2014 (11) TMI 535 - HC - Central Excise

Rejection of rebate claim on ATF supplied to foreign going Aircraft - goods were not supplied directly from the factory - goods were not supplied directly from the factory - Held that - The Revisional Authority so also the Appellate Authority have rendered consistent factual findings. They are that the Petitioner-Applicant has supplied the fuel to aircrafts on foreign run by transferring duty paid products to the Aviation Fuelling Station, Mumbai-Delhi (AFS) and which has been registered as a warehouse of excisable goods. Now, such a finding of fact based on the records would denote compliance with the condition in para 2(a) of the Notification No.19/2004 C.Ex.(NT) dated 6 September 2004. if excisable goods are exported after payment of duty directly from a factory or warehouse, then nothing more is required to be considered and verified. That in this case, records have been verified and which demonstrate that the export of duty paid products is from a recognized warehouse namely AFS at Delhi. Therefore, the Appellate as well as the Revisional Authority could not have held that there is no compliance with the condition. The Revisional Authority has further observed that the Circular issued by the Central Board of Excise and Customs dated 30 January 1997 has held that this condition can be relaxed if the goods exported are identifiable and co-relatable with the goods cleared from the factory of manufacturer. The Revenue has not produced before us any document, which superseded the Notification dated 6 September 2004 or modifies or amends the same in any manner. Further there is much substance in the argument of Mr.Patil that earlier identical finding and which is to be found in the order of the Assistant Commissioner, Central Excise, Chembur-I Dn.Mumbai-II dated 3 February 2006, at page 63 of the Paper Book, was set aside by the Revisional Authority. The Revisional Authority has in its order passed in favour of the Petitioner before us has held that the refund claim was rejected on procedural infractions, which are condonable. In these circumstances and when there is an identical view taken in the case of M/s.BPCL, we are unable to sustain the impugned order. rebate claim of the Petitioner is granted by quashing and setting aside all orders namely that of the Assistant Commissioner, Appellate Authority as also the Government. The incidental communication dated 11 March 2010 is also set aside - Decided in favour of assessee.

Summary

Issues Involved:
1. Eligibility of rebate claim under Rule 18 of the Central Excise Rules, 2002.
2. Compliance with Notification No.19/2004-CEX (N.T.) dated 6-9-2004.
3. Requirement of permission from the Central Board of Excise and Customs (CBEC).
4. Establishment of co-relation between goods cleared from the factory and those supplied to foreign run aircraft.
5. Procedural infractions and their condonability.

Detailed Analysis:

1. Eligibility of Rebate Claim under Rule 18 of the Central Excise Rules, 2002:
The petitioner, a Government of India undertaking, filed a claim for a refund of Rs. 10,93,745/- being the duty paid on Aviation Turbine Fuel (ATF) supplied to aircraft on foreign run. The claim was filed under Rule 18 of the Central Excise Rules, 2002. Despite complying with the mandatory and procedural requirements, the application was initially rejected by the Assistant Commissioner on 3 February 2006, and the appeal was dismissed by the Commissioner of Central Excise (Appeals) on 21 June 2006. The Revisional Authority also rejected the claim on 11 November 2009.

2. Compliance with Notification No.19/2004-CEX (N.T.) dated 6-9-2004:
The Notification stipulates that excisable goods must be exported after payment of duty directly from a factory or warehouse, except as otherwise permitted by the Central Board of Excise and Customs (CBEC). The petitioner argued that they complied with this condition as the ATF was exported from a recognized warehouse (Aviation Fuelling Station, Delhi).

3. Requirement of Permission from the Central Board of Excise and Customs (CBEC):
The Appellate Authority observed that the goods were not exported directly from the factory and the AFS is not a warehouse, hence permission from CBEC was a pre-requisite. The Revisional Authority noted that the petitioner failed to submit documents to establish the co-relation between the goods cleared from the factory and those supplied to foreign run aircraft, thus failing to comply with the mandatory conditions of the Notification.

4. Establishment of Co-relation between Goods Cleared from the Factory and those Supplied to Foreign Run Aircraft:
The Revisional Authority and the Appellate Authority held that the petitioner could not prove that the ATF exported had suffered duty and was the same ATF actually exported. However, the High Court found that the records demonstrated compliance with the condition in para 2(a) of the Notification, showing that the export of duty-paid products was from a recognized warehouse.

5. Procedural Infractions and their Condonability:
The High Court noted that the Revisional Authority's findings were inconsistent and contradictory. The Court emphasized that the Notification dated 6 September 2004 does not indicate that the refund can be denied merely because the goods were exported from a warehouse. The Court also highlighted that earlier identical findings in the case of the petitioner were set aside by the Revisional Authority, which held that the refund claim was rejected on procedural infractions that are condonable.

Conclusion:
The High Court concluded that the petitioner complied with all conditions, and thus, the rebate claim should have been granted. The Court quashed and set aside the orders of the Assistant Commissioner, Appellate Authority, and the Government, and directed that the refund amount be disbursed within eight weeks. The Court refrained from imposing costs but expressed that the Government should not harass its own entities like the petitioner.