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2016 (4) TMI 192 - CGOVT - Central ExciseRebate claims of duty paid on exported of exempted goods under Rule 18 of the Central Excise Rules, 2002 read with Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 - Held that - Government finds that there is no merit in the contentions of applicants that they are eligible to claim rebate of duty paid @ 10%, i.e., General Tariff Rate of Duty ignoring the effective rate of duty @ 0%/4% or 5%. As such, Government is of considered view that lower authorities are legally right in holding that rebate is admissible only to the extent of duty paid at the effective rate of duty, i.e., 0%/4% or 5% in terms of Notification No. 4/2006-C.E., dated 1-3-2006 as amended, as applicable on the relevant date on the transaction value of exported goods determined under Section 4 of Central Excise Act, 1944. Hence the Order-in-Appeal are upheld to that extent. In some cases the original authority either denied rebate where excise duty payable was NIL in terms of Notification No. 4/2006, dated 1-3-2006 read with Notification No. 21/2002-Cus., dated 1-3-2002 or confirmed recovery of rebate erroneously sanctioned on the ground that duty was not payable by the applicant. As held in above paras, the rebate is admissible only to the extent of 0%/4%/5% as the case may be. The Notification No. 4/2006, dated 1-3-2006 issued under Section 5A(1A) of the Act, grants exemption from whole of duty of excise absolutely. So applicant was required not to pay duty. The amount so paid cannot be treated as duty under Section 3 of the Act and therefore, not admissible as rebate under Rule 18 of Central Excise Rules, 2002 read with Notification No. 19/2004-C.E. (N.T.), dated 6-1-2004. Moreover, when goods are exempted from payment of duty, no Cenvat credit is permissible under Rule 6(1) of Cenvat Credit Rules, 2004. In view of the above, Government observes that the applicant was not allowed to pay duty on the exempted goods as per proviso 5A(1A) of Central Excise Act, 1944 and no Cenvat credit on the inputs is available under Rule 6(1) of Cenvat Credit Rules, 2004. Further the applicant has also not claimed that the duty on such fully exempted goods has not been paid from such inadmissible Cenvat credit and therefore, no re-credit is permissible in such cases. Hence, Government finds that orders of recovery by original/appellate authority are legal and proper.
Issues Involved:
1. Eligibility for rebate claims on exported goods under Rule 18 of the Central Excise Rules, 2002. 2. Applicability and selection of different Central Excise Notifications for duty payment. 3. Re-credit of excess duty paid in Cenvat credit account. 4. Recovery of rebate erroneously sanctioned at higher duty rates. 5. Legal interpretation and binding nature of C.B.E. & C. Instructions and Supreme Court judgments. Detailed Analysis: 1. Eligibility for Rebate Claims: The applicant, a manufacturer-exporter, filed rebate claims under Rule 18 of the Central Excise Rules, 2002, read with Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004. The duty was paid on exported goods at 10% under Notification No. 2/2008-C.E., dated 1-3-2008. However, for home consumption, the duty was paid at effective rates of 4% up to 28-2-2011 and 5% from 1-3-2011 under Notification No. 4/2006-C.E., dated 1-3-2006, or at 0% under Notification No. 21/2002-Cus., dated 1-3-2002. The original authority sanctioned the rebate claims to the extent of duty payable at 0%/4%/5% and rejected claims for goods cleared under total exemption. 2. Applicability and Selection of Different Notifications: The applicant contended that they could choose between Notification No. 4/2006-C.E. and Notification No. 2/2008-C.E., both approved by Parliament, to pay duty beneficially. They argued that the selection of Notification No. 2/2008-C.E. for paying 10% duty on export goods should be respected by the authorities. However, the government clarified that Notification No. 2/2008-C.E. prescribed a general tariff rate, while Notification No. 4/2006-C.E. provided an effective rate and that the effective rate should apply for rebate claims. 3. Re-credit of Excess Duty Paid: The original and appellate authorities allowed the re-credit of excess duty paid in the Cenvat credit account, as the excess amount could not be retained by the government. This was in line with the judgment of the Punjab & Haryana High Court in the case of M/s. Nahar Industrial Enterprises Ltd. v. UOI, which stated that refund should be given in the manner the duty was paid. 4. Recovery of Rebate Erroneously Sanctioned: In cases where the rebate was erroneously sanctioned at 10%, recovery was confirmed. The applicant argued that they were entitled to choose the beneficial notification. However, the government upheld that rebate is admissible only to the extent of duty paid at the effective rate of 0%/4%/5% as per Notification No. 4/2006-C.E. 5. Legal Interpretation and Binding Nature of Instructions and Judgments: The government emphasized that departmental authorities are bound by C.B.E. & C. Instructions, which state that export goods should be assessed in the same manner as goods for home consumption. The Supreme Court's judgments, such as in the case of Paper Products Ltd. v. CCE, were cited to reinforce that circulars issued by C.B.E. & C. are binding on departmental authorities. The government also noted that the cited case laws by the applicant were not directly applicable to the context of rebate claims under Rule 18. Conclusion: The government found no merit in the applicant's contentions and upheld the orders of the Commissioner (Appeals), confirming that rebate is admissible only to the extent of duty paid at the effective rate. The revision applications were rejected as devoid of merit.
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