2015 (3) TMI 824 - CGOVT - Central Excise

Denial of rebate claim - Goods fully exempted - Duty for which the rebate claims were filed had been paid out of Cenvat credit availed by the processors on the strength of bogus/fake invoices - Applicant failed to prove the genuineness of the duty payment and veracity of the input stage credit taken by the processors - Held that - DGCEI investigated the case and issued show cause notice dated 15.12.10 wherein they categorically stated that the said five suppliers were non-existent; that the processors availed cenvat credit on the basis of bogus invoices issued in the name of said five bogus suppliers; that the facts of the case clearly proves culpability of the merchant exporter; and that payment of duty from such fraudulently availed cenvat credit cannot be treated as payment of duty for granting rebate under Rule 18 of Central Excise Rules 2002. Adjudicating authority-has recorded in his-findings that in this case applicant had-shown on paper to have procured the grey fabrics from bogus grey suppliers and passed on the fake - cenvat credit by endorsing such fake invoices to the processors. As such there is nexus between. applicant and manufacturer. The applicant had facilitated the wrong availment of cenvat credit by showing purchase/supply of grey fabrics on his account from the non-existent grey suppliers. Under such circumstances, the applicant was party to said fraudulent availrnent of cenvat credit & then payment of duty fraudulently from such credit, on exported goods. As such, applicant was party to said fraudulent availement of cenvat credit and the transaction between - manufacturer and exporter was not bonafide. Contentions of the applicant that duty was paid on exported goods by issuing invoices under Rule 11 of Central Excise Rules 2002, and foreign remittances towards export sale proceeds were received, do not help them in making them entitled for rebate claim since the said goods were cleared for export by fraudulent payment of duty from wrongly availed cenvat credit as discussed in above para. The said fraudulent payment of duty are only debit entries on paper and no actual duty was paid and applicant was found party to said fraud. - As such, exported goods cannot be treated as duty paid goods Since-the fundamental-condition of-payment of duty on exported goods is not satisfied the rebate claim were-rightly held inadmissible in these cases. - impugned orders require no interference. As regard genuineness of duty payment certificates, the original authority has observed that genuineness of duty payment and verification of input stage credit of raw material (i.e. grey fabric) is not on record in any of the rebate claims filed by the merchant exporter as the same are lost by department. The applicant in this regard stated that they submitted before the, Commissioner (Appeals) that duty payment certificates were verified by the jurisdictional excise officers and were sent to rebate sanctioning authority and that though, the said certificates were found missing in the file of department, the duty payment can be verified from monthly return filed in the range office. Government notes that original authority has not stated that duty payment certificates (DPC) were not submitted by the applicant. The SCN dated 15.12 11 issued for rejection of Said claim has also not pointed out anything about non-submission of said DPCs. The adjudicating authority has simply stated that DPC are not available in rebate claim files. - In this case department has admitted- that the duty payment certificate submitted by applicant were missing from their office. In such a situation the claimant cannot be penalized by rejecting the rebate claims for lapses on the part of department. The original authority could have got the verification of duty payment done from jurisdictional Central Excise Range afresh rather than rejecting the claim. Government therefore directs the original authority to consider the said claim for sanction after getting the duty payment particulars verified by the jurisdictional range superintendent. - Decided in favour of assessee.

Issues Involved:
1. Rejection of rebate claims due to fraudulent availment of Cenvat credit.
2. Time-barred rebate claims.
3. Non-receipt of rebate claims by the office.
4. Genuineness of duty payment certificates.
5. Procedural deficiencies in rebate claims.

Issue-wise Detailed Analysis:

1. Rejection of Rebate Claims Due to Fraudulent Availment of Cenvat Credit:
The Deputy Commissioner, Central Excise (Rebate), Raigad rejected several rebate claims on the grounds that the exported goods were processed using Cenvat credit fraudulently availed by processors from non-existent grey fabric suppliers. The Commissioner (Appeals) upheld this rejection, noting that the DGCEI investigation revealed that the processors had availed Cenvat credit on the basis of bogus invoices, and the duty payment certificates for the exported goods were not on record. The Government observed that the fraudulent payment of duty from wrongly availed Cenvat credit cannot be treated as payment of duty for granting rebate under Rule 18 of the Central Excise Rules, 2002. Therefore, the rebate claims were rightly held inadmissible as the fundamental condition of payment of duty on exported goods was not satisfied.

2. Time-Barred Rebate Claims:
One of the rebate claims (No. 4282) was rejected as it was filed after the expiry of the one-year time limit stipulated under Section 11B of the Central Excise Act. The Government upheld this rejection, affirming that the claim was rightly held inadmissible due to being time-barred.

3. Non-Receipt of Rebate Claims by the Office:
The adjudicating authority noted that one rebate claim (ARE-1 No. 153/05-06) was not received in the office. The Government observed that since the claim was not received, it cannot be considered for sanction.

4. Genuineness of Duty Payment Certificates:
The original authority observed that the genuineness of duty payment and verification of input stage credit of raw material were not on record, as the duty payment certificates were missing from the department's files. The applicant argued that the certificates were verified by the jurisdictional excise officers and were sent to the rebate sanctioning authority. The Government noted that the department admitted the certificates were missing and directed the original authority to get the duty payment particulars verified by the jurisdictional range superintendent. The range superintendent was required to submit a report on fresh verification within one month of the receipt of communication from the original authority.

5. Procedural Deficiencies in Rebate Claims:
The original authority cited several procedural deficiencies in the rebate claims, such as discrepancies in chapter sub-headings, non-submission of Bank Realisation Certificates, and missing details on ARE-1 forms. The appellate authority dropped most of these grounds except for the time-barred claim, non-payment of duty, and non-verification of duty payment particulars. The Government directed the original authority to consider the claims for sanction after verifying the duty payment particulars, provided the duty payment on export goods was found in order upon verification.

Conclusion:
The Government upheld the rejection of rebate claims in R.A.No.195/1452/12-RA, finding no infirmity in the order-in-appeal No.US/502/RGD/12 dated 22.08.12. However, the Government partially allowed the revision application No.195/1453/12-RA, directing the original authority to verify the duty payment particulars and consider the claims for sanction accordingly. The applicant was instructed to submit all relevant documents relating to duty payment within a week of receiving the order.

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