2020 (1) TMI 540 - AT - Central Excise

Eligibility of exporting the goods of their 100% Export Oriented Units on payment of duty - Rebate claim - HELD THAT - It is on record that the appellant has withdrawn their refund claim and made a request in writing to the Departmental officer to permit the re-credit of cenvat credit availed for the discharge of central excise duty while exporting the goods. This request was turned down by the Department as is evident from the letter dated 27.07.2009. There is no dispute regarding viability of duty free export by 100% EOU in terms of Notification No. 24/2003. As the appellant has paid the duty, which ought to have not been paid, there is no reason that the refund thereof byway of recredit in cenvat account can be stopped by the Department. Denial of rebate by the appellant as merchant exporter - HELD THAT - The export goods have been purchased on payment of duty to the supplier of the goods, and therefore, the appellant is legally permitted to avail rebate on the export product to the extent of Central Excise Duty paid. The violation at the end of supplier of the goods is not within control of the appellant. The Department has not objected the payment of duty at the time of their clearance from the supplier s factory. In fact has suffer central excise duty at the declared value - The appellant has not taken anything other than the duty paid at the time of procurement of raw-material as cenvat credit, which after processing has been exported by a value addition at the end of appellant. Therefore, the appellant is rightly entitled to claim the rebate of the central excise duty paid at the time of their procurement from supplier/manufacturer - Also, customs department has not objected to the value declared by the appellant under the provisions of Customs Act at the time of export under Export Valuation Rule, 2007. The appellant is entitled for recredit/ refund of cenvat credit duty availed while exporting the goods through its 100% EOU and also the rebate as per declared violation for export made as merchant exporter - Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:

1. Eligibility of exporting goods from a 100% Export Oriented Unit (EOU) on payment of duty and subsequently claiming rebate.
2. Denial of rebate claim by the appellant as a merchant exporter due to alleged overvaluation of export goods.

Issue-wise Detailed Analysis:

1. Eligibility of Exporting Goods from a 100% Export Oriented Unit (EOU) on Payment of Duty and Subsequently Claiming Rebate:

The appellant, a 100% Export Oriented Unit (EOU), exported goods by utilizing Cenvat credit and claimed a rebate under Rule 18 of the Central Excise Rules, 2002. The Department denied the rebate claim, asserting that 100% EOUs are exempt from paying duty under Notification No. 24/2003-CE dated 31.03.2003. The appellant requested re-credit of the duty paid, citing a CBEC Circular dated 20.04.2006, which clarified that EOUs need not discharge excise duty on exports. This request was denied by the Jurisdictional Superintendent.

The Tribunal referenced the decision in Smriti Organics Ltd. vs. Commissioner of Central Excise, Pune-III [2015 (330) ELT 583 (Tri.-Mum)], which established that duty paid without authority of law must be refunded. The Tribunal concluded that the appellant is entitled to re-credit of the Cenvat credit used for duty payment during export, as the duty was paid erroneously.

2. Denial of Rebate Claim by the Appellant as a Merchant Exporter Due to Alleged Overvaluation of Export Goods:

The appellant, acting as a merchant exporter, purchased goods from a supplier on payment of applicable central excise duty and claimed a rebate under Rule 18 of the Central Excise Rules, 2002. The Department alleged that the appellant and the supplier colluded to inflate the value of the goods to claim higher rebates. The adjudicating authority reduced the rebate claim based on the price reflected in returns filed before the sales tax authorities.

The Tribunal found that the appellant purchased goods on payment of duty and exported them after reprocessing, thus legally entitled to claim a rebate. The Department failed to provide evidence of any fraudulent relationship between the appellant and the supplier. The Tribunal cited the Supreme Court's decision in Commissioner of Central Excise and Customs vs. MDS Switchgear Limited [2008 (229) ELT 28 (SC)], which held that the assessment by the supplier’s jurisdictional officers cannot be challenged by the appellant’s jurisdictional officers.

Further, the Tribunal referred to the Supreme Court's ruling in Om Overseas Limited vs. Union of India [2003 (156) ELT 167 (SC)], which stated that rebate cannot be denied due to short payment of duty unless it is due to fraud, collusion, or willful misstatement. The Tribunal concluded that the appellant is entitled to the rebate as there was no evidence of fraud or collusion.

Conclusion:

The Tribunal set aside the impugned order and allowed the appeal, granting the appellant re-credit/refund of the Cenvat credit duty availed during export through its 100% EOU and the rebate for exports made as a merchant exporter. The decision emphasized that the appellant is entitled to consequential benefits, if any, arising from this judgment.