2016 (11) TMI 1327 - AT - Central Excise

Rebate claim - whether sanctioning of rebate claims of the appellants on the inputs cleared as such to SEZ unit is legally correct or not? - Held that - On perusal of the order of the Commissioner (Appeals), I find that he has discussed Rule 18 of Central Excise Rules, 2002, which deals with rebate of duty by which the rebate claim was filed and Rule 3 (5) of CCR, 2004, by which the appellant had reversed the credit. The case requires clarification as to whether the amount paid under Rule 3 (5) can be treated as duty paid under Rule 3 (6) of CCR 2004, which has not been considered in the impugned orders. Hence, both the appeals are remanded back to the ld. Commissioner (Appeals) to decide the matter afresh on merits - appeal disposed off by way of remand.

Summary

Issues:
1. Correctness of sanctioning rebate claims on inputs cleared to SEZ unit.
2. Interpretation of Rule 18 of Central Excise Rules, 2002.
3. Application of Rule 3(5) of CCR, 2004 in claiming rebate.
4. Discrepancy in export documentation for refund claims.
5. Consideration of amount paid under Rule 3(5) as duty paid under Rule 3(6) of CCR 2004.

Analysis:
Issue 1: The appeals questioned the correctness of sanctioning rebate claims on inputs cleared to the SEZ unit. The department argued that the Cenvat credit utilized for payment of an amount equal to credit taken on inputs cannot be considered as payment of duty necessary for claiming rebate under Rule 18 of CER, 2002. The Commissioner (Appeals) set aside the rebate claims, stating that the exports made fell under Rule 3(5) of CCR, 2004, and the payment of an amount equal to credit taken cannot be equated with duty payment required for rebate. The appeals were allowed in favor of the department.

Issue 2: The appellant contended that the order passed by the adjudicating authority was correct as all original ARE1s were verified without discrepancies. The counsel requested a remand for a merit-based decision. However, the Revenue argued that the appellant's claim for refund on export of "plastic hangers" under Rule 18 of Central Excise Rules was not supported by export documentation, which showed discrepancies between the exported goods and the claimed raw materials.

Issue 3: The core issue revolved around whether the amount paid under Rule 3(5) could be deemed as duty paid under Rule 3(6) of CCR 2004. The Commissioner (Appeals) remanded the appeals to decide the matter afresh on merits, emphasizing the need to clarify this aspect which was not addressed in the previous orders. The appeals were remanded back for further consideration.

In conclusion, the judgment highlighted the complexities surrounding the sanctioning of rebate claims, the interpretation of relevant rules, discrepancies in export documentation, and the crucial distinction between credit utilization and duty payment for claiming rebates. The remand to the Commissioner (Appeals) aimed to address these issues comprehensively and ensure a just decision based on a thorough analysis of the legal provisions involved.