2023 (9) TMI 1574 - HC - Central Excise

Partial rejection of rebate claims of the petitioners under Rule 18 of the Central Excise Rules 2002 - availing of two exemption notifications for domestic and export clearance simultaneously - Section 142 of the CGST Act 2017 - denial of claim of rebate on the ground that the payment of duty was at the will of the assessee as per the beneficial Notification for export of the goods - HELD THAT - The export rebate is permissible as the petitioner has paid duty at the time of export as final products manufactured by the petitioner were exempted from payment of duty by Notification No.29/2004- CE as amended by Notification No.58/2008-CE. However the petitioner availed the benefit of concessional rate of duty under the Notification No.59/2008-CE which exempted the goods manufactured by the petitioner at a concessional rate of duty and thereafter the claim of rebate was made. This Court considering such issue in the case of Arvind Limited 2014 (5) TMI 171 - GUJARAT HIGH COURT has held that Admittedly when the petitioner was given exemption from payment of whole of the duty and the petitioner if had paid duty at the time of exporting the goods there is no reason why it should be denied the rebate claimed which otherwise the petitioner is found entitled to. The Hon ble Supreme Court has affirmed the above judgement of this Court by dismissing the Special Leave to Petition filed by the Union of India reported in 2017 (352) ELT A21 (SC) ( 2016 (3) TMI 1267 - SC ORDER ) wherein it is held that the benefit of export rebate could not be denied to the exporter who paid duty on the exported product despite same being fully exempted under Notification No.29/2004 as amended by Notification No.59/2008- CE. The Hon ble Apex Court in the case of H.C.L. Limited vs. Collector of Customs New Delhi 2001 (3) TMI 971 - SC ORDER has held that as per the order of the Hon ble Apex Court in Collector of Central Excise Baroda vs. Indian Petro Chemicals 1996 (12) TMI 66 - SC ORDER there are two exemption notifications that cover the goods in question and the assessee was entitled to the benefit of that exemption notification which gives him greater relief regardless of the fact that notification is general in its terms and the other notification is more specific to the goods. The impugned orders set aside by further directing the respondents to grant the petitioners the rebate as claimed after calculating interest as may be applicable in accordance with law within a period of 12 weeks from the date of receipt of the copy of this order - petition allowed.

Issues Involved:

1. Rejection of rebate claims under Rule 18 of the Central Excise Rules, 2002.
2. Simultaneous availing of two exemption notifications for domestic and export clearance.
3. Calculation of excise duty based on CIF versus FOB value.
4. Entitlement to cash refund under the GST regime.

Detailed Analysis:

1. Rejection of Rebate Claims under Rule 18:

The primary issue in these petitions revolves around the rejection of rebate claims filed by the petitioners under Rule 18 of the Central Excise Rules, 2002. The petitioners, manufacturers and exporters of pharmaceutical products, claimed rebates for excise duty paid on exported goods. The Assistant Commissioner partially rejected these claims, granting cash rebates only to the extent of 5% excise duty and re-crediting the remaining amount, arguing that the petitioner paid excess duty by opting for a higher rate of 10% for exports compared to 5% for domestic sales. The petitioners contested this decision, arguing that they were entitled to choose the more beneficial notification for export purposes.

2. Simultaneous Availing of Two Exemption Notifications:

The petitioners availed two separate exemption notifications: one for domestic clearance at a 5% duty rate and another for exports at a 10% duty rate. The authorities rejected this approach, stating that simultaneous availing of two notifications without maintaining separate accounts of inputs is impermissible. However, the petitioners relied on the precedent set by the case of Arvind Ltd vs. Union of India, where it was held that an assessee could choose the more beneficial notification for exports. The court reaffirmed this principle, allowing the petitioners to avail different exemptions for domestic and export clearances.

3. Calculation of Excise Duty Based on CIF versus FOB Value:

The Assistant Commissioner reduced the rebate claims by recalculating the excise duty based on the FOB value, instead of the CIF value, arguing that freight and insurance beyond the port of export should not be included in the transaction value. The petitioners argued that the excise duty was correctly paid on the CIF value, as per the certified ARE-I value. The court noted that the rebate should be granted on the excise duty paid, as the assessment for such goods was already finalized, and the authorities cannot dispute the assessable value at the rebate stage.

4. Entitlement to Cash Refund under the GST Regime:

With the introduction of the GST regime, the petitioners argued for a cash refund of the rebate claims, as the CENVAT credit account no longer exists. The court, referencing the case of Thermax Limited, held that under Section 142(3) of the CGST Act, 2017, any amount accruing to the assessee should be paid in cash. The court directed the authorities to refund the rebate amount in cash, with interest, instead of re-crediting it to a non-existent CENVAT account.

Conclusion:

The court allowed the petitions, quashing the impugned orders and directing the respondents to grant the claimed rebates in cash, with applicable interest, within 12 weeks. The court emphasized the petitioners' right to choose the most beneficial notification for exports and upheld the principle that rebate claims should be settled in cash under the GST regime, aligning with the legal precedents and statutory provisions.

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