2017 (11) TMI 1781 - CGOVT - Central Excise

Rebate of Central Excise duty in cash - Rule 18 of Central Excise Rules, 2002 - revision applications have been filed mainly on the ground that rebate of duty is to be granted in cash only under Rule 18 of Central Excise Rules, 2002 even if the duty is paid on the exported goods from Cenvat credit - C.B.E. & C. Circular No. 687/3/2003-cx, dated 3-1-2003 - Held that - Rule 18 of Central Excise Rules, 2002 and Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 are examined and it is found that these two relevant provisions for this matter do not provide anywhere that if the duty of Central Excise is paid from Cenvat credit for exported goods then rebate of duty is to be granted in Cenvat credit account only. These two provisions talk of granting of rebate of duty only and the same can be possible only in cash and not in form of Cenvat credit as Cenvat credit can be availed and allowed only under Cenvat credit Rules, 2004 and there is no provision for availing or allowing Cenvat credit under Rule 18 of Central Excise Rules, 2002. Even the Central Board of Excise and Customs, an apex body to regulate the working of Central Excise related affairs, has clarified, vide its Circular No. 687/3/2003-Cx, dated 3-1-2003 issued from File No. 267/57/20020/Cx-8, has categorically clarified that there is no discretion with the sanctioning authority to give the refund of duty paid on the goods exported and duty paid through Cenvat credit must be refunded in cash only. The Government is of the clear view that Commissioners (Appeals) have committed an error by denying the rebate of duty to the applicant in cash - the applicant is held to be eligible for rebate of duty through cheques in these cases along with interest in accordance with Section 11BB of the Central Excise Act, 1944 as per which interest is payable in the event of not granting rebate of duty within 3 months of filing of original rebate applications - Revision application allowed.

Summary

Issues:
1. Whether rebate of duty should be granted in cash or in the form of CENVAT credit.
2. Interpretation of Rule 18 of Central Excise Rules, 2002 and Notification No. 19/2004-C.E.
3. Applicability of the Punjab & Haryana High Court decision in the case of Nahar Industrial Enterprises Ltd.
4. Eligibility for rebate of duty and interest under Section 11BB of the Central Excise Act, 1944.

Detailed Analysis:
1. The revision applications were filed against orders rejecting appeals for seeking rebate of duty in cash instead of CENVAT credit. The main contention was that rebate of duty should be granted in cash under Rule 18 of Central Excise Rules, 2002. The Circular No. 687/3/2003-cx clarified that duty paid through CENVAT credit must be refunded in cash. The applicant argued that the Punjab & Haryana High Court decision in Nahar Industrial Enterprises Ltd. was distinguishable from their case as they had paid duty on exported goods at the applicable rate. A personal hearing was conducted where the applicant reiterated their grounds and cited the Supreme Court's decision in Syntex Industries Ltd. v. CCE.

2. Upon examination of the relevant provisions, it was found that Rule 18 of Central Excise Rules, 2002 and Notification No. 19/2004-C.E. did not specify that rebate of duty paid from CENVAT credit should be granted only in the form of CENVAT credit. The Circulars issued by the Central Board of Excise and Customs clarified that duty paid through CENVAT credit must be refunded in cash. The Punjab & Haryana High Court decision in Nahar Industrial Enterprises Ltd. was deemed inapplicable to the present case as there was no excess payment of duty made by the applicant. Therefore, the Commissioners (Appeals) erred in denying the rebate of duty in cash based on the Nahar Industrial Enterprises Ltd. decision.

3. The judgment held that the applicant was eligible for rebate of duty through cheques along with interest as per Section 11BB of the Central Excise Act, 1944, which mandates interest payment if rebate of duty is not granted within 3 months of filing the original rebate applications. Consequently, the orders of the Commissioners (Appeals) were set aside, and all five revision applications were allowed.