2013 (7) TMI 272 - CGOVT - Central Excise

Refund u/s 11B of the Central Excise Act, 1944 in cash or through Cenvat Credit - On verification of the documents it was noticed that the exports are made against Advance Licence Scheme under Notification 43/2001-C.E. (N.T.), dated 26-6-2001 under which the inputs required for the manufacture of the said exported goods were procured duty free - applicants contrary to the provisions of the Act, have discharged the duty on export of goods and claimed the same as rebate - not correct. Held that - Duty paid without authority of law cannot be treated a duty but it has to be treated as deposit made with Government on his own volition - As per the case of M/s. Nahar Industries Enterprises Ltd. v. UOI reported a 2008 (9) TMI 176 - PUNJAB AND HARYANA HIGH COURT , Petitioner paid lesser duty on domestic product and higher duty on export product which was not payable - Assessee not entitled to refund thereof in cash regardless of mode of payment of said higher excise duty - Petitioner is entitled to cash refund only of the portion deposited by it by actual credit and for remaining portion, refund by way of credit is appropriate. - refund in cash of higher duty paid on export product which was not payable, is not admissible and refund of said excess paid duty/amount in Cenvat Credit is appropriate. As such the excess paid amount/duty is required to be returned to the respondent in the manner in which it was paid by him initially - Applicants may be allowed to take re-credit of said amount in their Cenvat credit account. Decided against the Assessee.

Summary

Issues Involved:
1. Rejection of rebate claim under Section 11B of the Central Excise Act, 1944.
2. Applicability of Notification No. 43/2001-C.E. (N.T.) versus Notification No. 93/2004-Cus.
3. Eligibility for rebate on exported goods.
4. Re-credit of duty paid without authority of law.

Detailed Analysis:

1. Rejection of Rebate Claim:
The applicant filed a rebate claim for Rs. 90,432/- under Section 11B of the Central Excise Act, 1944, for duty paid on exported goods. The lower authority disallowed the rebate claim, stating that the applicants discharged the duty contrary to the Act's provisions and claimed the same as a rebate.

2. Applicability of Notifications:
The adjudicating authority noted that the exported goods were manufactured using inputs procured without payment of duty under Notification No. 43/2001-C.E. (N.T.), which requires goods to be exported under bond or letter of undertaking per Rule 19 of the Central Excise Rules, 2002. The applicants argued that they imported goods under Notification No. 93/2004-Cus., and hence, Notification No. 43/2001-C.E. (N.T.) was not applicable. They contended that the relevant notification for their case was Notification No. 93/2004-Cus., dated 10-9-2004, which permits rebate on the finished goods.

3. Eligibility for Rebate:
The applicants cited several case laws and circulars to support their claim that the restriction on rebate under Notification No. 93/2004-Cus. is limited to inputs and not the final products. They argued that they did not claim any rebate on inputs but only on the finished goods. The Commissioner (Appeals) upheld the original order, stating that the applicants did not provide evidence to show that inputs were imported under Notification No. 93/2004-Cus.

4. Re-credit of Duty Paid:
The applicants requested that if duty was not required to be paid, it should be returned to them as Cenvat credit. The Government observed that duty paid without authority of law should be treated as a deposit and must be returned. Citing the Rajasthan High Court's judgment in Commissioner v. Suncity Alloys Pvt. Ltd., the Government noted that the Union of India is not entitled to retain the amount if no duty was leviable. The Punjab and Haryana High Court also held that refund in cash is not admissible, and refund by way of credit is appropriate.

Conclusion:
The Government concluded that the applicants may be allowed to take re-credit of the amount in their Cenvat credit account. The impugned orders were modified to this extent, and the revision application succeeded.