2017 (11) TMI 1778 - CGOVT - Central Excise

Rebate of duty - export of Gutkha - prohibited item or not? - N/N. 19/2004-C.E. (N.T.) dated 6-9-2004 read with N/N. 32/2008-C.E. (N.T.) dated 28-8-2008 - Held that - One of the conditions for allowing rebate of duty on excisable goods under Notification No. 19/2004-C.E. (N.T.) dated 6-9-2004 read with Notification No. 32/2008-C.E. (N.T.) dated 28-8-2008 is that export of goods should not be prohibited under any law for the time being in force. Since the export of Gutkha from 18-7-2012 involving sale transportation and storage etc. in the State of Rajasthan was prohibited by the Government of Rajasthan the above condition in Notification No. 19/2004 that goods should not be prohibited under any law is undoubtedly attracted in this case. Therefore the Government observes that the rebate of duty has been rightly disallowed by the Commissioner (Appeals) to the applicant - Therefore the applicant s contention that Gutkha is not prohibited for export under the Rajasthan Government s order or under the Central Excise and Customs Acts is completely misplaced. The applicant has advanced an additional argument in the synopsis given during the personal hearing that since the duty of Central Excise has been accepted by the jurisdictional Central Excise authorities in respect of the exported Gutkha its rebate of duty cannot be refused under Rule 18 of Central Excise Rules 2002 - Held that - This argument is not found legally and factually tenable for two reasons. First the duty of excise on exported Gutkha was paid by the applicant in advance much before its production etc. was banned by the Government of Rajasthan under compounded levy scheme and secondly payment of duty on manufacture of goods and rebate of duty are two different things. Rebate of duty is admissible as per conditions and procedure specified under Notification No. 32/2008 read with Notification No. 19/2004 dated 6-9-2004 and thus it is not necessary that wherever duty of excise is paid on manufactured goods rebate of duty is always admissible on export of goods. Since under these two notifications rebate of duty is not admissible in respect of prohibited goods the applicant does not have any other basis for claiming the rebate of duty in this situation. Revision application dismissed.

Summary

Issues:
1. Rebate of duty on exported Gutkha.
2. Interpretation of prohibition order by Rajasthan Government.
3. Applicability of Central Excise and Customs Acts.
4. Legal tenability of duty payment and rebate claims.
5. Comparison with previous judgments on similar cases.

Analysis:
1. The case involves a dispute regarding the rebate of duty on exported Gutkha by M/s. Dinesh Fragrance despite a prohibition order issued by the Rajasthan Government. The applicant claimed that the export of Gutkha was not prohibited under the Rajasthan Government's order or the Central Excise and Customs Acts. However, the Government observed that the prohibition order covered all activities related to the movement, storage, and sale of goods, including export. The condition for rebate of duty specified that goods should not be prohibited under any law, which was applicable in this case. Therefore, the Commissioner (Appeals) rightly disallowed the rebate of duty to the applicant.

2. The Government interpreted the prohibition order issued by the Rajasthan Government, which banned the production, storage, distribution, and sale of Gutkha, pan masala, and food items containing tobacco and nicotine in the state. The order was deemed to cover all activities, including export, as it involved sale, transportation, and storage within Rajasthan until the goods were exported. The wide scope of the order led to the conclusion that the export of Gutkha was indeed prohibited under the Rajasthan Government's directive.

3. The applicant argued that since the duty of Central Excise had been accepted by the authorities for the exported Gutkha, the rebate of duty should not be refused. However, the Government clarified that the payment of duty and rebate of duty are distinct concepts. Even though the duty was paid under the compounded levy scheme before the ban, the conditions for rebate specified under relevant notifications were not met due to the prohibition on prohibited goods. The applicant's reliance on previous judgments was deemed irrelevant as those cases did not involve a total ban on Gutkha like in the present situation.

4. The Government rejected the applicant's additional argument that the duty payment on exported Gutkha should entitle them to a rebate. It was emphasized that the conditions for rebate eligibility were not fulfilled due to the prohibition on the goods. The case was distinguished from previous judgments where rebates were granted under different circumstances, highlighting the specificities of the current scenario and the legal basis for denying the rebate in this instance.

5. In conclusion, the Government found no deficiency in the Commissioner (Appeals)'s order and rejected the revision application filed by the applicant. The decision was based on the clear interpretation of the prohibition order, the conditions for rebate eligibility, and the legal distinctions between duty payment and rebate claims in the context of prohibited goods.