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2013 (6) TMI 33 - HC - Central Excise100% EOU - Export - Rebate / refund under Rule 18 - exempted goods - revision authority rejected the rebate claim on the ground that goods in question are exempt from the payment of duty, in terms of the Notification No.24/2003-CE, dated 31.3.2003, and therefore, the petitioner cannot choose to pay the duty and claim the rebate thereon. - held that - Revenue is bound to refund the rebate payable to the petitioner, in cash, subject to certain conditions to safe guard the interests of the respondent department. In view of the fact that the petitioner had paid the excise duty on the goods exported by it, and as it may not be of use to the petitioner if the respondent department keeps the amount of rebate claim in credit, as the petitioner does not have local sales, the respondent department is directed to refund the duty paid by the petitioner, on the goods expored by it, as expeditiously as possible, subject to certain conditions, which may be necessary to safeguard the interests of the respondent Department. - Decided in favor of assessee.
Issues:
1. Claim for rebate of duty paid by a 100% Export Oriented Unit. 2. Interpretation of Notification No.24/2003-CE regarding exemption from excise duty. 3. Application of Rule 18 of the Central Excise Rules, 2002 in claiming rebate. 4. Utilization of CENVAT credit for duty payment and rebate claim. 5. Legal validity of the rebate claim by the petitioner. Analysis: 1. The petitioner, a 100% Export Oriented Unit engaged in manufacturing bulk drugs and formulations, claimed rebate of excise duty paid on goods exported. The Government of India provided exemptions on excise and customs duty for export-oriented units but imposed Service Tax. The petitioner availed CENVAT credit on Service Tax paid for inputs. The dispute arose when the rebate claim was rejected by authorities citing exemption under Notification No.24/2003-CE. 2. The Notification No.24/2003-CE granted exemption to goods manufactured by Export Oriented Units. The authorities contended that since the goods were exempt from excise duty, the petitioner couldn't pay duty and claim rebate. The petitioner argued that the exemption was conditional, not absolute, and thus, Section 5A(1-A) of the Central Excise Act did not apply. The court agreed, emphasizing that the exemption wasn't absolute and upheld the petitioner's right to claim rebate under Rule 18. 3. The petitioner followed the procedures for export, paid duty on goods, and sought rebate. The authorities rejected the claim based on the exemption. The court held that the petitioner, as an exporter, had the choice to pay duty and claim rebate under Rule 18, which was legally valid. The petitioner's compliance with Rule 5 of the CENVAT Credit Rules, 2004, further supported their eligibility for rebate. 4. The petitioner's utilization of CENVAT credit for duty payment on exported goods was justified. The court noted that when goods are not absolutely exempt from duty, paying duty on exports using available credit and claiming rebate is legitimate. The authorities' argument against the rebate claim based on credit utilization was dismissed, highlighting the petitioner's right to export on payment of duty and claim rebate under Rule 18. 5. Ultimately, the court directed the respondent department to refund the duty paid by the petitioner on exported goods promptly, considering the petitioner's lack of local sales. The judgment favored the petitioner's claim for rebate, emphasizing the legality and validity of their actions in paying duty, claiming rebate, and utilizing CENVAT credit for duty payment on exported goods.
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