2022 (6) TMI 175 - HC - Central Excise

Rebate claim - duty paid on the exported finished goods - All Industry Rates of Draw back - Non availment of benefit of Cenvat credit or the benefit of rebate of duty paid on the materials used in the manufacture of export products - Rule 18 of the Central Excise Rules, 2002 r/w Notification 19/2004-CE(N.T.), dated 06.09.2004 - HELD THAT - It is the assertive stand of the appellants that they have not availed double benefit as alleged by the respondent authorities all along - According to the appellants, the N/N. 68/2011-Cus. (N.T.) dated 22.09.2011 would clearly go to show the double benefit only, where drawback of duty paid on inputs/input services and rebate of duty paid on inputs under Rule 18 of CER, 2002 are simultaneously availed. However, the appellants have not availed any rebate of duty paid on inputs/input services and therefore, there is no doubt benefit availed by them, which fact was not taken into account either by the respondent authorities or by the learned Judge. According to the respondents, the appellants are not entitled for doubt benefit and hence, their claim was rightly rejected by the respondent authorities. There are two different facts and circumstances projected by both the appellants and the respondents before this court. It is the firm stand of the appellants that they have not claimed any excess duty draw back, which is stoutly refuted by the learned counsel for the respondents. As such, taking note of the factual dispute arisen with regard to the availment of Cenvat Credit by the appellants, this court is of the view that it would be proper to remit the matter to the authority concerned to redo the entire process - Appeal disposed off.

Summary

Issues Involved:
1. Eligibility for All Industry Rate of Drawback.
2. Rejection of rebate claims by the Assistant Commissioner of Central Excise.
3. Double benefit allegation regarding Cenvat credit and higher rate of drawback.
4. Applicability of Notification No.68/2011-Cus. (N.T.) dated 22.09.2011.
5. Directions for reconsideration by the authority concerned.

Issue-wise Detailed Analysis:

1. Eligibility for All Industry Rate of Drawback:
The appellant, a manufacturer of synthetic and blended textile yarn, sought the benefit of the All Industry Rate of Drawback. The appellant claimed that they neither availed the benefit of Cenvat credit nor the rebate of duty paid on materials used in manufacturing export products. They argued that under the Government schemes, a manufacturer can either export finished products without payment of duty or claim a rebate/refund if exported on payment of duty. The appellant filed three rebate claims for the duty paid on exported finished goods.

2. Rejection of Rebate Claims by the Assistant Commissioner of Central Excise:
The Assistant Commissioner rejected the rebate claims on the ground that the appellant utilized Cenvat credit and availed the benefit of a higher rate of drawback. The rejection was based on Customs Notification No.68/2011-Cus.(N.T.) dated 22.09.2011, which prohibits availing both Cenvat credit and a higher rate of drawback simultaneously. The appellant's subsequent appeals to the Commissioner of Central Excise (Appeals) and the Joint Secretary, Ministry of Finance, were also rejected on similar grounds.

3. Double Benefit Allegation Regarding Cenvat Credit and Higher Rate of Drawback:
The appellant contended that they availed Cenvat credit only on capital goods and not on inputs or input services. They argued that Notification No.68/2011-Cus. (N.T.) allows a higher rate of drawback if no Cenvat credit is availed on inputs or input services. The customs authority sanctioned the drawback claim after due verification. The appellant maintained that they did not avail double benefits, as the rebate pertained to duty paid on finished goods using Cenvat credit on capital goods, while the drawback pertained to duty paid on inputs/input services without availing Cenvat credit.

4. Applicability of Notification No.68/2011-Cus. (N.T.) Dated 22.09.2011:
The notification provides for two types of drawback: a lower rate when Cenvat facility is not availed on inputs/input services and a higher rate when Cenvat facility is availed. The appellant argued that the notification does not restrict availing Cenvat credit on capital goods. The learned Judge, however, observed that the appellant is not entitled to claim both rebates as per the proviso to Rule 3 of the Central Excise Duties and Service Tax Drawback Rules, 1995.

5. Directions for Reconsideration by the Authority Concerned:
The court noted the factual dispute regarding the availment of Cenvat credit by the appellant. It directed the matter to be remitted to the authority concerned to reconsider the entire process, taking into account Paras 6 and 15 (i) and (ii) of Notification No.68/2011-Cus. (N.T.) and Rule 2(a) of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995. The appellants were instructed to file their submissions with documentary evidence within three weeks, and the authority was directed to pass orders within four weeks thereafter.

Conclusion:
The court disposed of the writ appeals with directions for the authority to reconsider the appellant's claims, ensuring compliance with relevant notifications and rules. The court emphasized the need for a thorough examination of the appellant's submissions and documentary evidence to resolve the dispute regarding the alleged double benefit.