2017 (1) TMI 589 - AT - Central Excise

Rebate claim - Rule 18 of Central Excise Rules, 2002 - export of goods - Held that - rule 5 of CENVAT Credit Rules, 2002 applies to inputs used in final products cleared for export and that rule 18 of Central Excise Rules, 2002 accords rebate of duties paid on goods that are exported. The rebate under this rule is allowable as long as goods are excisable or duty has been paid on materials used in processing of such goods. We find no reason to surmise that these rules distinguish between exempted goods and dutiable goods. They refer to final products and to excisable goods respectively. It is the stated doctrine in tax administration that domestic taxes are not exported with goods. Legislation carves out special provisions in taxing statutes for ensuring that such anathema is eliminated. The failure on the part of the lower authorities to perceive the intent of provision of rule 18 of Central Excise Rules, 2002, by digressing to the issue of payment of duty without the legal compulsion to do, appears to have blindsided them into suspicion of the motives for payment of such duty to the exclusion of the larger issue, viz, burdening the export value with domestic taxes. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Eligibility of the appellant to claim rebate of duty paid on exported goods.
- Classification of goods under Central Excise Tariff Act, 1985.
- Discharge of duty liability on goods cleared domestically.
- Interpretation of CENVAT Credit Rules, 2002 and Central Excise Rules, 2002.
- Application of rule 18 of Central Excise Rules, 2002.
- Consideration of exemption of goods for rebate eligibility.
- Legal principles governing tax administration and duty liability.

Analysis:
1. The primary issue in this appeal was the eligibility of M/s Hindustan Platinum Ltd to claim a rebate of duty paid on goods exported during specific periods. The dispute arose from the classification of the goods under the Central Excise Tariff Act, 1985, with the Revenue contending that the goods were misclassified to avail CENVAT credit. The lower authorities had concurred in the recovery of erroneously sanctioned rebate and the denial of rebate for the subsequent period, citing that the exported goods were exempted and not eligible for rebate.

2. The appellant argued that the classification of goods under tariff heading 7101.70 was appropriate, supported by relevant legal provisions and judicial decisions. The appellate tribunal analyzed the CENVAT Credit Rules, 2002, and Central Excise Rules, 2002, emphasizing that the rules do not distinguish between exempted and dutiable goods for the purpose of rebate eligibility. The tribunal referred to previous court decisions that favored the appellant's position.

3. The tribunal highlighted that the appellant, based on its expertise, had chosen a specific classification, and the discharge of duty liability on domestic clearance did not warrant the denial of benefits or privileges such as rebate. It criticized the lower authorities for adopting an opportunistic approach and emphasized the importance of consistent tax administration principles over mere duty rates considerations.

4. Furthermore, the tribunal stressed the principle that domestic taxes should not be exported with goods, and special provisions in tax statutes prevent such practices. It criticized the lower authorities for failing to understand the intent of rule 18 of Central Excise Rules, 2002, and for focusing on duty payment without legal compulsion, leading to suspicion regarding motives rather than addressing the core issue of burdening export value with domestic taxes.

5. Ultimately, the tribunal set aside the impugned orders and allowed the appeals, emphasizing the appellant's right to claim rebate based on the legal provisions and consistent tax administration principles. The judgment was pronounced on 19/12/2016.