2016 (7) TMI 434 - CGOVT - Central Excise

Claim of rebate/ refund - input stage rebate - export of goods - The adjudicating authority rejected all the rebate claims of the respondent holding that they failed to get the input output ratio approved in respect of Menthol Crystals as required under Notification No. 21/2004-CE(NT) dated 06109.2004 and rebate claim were not admissible to them as they had failed to fulfill the conditions of Notification ibid. - Commissioner (Appeals) allowed the rebate. Held that - it is clear that the respondent was not given any permission for manufacture and export of menthol crystals under claim for import duty rebate as they has never applied for fixation of input output ratio in respect of Menthol Crystals. The input output ratio for menthol crystals was applied for vide declaration dated 28.06.2010 and thereafter approved vide letter dated 31.01.2011. Government finds as untenable the presumption of Commissioner (Appeals) that as same ratio has been fixed first for menthol and then for menthol crystals, the norms for crystals can be said to have been fixed at the same time as that for menthol. Menthol and menthol crystals are two distinct products classifiable under distinct tariff headings viz 2906 and 3003 respectively as held in the impugned Order-in-Original. It is an uncontested fact that both items not only fall under different headings but the process of manufacture is also different as menthol is in liquid form and menthol crystals are in crystal form. The respondent was therefore, required to file different declaration and get separate approvals for the norms for each product sought to be exported for each product sought to be exported in terms of Notification No. 21/2004-CE(NT) dated 06.09.2004 read with para 2 of part V of Chapter 8 to CBEC Supplementary Instructions Manual. Para 2 of the said Notification clearly states that the correctness of the ratio of the input output ratio shall be verified before the commencement of the export of the said goods but in the present case, the respondent exported the goods before the verification of input output ratio as well as fixation of the input output norms. Thus they had failed to satisfy the condition of the Notification ibid. - Claim of rebate denied - Decided against the assessee and in favor of revenue.

Summary

Issues Involved:
1. Approval of Input-Output Ratio
2. Mis-declaration and Misrepresentation
3. Adherence to Notification No. 21/2004-CE(NT)
4. Re-fixation of Input-Output Norms
5. Admissibility of Rebate Claims
6. Legal Precedents and Compliance with Statutory Conditions

Issue-wise Detailed Analysis:

1. Approval of Input-Output Ratio:
The primary issue was whether the respondent obtained the necessary approval for the input-output ratio for Menthol Crystals as required under Notification No. 21/2004-CE(NT) dated 06.09.2004. The government observed that the respondent failed to get this approval before exporting the goods, which is a mandatory requirement. The Commissioner (Appeals) presumed that the same ratio fixed for menthol could apply to menthol crystals, but the government found this untenable as menthol and menthol crystals are distinct products with different manufacturing processes.

2. Mis-declaration and Misrepresentation:
The respondent was accused of mis-declaring that the waste obtained would not be reprocessed to extract more menthol, leading to an incorrect fixation of the input-output ratio. The government noted that the respondent's claim for re-fixation of the ratio was due to commercial interests and not compliance, indicating a malafide intention to claim higher rebates.

3. Adherence to Notification No. 21/2004-CE(NT):
The government emphasized that the respondent did not adhere to the conditions of Notification No. 21/2004-CE(NT), which requires the verification of the input-output ratio before the commencement of exports. The respondent exported goods without this verification, thus failing to satisfy the notification's conditions.

4. Re-fixation of Input-Output Norms:
The input-output norms were initially fixed at 1.250 kg DMO to 1 kg Menthol but were later revised to 1:1. The government found that the respondent's voluntary acceptance of the re-fixed ratio was for the speedy disposal of pending rebate claims, which was not acceptable as it indicated an intention to claim more rebates.

5. Admissibility of Rebate Claims:
The original authority rejected the rebate claims due to the failure to fulfill the conditions of the notification. The Commissioner (Appeals) allowed the appeal, but the government set aside this decision, upholding the original authority's rejection of the rebate claims. The government concluded that the respondent's failure to get the input-output ratio approved before export made the rebate claims inadmissible.

6. Legal Precedents and Compliance with Statutory Conditions:
The government cited several legal precedents, including the Supreme Court's rulings in Government of India vs. Indian Tobacco Association and Union of India vs. Dharmendra Textile Processors, to emphasize that benefits under a conditional notification cannot be extended in case of non-fulfillment of conditions. The government reiterated that the notification must be treated as part of the statute and complied with strictly.

Conclusion:
The government set aside the Order-in-Appeal and upheld the Orders-in-Original, rejecting the rebate claims due to non-compliance with the mandatory conditions of Notification No. 21/2004-CE(NT). The revision application was allowed, reinforcing the importance of adhering to statutory conditions and procedures.