2015 (3) TMI 908 - CGOVT - Central Excise

Rebate claim - determination of Annual Capacity Determination (ACP) of hot re-rolled products - Non discharge of full duty liability - rebate @ 12% of FOB value in terms of Notification No. 31/98-CE (NT) dt. 24-08-98 - Held that - during the relevant time, the rebate was admissible @ 12% of FOB value under rule 12 of Central Excise Rules, 2002, in terms of Notification No. 31/98-CE (NT) dt. 24-08-98. So the determination of ACP will not alter the rate of rebate claim mentioned above. Applicant has already paid the entire duty as per ACP fixed by Commissioner of Central Excise though CESTAT has granted stay against Order-in-Original passed by CCE. - in view of CBEC clarification in Circular No 418/51/98-Cx dt. 02-09-98, rebate will be allowed even in cases where manufacturer makes delayed payment of duty in these case and rebate claim was rightly held admissible to the respondents in terms of said CBEC circular. - The department has not stated in the grounds of revision application as why department does not want to follow the said circular. In view of said categorical clarification of CBEC in the matter Commissioner appeal has rightly allowed the rebate claim in terms of Notification No. 31/98-CE (NT) dt. 24-08-98 for the period 01-08-97 to 23-08-98. - No infirmity in impugned order - Decided against Revenue.

Summary

Issues Involved:
1. Determination of Annual Capacity of Production (ACP) under Rule 3 or Rule 5 of the "Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997".
2. Admissibility of rebate claims despite delayed payment of duty.
3. Applicability of rebate @ 12% of FOB value for the period prior to the issuance of Notification No. 31/98-CE (NT) dated 24-08-1998.
4. Linkage of non-payment of penalty and interest to rebate claims.

Detailed Analysis:

1. Determination of ACP under Rule 3 or Rule 5:
The primary issue revolves around whether the ACP of the manufacturer should be determined under Rule 3 or Rule 5 of the "Hot Re-rolling Steel Mills Annual Capacity Determination Rules, 1997". The Commissioner provisionally determined the ACP of hot re-rolled products and fixed the monthly payable amount. This determination was challenged by various manufacturers, including M/s. United Metal Industries, who argued for a lower duty liability. The Commissioner confirmed a duty liability of Rs. 1,17,84,627/- and imposed an equivalent penalty. The matter is still pending before the CESTAT and the Supreme Court.

2. Admissibility of Rebate Claims Despite Delayed Payment of Duty:
The revision application contends that the respondent has not fully discharged the duty liability, including interest and penalty, thus questioning the admissibility of rebate claims. However, the Commissioner (Appeals) relied on the CBEC Circular No. 418/51/98-CX dated 02-09-1998, which clarifies that "rebate will be allowed even in cases where the manufacturer makes delayed payment of duty". This was further supported by the Hon'ble Supreme Court Judgment in Omkar Overseas Ltd. Vs UOI, which held that delayed payment does not debar rebate claims if there was no fraud or collusion. Therefore, the rebate claims were allowed despite the delayed payment.

3. Applicability of Rebate @ 12% of FOB Value:
The department argued that the rebate @ 12% of FOB value, as per Notification No. 31/98-CE (NT) dated 24-08-1998, should not apply to the period before its issuance. However, the CBEC Circular No. 473/39/99-CX dated 27-07-1999 clarified that the rebate is admissible for the period from 01-08-1997 to 23-08-1998. The Board's decision, based on legal consultation, affirmed that the right to rebate existed prior to the notification and the formula prescribed could be applied retrospectively. Thus, the Commissioner (Appeals) rightly allowed the rebate claims for the earlier period.

4. Linkage of Non-Payment of Penalty and Interest to Rebate Claims:
The Commissioner (Appeals) stated that non-payment of penalty and interest should not be linked to the rebate claims. This position was upheld by the revisionary authority, which noted that the rebate claims were subject to verification and other conditions but were not contingent upon the full payment of penalty and interest.

Conclusion:
The Government upheld the Order-in-Appeal, finding no infirmity in the Commissioner (Appeals)'s decision to allow the rebate claims. The decision was based on the CBEC Circulars and the Supreme Court's judgment, which supported the admissibility of rebate claims despite delayed payment of duty and for periods prior to the issuance of the relevant notification. The linkage of non-payment of penalty and interest to rebate claims was also dismissed. Therefore, the revision application filed by the department was rejected.