2022 (2) TMI 1380 - HC - Central Excise

Rejection of Rebate Claim - rejection on the ground that the petitioner had availed higher rate of drawback for the export which is available only when Cenvat facility has not been availed - petitioner failed to establish that it satisfied the condition No.15 of the notification No.92/2012 dated 04.10.2012 - HELD THAT - Perusal of Rule 18 would show that such rebate would be granted by the Central Government by issuing notification on the duty paid on excisable goods or duty paid on materials used in manufacture or processing of such goods and the rebate shall be subject to such conditions or limitations and fulfillment of such procedure as may be specified in the notification. As per this rule thus upon export an exporter is entitled to claim rebate on the duty paid on export goods as well as on materials used in manufacture or processing of such goods. This would of-course be subject to fulfillment of the conditions as may be prescribed. If no duty is paid the claim would not fall in Rule 18 at all. When the petitioner through its drawback claims claimed the refund of excise duty which was granted also Rule 18 would have no applicability. The Supreme Court in the case of M/s Spentex Industries Ltd. 2015 (10) TMI 774 - SUPREME COURT referring to the scheme of granting rebate under Rule 18 and facilities for export of goods without payment of duty under Rules 19 of the Central Excise Rules 2002 held that the rebate of duty paid by them on inputs as well as final product was available - This judgment thus rests on totally different facts. In fact a reversed anomaly would arise if the claim of the petitioner is accepted. If an exporter exercises option under Rule 19 he could export the goods without payment of duty. He would thereupon not be entitled to claim duty drawback on such component. On the other hand an exporter who opts for the rebate of duty under Rule 18 is allowed the rebate after claiming drawback as well there would be double benefit and a clear case of anomaly. In this context the question as to from which source of Cenvat credit the duty was paid becomes redundant. The Assistant Commissioner has proceeded on the basis that the petitioner for the purpose of claiming drawback had made a false declaration. If these observations are allowed to stand as correctly pointed out by the learned counsel for the petitioner the drawback claims which are closed would be under jeopardy. It is clarified that the department as well as this Court have proceeded on the basis that the petitioner having claimed and received the drawback of excise duty could not thereafter claim rebate of the same component of duty. Petition dismissed.

Summary

Issues:
1. Interpretation of duty drawback and rebate claims.
2. Compliance with conditions for claiming rebate.
3. Applicability of Customs Act, 1962 and Central Excise Rules, 2002.
4. Double benefit claim and anomaly in granting rebates.
5. Legal precedent and judicial interpretations.

Detailed Analysis:
1. The judgment dealt with the interpretation of duty drawback and rebate claims. The petitioner, a limited company engaged in yarn export, claimed duty drawback at a higher rate and a separate rebate claim before the Excise Department. The Assistant Commissioner proposed to reject the rebate claim as the petitioner availed a higher drawback rate without satisfying condition No.15 of the notification. The petitioner argued it complied with the notification by only availing credit on capital goods. The court analyzed the difference between duty drawback and rebate claims, emphasizing the need to fulfill prescribed conditions.

2. The issue of compliance with conditions for claiming rebate was central to the judgment. Despite the petitioner's declaration of not availing Cenvat facility for inputs, the Assistant Commissioner rejected the rebate claim. The appellate authority and revisional authority upheld this decision, citing the petitioner's prior availing of drawback at a higher rate. The court examined the conditions under the notification and Central Excise Rules, emphasizing the need for duty payment to claim rebate, highlighting the petitioner's prior drawback claim as a crucial factor.

3. The applicability of the Customs Act, 1962, and Central Excise Rules, 2002 was crucial in the judgment. The court referred to Section 75 of the Customs Act regarding drawback and analyzed Rule 18 and Rule 19 of the Central Excise Rules. It pointed out the option for exporters to choose duty-free exports under Rule 19 or pay duty and claim rebate under Rule 18. The court clarified that rebate under Rule 18 is granted on duty paid on export goods and materials used in their manufacture, subject to specified conditions.

4. The judgment addressed the issue of a double benefit claim and anomaly in granting rebates. The department argued that the petitioner, having claimed drawback at a higher rate, was not entitled to claim rebate on the duty paid, as it would result in double benefits. The court agreed with this stance, emphasizing that allowing both claims would lead to an anomalous situation and defeat the purpose of duty remission for exported goods. It cited a Supreme Court decision to support the position that claiming rebate after drawback would constitute a double benefit.

5. The judgment extensively discussed legal precedents and judicial interpretations to support its conclusions. The court referenced a decision of the Madras High Court and a Supreme Court ruling on rebate claims to establish the legal framework for analyzing the petitioner's case. It highlighted the importance of consistent interpretation of rules to avoid anomalies and discriminatory practices. The court's reasoning aligned with previous appellate and revisional orders, emphasizing the rejection of rebate claims after availing duty drawback to prevent double benefits. Ultimately, all petitions were dismissed based on these legal principles and interpretations.