2014 (9) TMI 224 - HC - Central Excise

Denial of rebate claim - 100% EOU - Export initially sanctioned by the original authority - department contends that the petitioner, being a 100% EOU, was not required to export the goods on payment of duty in terms of absolute exemption provided under the notification No.24/2003-CE dt. 31/03/2003 and hence, the petitioner is not liable for rebate claims - Held that - In view of notification No.24/2003-CE dt. 31/03/2003 and Sec. 5A(i) of the Act of 1944, the exempted goods manufactured by 100% EOU and cleared from export from whole of duty unconditionally. Therefore, in view of the provisions of sub-sec. (1A) of Sec. 5A, the petitioner/manufacturer was not liable to pay any duty. In our view, there is no condition for availing exemption from payment of duty of goods cleared for exports. The 100% EOU has to clear all the goods manufactured by them for exports as per the EOU scheme. Such units can clear the goods in DTA with prior permission of the Development Commissioner and since no prior permission of Commissioner was sought, therefore, the revisional authority has correctly come to this conclusion. Since there is no condition in the notification for availing exemption of goods manufactured by 100% EOU and cleared for export, the provision of sub-sec. (1A) of Sec. 5A(1), are applicable and no duty was required to be paid on such exported goods. Rebate claimed is not admissible in terms of Rule 18 of the Central Excise Rules, 2002 read with notification No.19/2004 -CE(NT) dated 06/09/2004 - Decided against assessee.

Summary

Issues:
Challenge to order by revisional authority regarding rebate claims for export goods by 100% export oriented unit (EOU) under notification No.24/2003-CE.

Analysis:
1. The writ petition challenged the order of the Joint Secretary to the Government of India, acting as a revisional authority, which reversed the Commissioner (Appeals)'s decision in favor of the petitioner, a 100% EOU exporting Cotton Teri Towel and claiming rebate under notification No.24/2003-CE.

2. The respondent-department contended that since the petitioner was a 100% EOU, they were not required to pay duty for exports under the absolute exemption of the notification. The revisional authority supported this argument, leading to the petitioner's appeal against the decision.

3. The revisional authority found that the petitioner, as a 100% EOU until a specific date, was not liable to pay any duty under the exemption provided by the notification. The petitioner supported the order in appeal and contended that it was legal and proper, deserving to be upheld.

4. The Court noted the absence of representation on behalf of the petitioner and after hearing the respondent-department's submissions, found no error in the revisional authority's decision.

5. The Court examined the relevant notification No.24/2003-CE and Section 5A(1) of the Central Excise Act, which exempted goods manufactured by 100% EOU from duty for export unconditionally.

6. Quoting Section 5A(1A) of the Act, the Court emphasized that when an exemption is granted absolutely, the manufacturer is not required to pay duty on such goods, supporting the revisional authority's decision.

7. The Court concluded that since there were no conditions in the notification for availing exemption for goods manufactured by a 100% EOU and cleared for export, the rebate claimed was not admissible under the Central Excise Rules.

8. Referring to the judgment in ITC Ltd. v. Commissioner of Central Excise, the Court highlighted the importance of strict construction of statutory language and legislative intent in interpreting fiscal statutes, supporting the revisional authority's decision.

9. The Court also cited circular F. No.209/26/09-Cx-6, which clarified that EOUs did not have the option to pay duty and claim rebate, further supporting the revisional authority's interpretation and dismissing the writ petition for lack of merit.