2020 (3) TMI 431 - CGOVT - Central Excise

Rebate of duty - failure to self-sealing of the exported goods - rejection on the ground that the respondent had contravened the procedure enumerated in para 3(a)(i), (ii) (iii) of Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 issued under Rule 18 of C.E. Rules, 2002 - HELD THAT - It is observed that the rebate of duty on the export goods is allowed under Notification No. 19/2004-C.E. subject to the conditions, limitations and procedures specified in Para 2 and Para 3 thereof. While conditions and limitations are specified in Para 2, the procedure to be followed is specified in Para 3 of this notification. From the word shall used in Para 2(a) to 2(g) of the notification (supra), it is evident that all the conditions and limitations mentioned in Para 2 are mandatory and non-negotiable. Further the condition that the excisable goods shall be exported after payment of duty is a substantive condition for claiming the rebate of duty. Similarly the procedure relating to sealing of goods and examination at the place of dispatch and export thereof specified in Para 3(a)(i), ((ii) and (iii) of the notification are also mandatory - The essence conditions and procedure prescribed thereunder is to establish the identity and the duty paid character of export goods which has not been done in the present case which is a substantive condition of notification. Commissioner (Appeals) observation that the warehouse appearing in para 2(a) of the notification includes the warehouse of the merchant exporter is incorrect. Therefore his findings that the merchant exporter could have cleared the impugned goods from his warehouse under self-sealing procedure is fallacious - The Government is of the view that the Commissioner (Appeals) has not appreciated the true facts; the real spirit and the text of the Notification 19/2004, dated 6-9-2004 and granted relief to the applicant erroneously. The government agrees with the applicant s contention that contravention of the mandatory conditions stipulated in Para (2) Para (3) of the Notification No. 19/2004, dated 6-9-2004 cannot be waived or relaxed under Rule 18 of Central Excise Rules, 2002 - revision allowed.

Summary

Issues:
Claim of rebate of duty on exported goods by a merchant exporter under Notification No. 19/2004-C.E. (N.T.)
Compliance with the conditions and procedures specified in Para 2 and Para 3 of Notification No. 19/2004-C.E.
Eligibility of a merchant exporter for the facility of self-sealing of export goods

Analysis:
The judgment revolves around a Revision Application filed against an Order-in-Appeal allowing the rebate of duty to a merchant exporter for exported goods. The exporter procured goods without sealing from the manufacturer and exported them without prior intimation to Central Excise authorities. The Maritime Commissioner rejected the rebate claim due to non-compliance with specified procedures. The applicant argued that a merchant exporter is not eligible for self-sealing and highlighted non-compliance with Notification 19/2004-C.E. The matter was examined, emphasizing the mandatory nature of conditions and procedures for claiming duty rebate under the notification.

The judgment highlighted that conditions and limitations in Para 2 and procedures in Para 3 of Notification 19/2004-C.E. are mandatory. The exporter must export goods after duty payment, and procedures for sealing and examination are crucial. A merchant-exporter has two options for claiming duty rebate: direct removal from the manufacturer's premises under self-sealing or sealing under Central Excise authorities' supervision. Failure to establish the identity and duty paid character of export goods is a substantive condition. The judgment referenced a Supreme Court case distinguishing between procedural and substantive conditions, emphasizing non-condonable non-compliance.

The judgment criticized the Commissioner (Appeals)'s reliance on a previous case, noting differences in export processes. It clarified that the warehouse mentioned in the notification does not include the merchant exporter's warehouse, refuting the possibility of self-sealing by the exporter. The Government concluded that the Commissioner (Appeals) erred in interpreting the notification and granted relief erroneously. It affirmed that contravention of mandatory conditions in the notification cannot be waived or relaxed under Central Excise Rules.

In conclusion, the Revision Application was allowed, emphasizing the importance of complying with mandatory conditions and procedures for claiming duty rebate on exported goods. The judgment clarifies the eligibility of a merchant exporter for self-sealing and underscores the significance of following prescribed rules and procedures for export transactions to ensure compliance with legal requirements.