2014 (9) TMI 188 - HC - Central Excise

Rebate / refund under Rule 18 while claiming rebate under Rule 19 on Inputs - exports desk diaries through merchant exporter against form C.T.-I without payment of duty - Government (revisionary authority) while rejected the claim was of considered opinion that is the instant case goods were exported under the provisions of Rule 19 of Central Excise Rules, 2002 and therefore the benefit of rebate claim under Rule 18 ibid is not admissible in this case - Held that - Whilst facially the DEPB Scheme and particularly Para 4.1 might be suggestive of the intent to confer the benefit only to exporters to use imported inputs, the larger intention of giving the benefit of duty drawback so as to level the ultimate amended cost of export products in the international market cannot be lost sight of. This is what weighed with the Bombay High Court in Indorama Textiles Ltd. 2006 (5) TMI 8 - HIGH COURT OF JUDICATURE (BOMBAY) , which supported its reasoning by the language adopted in Rule 18 which specifically talks of rebate of duty paid on such excisable goods or duty paid on materials used in the manufacture or processing of such goods . In order to consider the purport of Rule 18 of the 2002 Rules, Notification Nos. 19/2004 and 21/2004, dated 6-9-2004 issued by the Central Government are relevant. These two notifications are issued in exercise of power conferred by Rule 18 of the 2002 Rules for grant of rebate of duty on the excisable goods exported as well as grant of rebate of duty paid on the materials used in the manufacture or processing of such excisable goods respectively. These two notifications pertain to grant of rebate of duty paid on two different items. If the assessee is entitled to get rebate of duty paid on both the items, there was no necessity for the Central Government to issue two separate notifications requiring assessee to claim rebate separately on the duty paid on excisable goods and on inputs - Rebate claim allowed - Decided in favor of assessee.

Summary

Issues:
Challenge against Central Government's order under Section 35EE of Central Excise Act, 1944 regarding refund of duty paid on excisable inputs used in the manufacture of export products.

Analysis:
The writ petition challenged the Central Government's order setting aside the Commissioner of Central Excise's decision granting rebate of duty paid on excisable inputs used in manufacturing export products. The petitioner exported desk diaries through a merchant exporter without duty payment and claimed refund of duty on excisable inputs. The Central Government contended that the DEPB Scheme did not cover excisable inputs, citing Rule 19 of Central Excise Rules. The petitioner relied on a Bombay High Court decision supporting their stand. The revisional authority rejected the petitioner's argument, emphasizing the need to follow specific rules for rebate claims under different schemes.

The key contention revolved around the interpretation of DEPB Scheme and its applicability to excisable inputs. The petitioner argued that the scheme should provide relief uniformly to exporters using both domestically manufactured and imported inputs. The Revenue's counsel supported the revisional authority's reliance on Rule 19 and highlighted the scheme's specific language regarding imported inputs for export products.

The DEPB Scheme's provisions were crucial in the analysis, emphasizing the grant of credit entitlement to exporters based on FOB value and customs duties suffered on inputs. The Court examined Rule 18 and Rule 19 of Central Excise Rules, discussing the rebate of duty and export without payment of duty provisions. The Court agreed with the Bombay High Court's interpretation that exporters should receive benefits regardless of input source to maintain competitiveness in the international market.

In conclusion, the Court set aside the impugned order, directing the respondents to uphold the Commissioner's decision and process or credit duty rebate within a specified timeframe. The Court's decision aimed to ensure fair treatment for exporters using both excisable and imported inputs, preventing unintended discrimination and maintaining market competitiveness.