2014 (2) TMI 2 - CGOVT - Central Excise

Claim of simultaneous benefits in alternate i.e. export without payment of duty against LUT as well as claim of rebate on payment of duty - Denial of recredit - Denial of duty drawback - Non-following of procedure export of exempted goods - Notification No. 42/2001-C.E. (N.T.), dated 26-6-2001 - Held that - respondents have made clearance of the impugned goods to the SEZ Unit under specific UT-1 Bond No. 28/2008, dated 3-4-2008 under Drawback scheme without payment of duty under Notification No. 42/2001-C.E. (N.T.), dated 26-6-2001 issued under Rule 19 of the Central Excise Rules, 2002. The respondents contended that they have subsequently paid the applicable duty of Rs. 487439/- vide debit entry No. 598 dated 31-3-2009 in Cenvat account with disclaimer certificate that they are not claiming Duty Drawback on the said export. There are two export benefit schemes which are stipulated in Rule 18 and Rule 19 of the Central Excise Rules and Notification issued thereunder. According to the Rule 18 when any excisable goods are exported on payment of duty or duty is paid on materials used in manufactured goods which are exported, rebate is granted subject to condition or limitation if any fulfilment of procedure specified in concerned Notification i.e. in Notification 19/2004-C.E. (N.T.), dated 6-9-2004. Whereas as per Rule 19 excisable goods/materials can be exported without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises subject to conditions, safeguard and procedures as specified by Notification by the Board and for this very purpose Notification 42/2001-C.E. (N.T.), dated 26-6-2001 is applicable. The manufacturer/exporter is free to opt one of the Rules, which is more beneficial/suitable to him. Once anyone of the two options is exercised it attains finality and cannot be reverted back subsequently. It is very much clear that the respondents have made clearance of goods under UT-I Bond No. 28/2008, dated 3-4-2008 hence they have exercised the option to export goods under Rule 19 and in no way it was further open for him to pay duty and claim rebate thereupon. In such a situation payment of duty cannot be treated as duty. But it has to be treated simply a voluntary deposit with the Government - 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 - Following decision of M/s. Nahar Industrial Enterprises Ltd. v. UOI 2008 (9) TMI 176 - PUNJAB AND HARYANA HIGH COURT - Decided in favour of revenue.

Summary

Issues Involved:
1. Eligibility for rebate claim on goods supplied to SEZ.
2. Simultaneous claim of Duty Drawback and rebate.
3. Admissibility of rebate under Rule 18 and Rule 19 of Central Excise Rules, 2002.
4. Procedural compliance and submission of disclaimer certificates.
5. Conversion of export promotion schemes.

Issue-wise Detailed Analysis:

1. Eligibility for Rebate Claim on Goods Supplied to SEZ:
The respondents filed a rebate claim for goods cleared to SEZ under UT-1 Bond and Duty Drawback scheme, without payment of duty under Notification No. 42/2001-Central Excise. The original authority rejected the rebate claim under Rule 18 of Central Excise Rules, 2002. The Commissioner (Appeals) allowed the rebate subject to fulfillment of other criteria. The Department contended that paying duty later and claiming rebate was an afterthought to convert accumulated Cenvat credit into cash.

2. Simultaneous Claim of Duty Drawback and Rebate:
The Department argued that Rule 12 of Customs, Central Excise Duties and Service Tax Drawback Rules, 1955 prohibits claiming both Duty Drawback and rebate on the same goods. The respondents initially indicated exports under the Duty Drawback scheme but later submitted a disclaimer certificate stating they did not claim Duty Drawback. The Department viewed this as an afterthought to mislead and claim undue benefits.

3. Admissibility of Rebate under Rule 18 and Rule 19 of Central Excise Rules, 2002:
The respondents cleared goods under Rule 19 without payment of duty and later paid duty to claim rebate under Rule 18. The Department maintained that once goods are cleared under Rule 19, paying duty later to claim rebate is not permissible. The Government noted that Rule 18 and Rule 19 are distinct and mutually exclusive; once an option is exercised, it attains finality and cannot be reverted. The payment of duty in this context is treated as a voluntary deposit, not as duty.

4. Procedural Compliance and Submission of Disclaimer Certificates:
The respondents submitted a disclaimer certificate stating they did not claim Duty Drawback. The Department argued this was an afterthought, as initial documents indicated exports under the Duty Drawback scheme. The Government observed that procedural deviations should not defeat the purpose of export promotion schemes if substantive conditions (manufacture, payment of duty, and proof of supply) are met.

5. Conversion of Export Promotion Schemes:
The Department contended that conversion from one export promotion scheme to another requires permission from the competent authority and should be sought if the initial scheme's benefit is denied. The respondents did not obtain such permission, and their clearances under the Duty Drawback scheme remained unchanged. The Government upheld that the respondents could not claim benefits under Rule 18 after opting for Rule 19.

Conclusion:
The Government directed the original authority to allow the respondents to recredit the duty amount in their Cenvat credit account, as the excess paid amount cannot be retained by the Government without legal authority. The impugned order-in-appeal was set aside, and the order-in-original was restored with this modification. The revision application was disposed of accordingly.