2017 (11) TMI 1520 - HC - Central Excise

Rebate claim - export related benefits - rule 16 of CER - manufacture of biscuits - Held that - in response to the prior correspondence attention of the BFPL was invited to discussions held on 5th April, 2004 when the Commissioner had apparently clarified that unless difficulties in observing the provisions of Rule 16(1) and (2) were established, no case had been made out for granting permission by Commissioner under Rule 16(3). During discussions, it was apparent that no difficulties were pointed out. Furthermore, in an earlier communication dated 25th February, 2004 BFPL was advised to follow the provisions of Rule 16(1) and (2) and since there was no difficulties in following Rule 16(1) and (2) the question of seeking the permission of the Commissioner under Rule 16(3) did not arise. The Commissioner had therefore directed BFPL to follow the procedure specified in Rule 16(1) and (2). Reference to the communication dated 25th February, 2004 issued by BFPL (Exhibit I) reveals that BFPL had admitted to manufacture of generically identical biscuits as those received in its factory from CMUs. These could be exported with attendant benefits only with permission from the Commissioner under Rule 16(3). Trade Notice No.2/2001 reveals that Rule 16(1) and (2) may not apply for receiving duty paid biscuits in the factory for export of confectioneries and chocolates, since BFPL had not manufactured these products. A fair reading of the letter reveals that it is in fact a denial of permission. It records in unequivocal terms that during discussions no difficulties were pointed out by BFPL in following the provisions of rules 16(1) and (2) and since no difficulties in following rules 16(1) and (2), the question of seeking permission of the Commissioner under rule 16(3) should not arise. There was a clear direction in the letter to follow procedure as specified under Rule 16(1) and (2) of Central Excise Rules, 2002. - the contention of Mr. Patil to the effect that the authorities of Commissioner had given permission is devoid of merit. In our view in both these matters there was no permission given for bringing goods to the factory of BFPL and for stuffing them in the containers. Since the products have not been manufactured by BFPL there was no occasion to export them. In the circumstances, the contention that the permission granted was in the nature of a misrepresentation and an attempt to mislead the authorities and this Court. Petition dismissed - decided against petitioner.

Summary

Issues Involved:

1. Rejection of rebate claims under specified notifications.
2. Compliance with Central Excise Rules and Notifications.
3. Identifiability and co-relation of exported goods.
4. Permission under Rule 16(3) of the Central Excise Rules, 2002.
5. Alleged misrepresentation and misuse of permissions.

Detailed Analysis:

1. Rejection of Rebate Claims under Specified Notifications:

The petitioner challenged the orders passed under Section 35EE of the Central Excise Act, 1944, which rejected their claims for rebate under specific notifications granting export-related benefits. The Assistant Commissioner rejected 76 rebate claims amounting to ?25,72,908/- on the grounds that the goods were not directly cleared from the place of manufacture as required by Notification 41 and Notification 19. The Commissioner (Appeals) and the Joint Secretary, Government of India, upheld this rejection, emphasizing the necessity for goods to be exported directly from the factory of manufacture.

2. Compliance with Central Excise Rules and Notifications:

The petitioner argued that they had been consistently getting their goods manufactured through Contract Manufacturing Units (CMUs) and exporting them after receiving appropriate permissions. They contended that the goods received at BFPL were duty-paid and were cleared for export after payment of excise duty, thus eligible for rebate under Rule 18 of the Central Excise Rules, 2002. However, the authorities maintained that the goods must be exported directly from the factory of manufacture, and the petitioner had not followed the stipulated procedures.

3. Identifiability and Co-relation of Exported Goods:

The petitioner claimed that the exported goods were clearly identifiable and co-relatable with the goods cleared from the factory. They provided detailed documentation, including invoices, shipping bills, and Form ARE-1s, to demonstrate the co-relation of the goods. However, the authorities concluded that it was not possible to co-relate the exported goods with the goods cleared from the factory, as the goods were not exported directly from the place of manufacture.

4. Permission under Rule 16(3) of the Central Excise Rules, 2002:

The petitioner asserted that BFPL had obtained permission from the Commissioner of Central Excise under Rule 16(3) to receive duty-paid goods for export. However, the authorities found that no such permission had been granted. The letter dated 26th May 2004 from the Commissioner explicitly directed BFPL to follow the provisions of Rule 16(1) and (2), and since no difficulties in following these rules were reported, the question of seeking permission under Rule 16(3) did not arise. The court concluded that there was no permission given for bringing goods to the factory of BFPL for stuffing them into containers.

5. Alleged Misrepresentation and Misuse of Permissions:

The petitioner was accused of misrepresenting the facts and misusing permissions. The authorities noted that the letter from the Commissioner was not a permission under Rule 16(3), and the goods were not exported directly from the place of manufacture. The court found that the petitioner had attempted to mislead the authorities and the court by claiming that permission had been granted when it had not.

Conclusion:

The court dismissed the writ petitions, upholding the orders of the authorities rejecting the rebate claims. The court found that the petitioner had not complied with the necessary conditions for claiming the rebate, and there was no permission granted for the export of goods from BFPL. The court also imposed costs of ?10,000/- on the petitioner for each of the matters.