2014 (12) TMI 28 - CGOVT - Central Excise

Claim of rebate on inputs - Polyster cotton blended yarn - non compliance of procedure of Notification 21/2004-C.E. (N.T.), dated 6-9-2004 - Exemption under Notification No. 30/2004-C.E., dated 9-7-2004 - Held that - The said ARE-1 forms were endorsed with remark read as Export under NIL Rate of duty vide Notification No. 30/2004-C.E., dated 9-7-2004. After exporting goods in Jan. & Feb., 2011, they realized that they were entitled for refund of duty paid on inputs viz., polyster staple fibre, and they were required to follow the procedure laid down under Notification 21/2004-C.E. (N.T.), dated 6-9-2004. The said rebate claims filed by applicant on 6-5-2011, 6-6-2011 and 21-6-2011 were rejected by original authority for non-compliance of the provisions of Notification 21/2004-C.E. (N.T.), dated 6-9-2004. Commissioner (Appeals) upheld the said order. Government notes that substantial condition for claiming input rebate is that paid inputs are used in the manufacturing of exported goods. The lower authorities have not discussed anything about use of duty paid materials in the manufacture of exported goods. Applicant claimed that they had submitted documentary evidences along with rebate claims to prove the use of duty paid materials i.e. polyster staple fibre in the manufacturing of exported goods. Applicant has now submitted copies of documents mentioned on Exhibit-1, 2 and 3 of this revision application, which are claimed as duty paying documents. The fundamental condition for granting input rebate claim is that duty paid inputs are used in the manufacture of exported goods. So, the original authority is required to conduct verification from the original records to ensure the compliance of above said condition of Rule 18 of the Central Excise Rules, 2002 read Notification 21/2004-C.E. (N.T.), dated 6-9-2004. As such case is required to be remanded for fresh consideration - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Claim for rebate of duty paid on inputs used in manufacturing exported goods under Notification No. 21/2004-C.E. (N.T.)

Analysis:
The case involved a revision application by a company against the rejection of their rebate claims for duty paid on inputs used in manufacturing Polyester Cotton Blended Yarn for export. The company had not availed credit of inputs used in production and had purchased polyester staple fibre on duty payment. They claimed rebate under Notification No. 21/2004-C.E. (N.T.) for the duty paid on the polyester staple fibre used in manufacturing the exported yarn. The original authority rejected the rebate claims, which was upheld by the Commissioner (Appeals), leading to the revision application.

The company argued that the denial of rebate for procedural infractions was unjust, citing precedents where substantial benefit of rebate should not be denied for procedural lapses. They contended that they had submitted evidence to prove the correct duty rebate claim and that procedural errors should not deprive them of the benefit of boosting exports. They highlighted a case where the Government emphasized avoiding technical interpretations of export-oriented schemes.

The Government noted that the company exported goods under specific rules and realized later that they were entitled to a refund of duty paid on inputs, following a specific procedure under Notification No. 21/2004-C.E. (N.T.). The company had not filed necessary declarations or used the correct forms for exports, leading to rejection of rebate claims. However, the Government found merit in the company's argument that the approved input-output ratio for subsequent exports should be accepted if the same inputs and outputs were involved.

Regarding the submission of original and duplicate forms for export, the Government referred to a Bombay High Court judgment stating that rebate claims should not be rejected solely on the ground of non-submission of forms if conditions for rebate were otherwise fulfilled. The Government emphasized the need for the original authority to consider collateral evidence to establish export of goods.

The Government highlighted that the lower authorities did not discuss the use of duty paid materials in manufacturing exported goods. The company claimed to have submitted documentary evidence to prove this use, and the Government directed the original authority to verify compliance with the conditions of Rule 18 of the Central Excise Rules, 2002, and Notification No. 21/2004-C.E. (N.T.). The case was remanded for fresh consideration to ensure compliance with the conditions for granting input rebate claims.

In conclusion, the Government set aside the Order-in-Appeal and remanded the case for a fresh decision, emphasizing the verification of compliance with the conditions for granting input rebate claims.