) TMI 191 - CEGAT, KOLKATA) Thus as in the present case the Petitioner has inter alia relied upon the bills of lading, banker's certificate in regard to the inward remittance of export proceeds and the certification by the customs authorities on the triplicate copy of the ARE-1 form the rebate sanctioning authority directed to reconsider the claim.

Issues Involved:
1. Legality and validity of the order dismissing revision applications for rebate claims.
2. Procedural requirements for claiming rebate under Rule 18 of the Central Excise Rules, 2002.
3. Submission of original and duplicate ARE-1 forms.
4. Documentary evidence supporting the export and duty-paid character of goods.
5. Distinction between mandatory conditions and procedural requirements.

Issue-wise Detailed Analysis:

1. Legality and Validity of the Order Dismissing Revision Applications for Rebate Claims:
The Petitioner questioned the legality and validity of the order passed by the Joint Secretary to the Government of India on 24 May 2012, which dismissed the revision applications from orders of the appellate authority confirming the rejection of rebate claims. The Petitioner argued that the rejection was based on the non-submission of original and duplicate ARE-1 forms, which they claimed were lost by their CHA.

2. Procedural Requirements for Claiming Rebate under Rule 18 of the Central Excise Rules, 2002:
Rule 18 provides for the rebate of duty on excisable goods or materials used in the manufacture of such goods, subject to conditions and procedures specified in the notification. The notification dated 6 September 2004 outlines the conditions and limitations for granting a rebate and the procedure for sealing goods, presenting applications, and verifying exports.

3. Submission of Original and Duplicate ARE-1 Forms:
The rejection of rebate claims was primarily due to the non-submission of original and duplicate ARE-1 forms. The revisional authority held that these forms are essential to establish the export of duty-paid goods. However, the Petitioner argued that the forms were lost and sufficient documentary evidence was provided to prove the export and duty-paid character of the goods.

4. Documentary Evidence Supporting the Export and Duty-Paid Character of Goods:
The Petitioner provided various documents, including the bill of lading, mate's receipt, bank receipt, and customs endorsement on the triplicate ARE-1 form, to establish the export and duty-paid character of the goods. The Court noted that the procedure specified in the notification and the CBEC's Manual of Instructions is to facilitate the processing of rebate claims and ensure that the goods were exported and were of a duty-paid character.

5. Distinction Between Mandatory Conditions and Procedural Requirements:
The Court emphasized that Rule 18 distinguishes between conditions and limitations for granting a rebate and the procedure for doing so. While conditions and limitations are mandatory, procedural requirements are directory. The Court cited the Supreme Court's judgment in Mangalore Chemicals & Fertilizers Ltd. v. Deputy Commissioner, which differentiates between substantive conditions and procedural requirements.

Conclusion:
The Court held that the mere non-production of ARE-1 forms should not invalidate a rebate claim if the exporter can provide sufficient documentary evidence to prove the export and duty-paid character of the goods. The rejection of the rebate claim dated 8 April 2009 was upheld due to the failure to comply with the primary requirement of identity verification by customs authorities. However, for other claims, the case was remanded to the adjudicating authority to reconsider the claims based on the provided documents, without rejecting them solely for the non-production of original and duplicate ARE-1 forms. The impugned order of the revisional authority dated 22 May 2012 was quashed and set aside, and the proceedings were remanded for fresh consideration.

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