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2015 (1) TMI 943 - CGOVT - Central ExciseRebate claim - Section 54(1A) of Central Excise Act 1944 absolute exemption was available to the applicant being a 100% EOU hence they had no option to pay duty and claim rebate under Rule 18 of Central Excise Rules 2002 - Held that - Notification No. 24/03-CE dated 31-03-2003 was issued under section 5A(i) of Central Excise Act 1944. The goods manufactured by 100% EOU and cleared for export are exempted from whole of duty unconditionally. Therefore in view of provisions of subsection (1A) of section 5A the applicant manufacturer has no option to pay duty. Government notes that there is no condition for availing exemption from payment of duty on goods cleared for exports Normally the 100% EOU has to clear goods for exports as per the EOU scheme. Since there is no condition in the notification for availing exemption to goods manufactured by 100% EOU and cleared for export the provisions of sub section (IA) of section 5A(1) are applicable and no duty was required to be paid on such export goods - it is quite clear that the amount paid cannot be treated as duty paid and these rebate claim cannot be held admissible under rule 18 of Central Excise Rules 2002. - Following decision of M/s. Orchid Health Care (A division o Orchid Chemicals s own previous case - matter remanded back - Decided in favour of Revenue.
Issues Involved:
1. Admissibility of rebate claim under Rule 18 of Central Excise Rules 2002 for a 100% Export Oriented Unit (EOU). 2. Eligibility of Cenvat Credit on inputs like MS Channels, Plates, and SM Bars. Detailed Analysis: 1. Admissibility of Rebate Claim under Rule 18 for 100% EOU: The core issue revolves around whether a 100% EOU can claim a rebate of Central Excise Duty under Rule 18 of Central Excise Rules 2002, given the absolute exemption provided under Notification No. 24/2003-CE dated 31.03.2003. The notification provides an absolute exemption from excise duty for goods manufactured by EOUs, implying that EOUs should not pay duty on such goods. This is reinforced by Section 5A(1A) of the Central Excise Act, 1944, which states that when an exemption is granted absolutely, the manufacturer shall not pay the duty of excise on such goods. The Department argued that since the goods are exempted absolutely, the assessee has no option to pay duty and claim a rebate. The Commissioner (Appeals) had allowed the rebate claims based on the decision in GTN Exports Vs CCE, Coimbatore, and CBEC Circulars which allowed EOUs to claim refunds of unutilized Cenvat Credit. However, the Revision Authority noted that these precedents and circulars pertain to refund claims under Rule 5 of CENVAT Credit Rules, 2004, not rebate claims under Rule 18. The Government's decision in similar past cases, such as M/s Vijay Chemicals Industries and M/s Orchid Healthcare, was referenced. The Government concluded that the amount paid cannot be treated as duty paid, and thus, the rebate claims are not admissible under Rule 18. The case was remanded back to the original authority to be decided afresh in light of the pending final order from the Hon'ble High Court of Madras in the case of Orchid Healthcare. 2. Eligibility of Cenvat Credit on Inputs: The second issue concerns the eligibility of Cenvat Credit on inputs like MS Channels, Plates, and SM Bars. The Department contended that these inputs were not used in the manufacture of the final product (Solid Tyres) and thus, the credit was wrongly availed. The Commissioner (Appeals) had partially allowed the credit on Plates, arguing they were used in manufacturing hub rims, which are part of the final product. The Department argued that the primary inputs for Solid Tyres are Carbon Block, Reclaimed Rubber, Rubber Chemicals, and Zinc Oxide, and not MS Channels, Plates, and SM Bars. The Ministry's Circular No.943/04/2011-Cx dated 29-4-2011 was cited, clarifying that only goods having no relationship with the manufacture of the final product are ineligible for credit. The Government upheld the Department's view that the Cenvat Credit on MS Channels, Plates, and SM Bars was not admissible, as these inputs were not directly related to the manufacture of Solid Tyres. The case was remanded back to the original authority for a fresh decision, ensuring a reasonable opportunity for personal hearing for both parties. Conclusion: The Government set aside the impugned orders and remanded the cases back to the original authority for a fresh decision, pending the final judgment of the Hon'ble High Court of Madras in the case of Orchid Healthcare. Both issues-admissibility of rebate claims under Rule 18 and eligibility of Cenvat Credit on certain inputs-were directed to be re-evaluated in accordance with the final court order and existing legal provisions.
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