2013 (7) TMI 211 - CGOVT - Central Excise

Procedural lapses rejection of rebate claim on the ground that applicants failed to incorporate self-certification on ARE-2 as prescribed in para (iii) of the Notification No. 42/2001-C.E. (N.T.) r/w para (5) of the Notification No. 21/2004-C.E. (N.T.) Also filing of declaration and getting the input-output verification done after export of goods. - Held that - A manufacturer intending to claim input rebate should file a declaration with the jurisdictional Deputy/Assistant Commissioner of Central Excise for verification and approval of input-output ratio prior to export of the goods and obtain the permission of the Deputy/Assistant Commissioner of Central Excise for manufacture or processing and export of finished goods. However, the said approval was granted by department subsequently. So this condition stands satisfied. As regards, non-mentioning of self-certification in ARE-2, Government notes that it is a procedural requirement as laid down in Notification No. 42/2001-C.E. (N.T.). But, it is a record that goods have been exported. Government notes there is no dispute about the use of duty paid goods in the manufacture of exported goods. Hence, Rebate claim rightly allowed. Against the Revenue.

Summary

Issues:
1. Rebate claim rejection based on procedural lapses.
2. Interpretation of Notification No. 42/2001-C.E. (N.T.).
3. Compliance with Notification No. 21/2004-C.E. (N.T.).
4. Approval of input-output ratio before export.
5. Incorporation of self-certification in ARE-2.
6. Commissioner (Appeals) decision in favor of the respondent.
7. Revision application by the applicant department.
8. Review of the impugned orders by the Central Government.

Issue 1: Rebate claim rejection based on procedural lapses
The respondent, engaged in manufacturing medicines, filed a rebate claim for duty paid on inputs used in the manufacture of export goods. The claim was rejected by the adjudicating authority citing the failure to incorporate self-certification on ARE-2 as required by the relevant notifications.

Issue 2: Interpretation of Notification No. 42/2001-C.E. (N.T.)
The applicant department argued that the rebate claim cannot be granted as the party failed to follow the procedure laid down under para (iii) of Notification No. 42/2001-C.E. (N.T.), which mandates self-certification in the ARE-1 for exporters.

Issue 3: Compliance with Notification No. 21/2004-C.E. (N.T.)
The department contended that the respondent did not fulfill the conditions of Notification No. 21/2004-C.E. (N.T.) as the export of goods was done before obtaining permission from the Deputy Commissioner, as required by the notification.

Issue 4: Approval of input-output ratio before export
The notification stipulates that the correctness of the input and output ratio must be verified by the Assistant or Deputy Commissioner before export. In this case, the export was carried out before such verification, leading to non-compliance with the notification.

Issue 5: Incorporation of self-certification in ARE-2
The non-inclusion of self-certification in ARE-2 was highlighted as a procedural lapse by the department. However, the Commissioner (Appeals) considered the actual export of goods and the use of duty-paid goods in manufacturing the exported products, ultimately allowing the rebate claim.

Issue 6: Commissioner (Appeals) decision in favor of the respondent
The Commissioner (Appeals) ruled in favor of the respondent, considering the procedural lapses as minor and condonable, especially in light of subsequent exports where the lapses were rectified.

Issue 7: Revision application by the applicant department
The applicant department filed a revision application challenging the decision of the Commissioner (Appeals) under Section 35EE of the Central Excise Act, 1944, citing the failure to appreciate the requirements of the relevant notifications.

Issue 8: Review of the impugned orders by the Central Government
After careful consideration, the Central Government upheld the decision of the Commissioner (Appeals) as the respondent eventually obtained the required approval for the input-output ratio, and the export of goods was not in dispute. The Government found no infirmity in the Commissioner (Appeals) decision and rejected the revision application for lacking merit.