2013 (11) TMI 376 - CGOVT - Central Excise

Rebate claims Final product i.e Nylon Fishnet twine exported and exempted under Notification No. 30/2004 Non-compliance of Procedure prescribed under Rule 18 of Central Exise Rules, 2002 r.w. Notification No. 21/2004 Assessee claimed the rebate of excise duty paid on excisable goods used in the manufacture of goods exported Held that - Benefit of rebate should not be denied on technical grounds Relying upon UOI v. Suksha International & Nutan Gems & Anr. 1989 (1) TMI 316 - SUPREME COURT - Original authority has observed/admitted the payment of duty on raw materials and export of goods manufactured - There are only procedural violation of not following the procedure laid down in Notification No. 21/2004 - Government notes that goods were cleared under ARE-2 form - assessee contended that input-output ratio is as per Standard Input-Output Norm of EXIM Policy - CBEC Manual of Supplementary Instructions, Chapter 8 has clarified that for sake of convenience and transparency, input-output norms under Export-Import policy may be accepted unless there are specific reasons for variation. substantial benefit of rebate should not be denied for procedural infractions - thus input rebate claim is admissible in respect of duty paid on materials used in the manufacture of goods exported, subject to the condition that input-output ratio does not exceed the SION Norms and there are no other reason for variation - The original authority is directed to sanction the said input rebate claim subject to compliance of conditions Decided in favour of Applicant.

Issues Involved:
1. Denial of rebate claims due to non-compliance with procedural requirements.
2. Allegation that the applicant did not bear the incidence of duty.
3. Relevance of duty exemption on final products in rebate eligibility.
4. Procedural violations and their impact on rebate eligibility.

Detailed Analysis:

1. Denial of Rebate Claims Due to Non-Compliance with Procedural Requirements:
The lower authority rejected the rebate claims on the grounds of non-compliance with Rule 18 of the Central Excise Rules, 2002, and Notification No. 21/2004-C.E. (N.T.). The applicant contended that the fact of export, payment of duty, and timely filing of rebate claims were not disputed. They argued that procedural violations should not lead to the denial of rebate claims, citing several case laws to support their position. The applicant had submitted a letter to the Deputy Commissioner of Central Excise seeking permission to avail rebate on excisable goods used in the export product, and the input-output ratio was as per the Standard Input-Output Norm (SION) H-406 of the EXIM Policy.

2. Allegation That the Applicant Did Not Bear the Incidence of Duty:
The lower authority observed that the applicant did not bear the incidence of duty on the Nylon Yarn, as the duty was paid by M/s. SRF Ltd., who availed Cenvat credit on the Nylon Chips. The applicant argued that they had borne the incidence of duty as per Section 12B of the Central Excise Act, 1944, since the duty paid by the manufacturer (SRF) was passed on to them. The applicant provided evidence that SRF raised debit notes for the duty paid, which were adjusted in their books of accounts.

3. Relevance of Duty Exemption on Final Products in Rebate Eligibility:
The lower authority held that since the final product, Nylon Fishnet Twine, was exempt from duty, the applicant was not eligible for a rebate on the duty paid on the raw materials. The applicant contended that Rule 18 of the Central Excise Rules provides for a rebate of duty paid on any goods used in the manufacture of exported goods, regardless of whether the final product is exempt from duty. The applicant argued that the denial of rebate on this ground was contrary to statutory provisions.

4. Procedural Violations and Their Impact on Rebate Eligibility:
The applicant acknowledged some procedural violations, such as not following the self-sealing procedure and not filing declarations for certain exports. However, they argued that these procedural lapses should not result in the denial of substantial benefits. The government observed that procedural infractions should not deny substantial benefits, especially when the input-output ratio was as per SION norms and there were no other reasons for variation.

Judgment:
The government noted that the original authority had correctly rejected the rebate claim where no duty was paid by the applicant. However, for the export vide ARE-2 No. 3/08-09, dated 26-7-2008, where the applicant directly imported Nylon Yarn and paid duty, the rebate claim was admissible despite procedural violations. The government directed the original authority to sanction the input rebate claim of Rs. 73,630/- for this export, subject to compliance with the input-output ratio norms and other conditions.

Conclusion:
The revision application was disposed of with the modification that the input rebate claim for the export vide ARE-2 No. 3/08-09, dated 26-7-2008, was to be sanctioned, while other claims were rightly held inadmissible due to non-payment of duty by the applicant.

← Previous Next →