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2020 (2) TMI 1373 - HC - Central Excise100% EOU - Rebate claim - It was the contention of the Department that the petitioner was not entitled to rebate claim under Rule 18 of the Central Excise Rules, 2002 as the goods on which excise duty was paid by the petitioner were exempt from payment of excise duty in terms of N/N. 24/2003-C.E., dated 31-3-2003 and exemption did not apply to such goods if brought to any other place in India - HELD THAT - The petitioner was not required to pay excise duty in terms of Notification No. 24/2003, dated 1-4-2003. As per the said notification all excisable goods produced manufactured in an Export-Oriented Undertaking was exempt from whole of duty leviable thereon under Section 3 of the Central Excise Act, 1944 and additional duty of excise leviable thereon under Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and additional duty of excise leviable thereon under Section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978. Only exception under the above exemption notification was under the proviso - The proviso was admittedly not applicable to the facts of the present case. As per Section 5(1A) of the Central Excise Act, 1944, the petitioner could not have paid excise duty. Therefore, the petitioner could not have also paid excise duty goods export to claim rebate. As a Export Oriented Unit the petitioner would have been entitled to receive goods without payment of duty under various Customs as Central Excise Notification. Export-oriented units being engaged in generation of foreign exchange for the country have been exempt from payment of duty not only on their procurements but also on final products which are exported. Not only goods used by them are exempt in terms of Notification No. 22/2003-C.E., dated 31-3-2003 but also the final products are exempt under in terms of Notification No. 24/2003-C.E., dated 31-3-2003. The benefit of Notification No. 24/2003-C.E., dated 31-3-2003 conferred on export-oriented units has however resulted in a disability to the petitioner inasmuch as the petitioner procured goods on payment of excise duty and additional duty of customs and allowed such duty to be accumulated in their Cenvat Account. Had the petitioner availed the benefit of Notification No. 22/2003-C.E., dated 31-3-2003 there would have been no such accumulation. Since 100% EOU like the petitioner are entitled to procure goods without payment of duty under Notification No. 22/2003-C.E., dated 31-3-2003 but had procured on payment of duty, the amount of duty paid can be directed to be refunded back to the petitioner as no duty was payable by them even otherwise - the respondent are directed to ascertain the amount that has remained unutilised in view of the denial of rebate claim and refund the same to the petitioner within a period of three months from date of receipt of a copy of this order - petition disposed off.
Issues:
- Entitlement to rebate claim under Rule 18 of the Central Excise Rules, 2002 - Applicability of Notification No. 24/2003-C.E., dated 31-3-2003 - Jurisdiction of the High Court under Article 226 of the Constitution of India - Accumulation and lapse of Input Tax Credit/Credit availed on capital goods - Refund of duty paid by a defunct company - Interpretation of relevant legal provisions for duty exemption Entitlement to Rebate Claim: The petitioner, a defunct 100% EOU, had stopped manufacturing goods but exported goods during the disputed period and claimed rebate of Central Excise Duty under Rule 18 of the Central Excise Rules, 2002. The Department contended that the petitioner was not eligible for the rebate claim as the goods were exempt from excise duty under Notification No. 24/2003-C.E., dated 31-3-2003. The petitioner had paid excise duty to liquidate excess CENVAT credit despite restrictions under Section 5A(1A) of the Central Excise Act, 1944. Applicability of Notification No. 24/2003-C.E.: The High Court found that the exemption proviso under Notification No. 24/2003-C.E. did not apply to the petitioner's case. As per Section 5(1A) of the Central Excise Act, 1944, the petitioner was not required to pay excise duty. Therefore, the petitioner's payment of excise duty for goods export to claim rebate was deemed unnecessary. Jurisdiction of the High Court: The respondent argued that the petitioner should have appealed before the appellate Commissioner instead of invoking the High Court's jurisdiction under Article 226 of the Constitution of India. However, the High Court rejected this argument and proceeded to analyze the case on its merits. Accumulation and Lapse of Input Tax Credit: The High Court noted that no provision was presented to explain how the Input Tax Credit/Credit availed on capital goods had accumulated and lapsed. Referring to a similar case, the Court highlighted the relevance of granting relief in situations where a company has closed down its operations. Refund of Duty Paid by a Defunct Company: Considering the peculiar circumstances of the case where the petitioner had ceased operations, the Court directed the respondent to refund the unutilized amount accumulated due to the rejection of the rebate claim within three months. Interpretation of Relevant Legal Provisions for Duty Exemption: The Court emphasized that as an Export-Oriented Unit, the petitioner was entitled to receive goods without duty payment under various Customs and Central Excise Notifications. Due to the disability caused by the exemption notification, the petitioner had accumulated duty in their CENVAT Account unnecessarily. The Court directed the refund of the duty paid as no duty was payable by the petitioner. In conclusion, the High Court disposed of the Writ Petition, ordering the respondent to refund the unutilized amount to the petitioner in line with the decision of the Karnataka High Court and the Supreme Court in a similar case. No costs were awarded, and the connected Writ Miscellaneous Petition was closed.
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