2016 (10) TMI 275 - HC - Central Excise

Mode and manner of refund - whether the rebate claims of the assessee(s) were to be allowed in cash or sanctioned by way of re-credit - manufacture and export of cotton yarn and woven fabrics, both for domestic market as well as for export - by Notification No.30/2004-CE, the assessee(s) were granted total exemption from payment of duty on the products manufactured by them subject to the condition that no credit is taken on the inputs consumed in the manufacture of the final product - assessee(s) had not availed Cenvat Credit on the inputs use. Held that - it may be noticed that the Central Board of Excise and Customs (for short Board ) has issued Circular No.687 dated 03.01.2003 wherein it has been clarified that the duty paid through the actual credit or deemed credit account on the goods exported must be refunded in cash. In view of the exposition of law, it is evidently clear that the circular issued by the Board cannot be assailed by the petitioner herein. Further, there can be no dispute that in terms of the said circular, there was no discretion vested with the sanctioning authority to give the refund of the duty on goods exported through credit accounts, rather the duty paid through actual credit or deemed credit account on the goods exported has to be refunded only in cash. - Decided against the Revenue

Summary

Issues:
1. Mode and manner of refund of excise duty - cash or re-credit.

Analysis:

The judgment by the High Court of Himachal Pradesh involved a dispute regarding the mode and manner of refund of excise duty to the assessee(s) engaged in the manufacture and export of cotton yarn and woven fabrics. The primary issue was whether the rebate claims of the assessee(s) should be allowed in cash or sanctioned by way of re-credit. The Central Board of Excise and Customs had issued Circular No.687 clarifying that duty paid through credit accounts on exported goods must be refunded in cash. The Court examined the contentions of both parties and emphasized the binding nature of circulars issued by the Board, citing various Supreme Court judgments to support this principle.

The Court distinguished a previous judgment in M/S Nahar Industrial Enterprises, highlighting that the facts of the present cases were different as there was no dispute regarding the duty paid, quality, quantity, or actual export of goods by the assessee(s). The Court reiterated that once the assessee(s) were held entitled to the rebate, the duty paid on exported goods had to be refunded in cash as per Circular No.687. The judgment emphasized that the circulars issued by the Board were binding on the department, and the department could not take a stand contrary to these circulars.

Referring to Commissioner of Customs v. Indian Oil Corporation Ltd., the Court outlined principles stating that the Revenue was bound by operational circulars and could not raise contentions contrary to them. The judgment also cited Union of India v. Arviva Industries India Ltd. to reinforce the importance of adhering to circulars issued by the Board. Ultimately, the Court found no merit in the petitions and dismissed them, directing the parties to bear their costs and disposing of any pending applications.

In conclusion, the judgment provided a comprehensive analysis of the legal issues surrounding the mode and manner of refund of excise duty to the assessee(s), emphasizing the binding nature of circulars issued by the Central Board of Excise and Customs and the department's obligation to adhere to them in matters of duty refund on exported goods.