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2018 (12) TMI 1422 - HC - Central ExciseLapse of credit in case of exempted goods - Review of order - Section 35 EE of the Central Excise Act, 1944 - rebate claim - alleged erroneous refund of rebate of taxes on the duty paid export goods in terms of Rule 18 of the Central Excise Rules, 2004 - Held that - Unless it is demonstrated or held that the effect of the Notification No.10/2007 CE-NT dated 01.03.2007 is retrospective in character which does not assert so, the availing of lying cenvat credit, while choosing to avail exemption, for payment of duty on export goods against claim of rebate of duty under Rule 18 of the Central Excise Rules, 2002, is in accordance with law, until the introduction of Rule 11(3) of Cenvat Credit Rules on 01.03.2007 - It may be noted that the sanction and payment of the alleged rebate claims pertain to payment of duty by availing cenvat credit during the period 10.06.2007 to 31.07.2007. When the amendment was made on 01.07.2017, the petitioner was already availing exemption. It is to be noted that the provision apply only in transitional situation when the assessee opts to stop payment of duty and avail exemption. The question of reversal does not arise. In effect, the amendment to Cenvat Credit Rules, 2004 by the insertion of Rule 11 (3) will operate only on tax paying assessees who opt to avail exemption on or after 01.07.2007 - the impugned Orders in Review 06.03.2013 are liable to be set aside - Petition allowed.
Issues involved:
Challenge to orders in review under Section 35 EE of the Central Excise Act, 1944 regarding alleged erroneous refund of rebate of taxes on duty paid export goods in terms of Rule 18 of the Central Excise Rules, 2004. Analysis: The case involved Writ Petitions filed against orders in review passed by the Board under Section 35 EE of the Central Excise Act, 1944. The Orders in review set aside the Orders in Appeal of the first appellate authority and reinstated the Orders in Original passed by the Original authority. The issue revolved around the demand for the alleged erroneous refund of rebate of taxes on duty paid export goods in accordance with Rule 18 of the Central Excise Rules, 2004. The petitioner admitted to paying duty on export goods from Cenvat credit earned before an exemption notification was issued. The original authority noted that the petitioner opted for full duty exemption on final products during a specific period, which restricted them from taking Cenvat credit of inputs used in manufacturing. It was observed that the petitioner reversed a certain amount of Cenvat credit on inputs due to opting for exemption under a notification. The revenue alleged that excess credit available in the petitioner's accounts was used for duty payment on export goods and claimed back as rebate. The department argued that the credit available from a certain date should have been purged as per Rule 11 (3) of Cenvat Credit Rules, 2004. The judgment highlighted the introduction of Rule 11 (3) requiring reversal of credit on lying stock and lapsing of excess credit when opting for exemption under a specific notification. The court emphasized that the exemption was optional and not mandatory under the Central Excise Act, and the amendment introducing Rule 11 (3) was not retrospective. It clarified that the amendment would apply to tax-paying assessees opting for exemption on or after a specified date. Consequently, the court set aside the impugned Orders in Review, stating that the amendment to Cenvat Credit Rules, 2004 by inserting Rule 11 (3) would only impact assessees opting for exemption post a particular date. The judgment allowed the Writ Petitions and closed connected miscellaneous petitions without costs.
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