2017 (10) TMI 1428 - CGOVT - Central Excise

Rebate claim - Rule 18 of the Central Excise Rules, 2002 - area based exemption claimed - rejection on the ground that since the manufacturer M/s. Mohini Metal Industries, Jammu, had already taken refund of excise duty paid on the exported goods, rebate of duty was not admissible to the applicants - rejection of appeal for the second time - whether the applicant is eligible for rebate of duty when refund of duty has already been granted to the manufacturer under an area based exemption scheme enshrined in N/N. 56/2002-C.E.? Held that - Under Rule 18 of Central Excise Rules, 2002 first and foremost condition is that exported goods should be duty paid. But in this case no duty has been paid on the goods cleared by the Jammu based manufacturer as the goods manufactured in whole of J&K State are exempted under Notification No. 56/2002. The exemption from duty on the goods manufactured in J&K is not operative at the time of clearance of goods as is usually done in other instances of exemption and it is extended by granting refund of duty subsequent to clearance of the goods. But undoubtedly the goods are exempted by virtue of the above Notification which is issued under Section 5A of the Central Excise Act which empowers the Government to issue exemption Notification. The net effect of getting duty amount back to the manufacturer has been that no duty amount was actually paid on the exported goods. When this is a situation, the first condition in Rule 18 that the exported goods should be duty paid is not fulfilled in this case and consequently the applicant s present case is not covered in the four corners of the Rule 18 and Notification No. 19/2004-C.E. (N.T.) - It cannot be denied that Notification No. 37/2007-C.E. (N.T.), dated 17-9-2007, issued by C.B.E. & C., providing that the rebate of duty will not be available in respect of goods manufactured by a unit enjoying any area based exemption scheme, was not in existence at the time the applicant procured goods from M/s. Mohini Metal Industries. The applicant is not eligible for rebate of duty in this case irrespective of whether the above referred Notification No. 37/2007 was in vogue at the time of procurement of the goods by applicant in this case - the revision application of the applicant is not found maintainable and hence rejected.

Summary

Issues involved:
Whether the applicant is eligible for rebate of duty when the manufacturer has already received a refund of excise duty under an exemption scheme.

Analysis:
The case involved a Revision Application filed by a company against the rejection of their rebate claim by the Commissioner (Appeals). The company, a merchant exporter, had purchased goods from a manufacturer who availed an exemption scheme. The jurisdictional Assistant Commissioner rejected the rebate claim, stating that since the manufacturer had already received a refund of excise duty, the rebate was not admissible to the applicant. The applicant challenged this decision through various levels of appeal and revision. The central issue to be decided was whether the applicant was eligible for rebate of duty when the manufacturer had already received a refund under an exemption scheme.

The Government examined the case records and analyzed the applicable rules and notifications. It was noted that the goods were exempted from duty under Notification No. 56/2002, and the manufacturer had initially paid duty on the goods but later received a refund. As a result, no duty amount was actually paid on the exported goods. Rule 18 of the Central Excise Rules, 2002 requires exported goods to be duty paid, which was not the case here due to the exemption scheme. The Government emphasized that the applicant's case did not fall within the scope of Rule 18 and relevant notifications. Although a later notification regarding rebate of duty for goods under an area-based exemption scheme was not in existence when the goods were procured, the fact remained that the goods were exempted at the time of procurement. The Government concluded that the applicant was not eligible for rebate of duty in this case, regardless of the timing of the later notification.

The Government also addressed the non-application of a circular and a Tribunal decision, stating that they were not relevant to the present case based on the reasons provided in the original order and the Commissioner (Appeals)'s decision. After detailed discussions and analysis, the Government found the revision application of the applicant not maintainable and subsequently rejected it.