2020 (2) TMI 626 - HC - Central Excise

Rebate claim - claim rejected on the ground that the description of the export goods in the export invoices were invariance within the description in Form ARE-1 s - Maintainability of application - Section 35 EE of the Central Excise Act 1944 - HELD THAT - Goods imported under Advance Authorisation Schemes are exempted are from payment of customs duty additional customs duty education cess anti-dumping duty and safeguard duty et cetera. An importer has to 1st discharge export obligation undertaken under the Advance Authorisation by exporting finished goods out of the country. Had the petitioner used only duty paid goods in the manufacture of export goods the petitioner would have been entailed rebate under Rule 18 of the Central Excise Rules 2002. In the present case however the petitioner has utilized not only goods/inputs imported under the Advance Authorisation Scheme but also goods/inputs procured on payment of excise duty/additional duty of customs equivalent to central excise duty on which it availed CENVAT Credit to manufacture goods exported - There is no discussion in the impugned orders of the 1st 2ndrespondent and the 3rd respondent as to under which customs notification the goods were imported by the petitioner under the Advance Authorisation Scheme. The petitioner has used goods/inputs procured on payment of Central Excise duty and Additional Duty of Customs equivalent to Central Excise Duty along with goods imported under the Advance Authorisation Scheme to manufacture of export goods to claim rebate under Rule 18 of the Central Excise Rules 2002 on the finished goods exported from the Coimbatore unit of the petitioner - Normally only after export obligation undertaken/specified in the Advance Authorisation is discharged a manufacturer would be entitled to either sell the manufactured goods in the domestic tariff area i.e in the domestic market on payment of excise duty or export them and claim rebate of excise duty paid on such goods under Rule 18 of the Central Excise Rules 2002. To allow rebate claim to the petitioner without the petitioner discharging the obligation undertaken under the relevant customs notification read with Foreign Trade Policy under which the inputs were imported may result in unintended incentives being granted to the petitioner without proper examination - Appeal allowed by way of remand.

Summary

Issues:
- Denial of rebate claim under Section 35 EE of the Central Excise Act, 1944
- Discrepancies in description of export goods
- Utilization of goods imported under Advance Authorisation Scheme and CENVAT credit

Analysis:
1. Denial of Rebate Claim: The petitioner, engaged in manufacturing SG/Ductile Iron Machine Casting Pipe fittings, filed rebate claims under Rule 18 of the Central Excise Rules, 2002 for goods exported. The 1st respondent partially sanctioned the claims but rejected a portion due to discrepancies in export goods' description. The 2nd respondent affirmed this decision, leading to revision applications by the petitioner. The 3rd respondent dismissed the applications, citing improper utilization of cenvat credit and duty-free inputs, upholding lower authorities' decisions.

2. Discrepancies in Description: The petitioner argued that minor variations in export goods' description should not hinder rebate claims, supported by customs officers' verification. However, the government contended that accurate documentation is crucial for rebate claims, emphasizing the need for matching descriptions in export documents. The government upheld lower authorities' decisions due to the petitioner's failure to establish a clear correlation between exported and documented goods.

3. Utilization of Goods under Advance Authorisation: The petitioner imported materials under the Advance Authorisation Scheme, using both duty-free and duty-paid inputs for manufacturing export goods. The court noted discrepancies in discussing relevant customs notifications and policies, directing the 1st respondent to reevaluate if unintended export incentives were granted. The court set aside the 3rd respondent's order, remanding the case for a fresh consideration within three months to ensure proper examination of rebate entitlement and utilization of imported inputs.

In conclusion, the judgment addresses the denial of rebate claims, discrepancies in goods' description, and the utilization of duty-free and duty-paid inputs under the Advance Authorisation Scheme. The court emphasized the importance of accurate documentation, proper utilization of inputs, and compliance with customs policies in determining rebate entitlement, leading to a remand for further evaluation by the 1st respondent.