2014 (12) TMI 869 - CGOVT - Central Excise

Denial of rebate claim - procedure prescribed under the Notification 21/2004(NT) dated 06.09.2004 had not been followed - non submission of original and duplicate copy of Form A.R.E.-2 - procurement of the input from a firm who was neither a registered manufacturer nor a registered dealer with the department - Held that - Rebate sanctioning authority shall not reject the rebate claim on the ground of non-submission of original and duplicate copies of ARE-1 forms if it is otherwise satisfied that conditions for grant of rebate have been fulfilled. - Following decision of UM Cables Ltd. Versus Union of India And Others 2013 (5) TMI 459 - BOMBAY HIGH COURT In order to avail benefit of import stage rebate under notification No. 21/2004-CE (NT) the exporter needs to follow certain condition and procedure one of the substantial requirement was to procure the goods directly from manufacturer place. In this case, M/s Sudhir Gensets Limited raised invoices to M/s. Neptro Renewable Energy India Pvt. Ltd. on 9.02.2010, while M/s Neptro has raised invoices to the applicant on 26.02.2010. The applicant could not give any satisfactory explanation regarding such gap of time in issuance of invoices to support their contention that goods were procured directly from manufacturer. As such applicant failed to produce any evidence to show that they procured the goods directly from factor premises. Under such circumstances, Government finds that the applicant failed to fulfill substantial condition of the said notification No. 21/2004-CE (NT) and therefore, rendered themselves liable for rejection of this rebate claim. - Matter remanded back - Decided partly in favour of assessee.

Summary

Issues:
1. Rebate claim rejection based on non-submission of original/duplicate copies of ARE-2.
2. Procurement of goods not directly from the manufacturer as required for availing rebate under a specific notification.

Analysis:
1. Rebate Claim Rejection:
- The revision applications were filed against orders-in-appeal by the Commissioner of Central Excise & Customs regarding rebate claims. The rejection of the rebate claim in both cases was primarily due to the non-submission of original/duplicate copies of ARE-2 forms, as required by the Notification No.21/2004-CE(NT) dated 06.09.2004. The Commissioner of Appeals upheld the rejection, leading to the filing of revision applications by the applicant.
- The applicant argued that the rejection solely based on non-submission of ARE-2 forms was incorrect. They contended that other essential documents like certified invoices, packing lists, and bank realization certificates substantiated the export and duty payment, fulfilling the conditions for the rebate claim. Additionally, they cited judicial pronouncements emphasizing that procedural lapses should not overshadow the fulfillment of substantial conditions for rebate claims.
- The applicant further highlighted a Bombay High Court judgment stating that the non-submission of original and duplicate AREs should not be a sole reason for rejecting a rebate claim. The judgment differentiated between procedural requirements and substantial conditions, emphasizing that the rebate sanctioning authority should be satisfied with the fulfillment of conditions even without the ARE-2 forms.

2. Procurement of Goods Issue:
- In one of the cases, the rebate claim was rejected because the goods were not procured directly from the manufacturer, as mandated by the notification for availing the rebate. The applicant had obtained the goods from a firm that was neither a registered manufacturer nor a dealer with the department. The invoices showed a chain of procurement from the manufacturer to the applicant through an intermediary.
- The Government noted that to benefit from the rebate under the specific notification, the goods must be procured directly from the manufacturer's premises. The delay in invoicing and lack of evidence showing direct procurement raised doubts about compliance with this essential condition. As a result, the rebate claim was deemed ineligible for approval.
- The Government decision set aside one order-in-appeal for reconsideration in light of the Bombay High Court judgment regarding non-submission of ARE-2 forms. However, the other order-in-appeal was upheld, as the applicant failed to demonstrate direct procurement from the manufacturer, a vital requirement for availing the rebate.

In conclusion, the judgment addressed issues related to procedural compliance and substantial conditions for rebate claims, emphasizing the importance of direct procurement from manufacturers for availing specific rebates under notifications. The Government decision provided clarity on the application of judicial precedents and the necessity to fulfill all conditions stipulated in notifications for successful rebate claims.