2003 (7) TMI 99 - CGOVT - Central Excise

Export - Rebate claim - duty payment - excisable raw materials used in the manufacture of made-up articles - manufacturers or exporters - Requirement of disclaimer certificate on AR-4/AR-5 - Non-mention of merchant-exporter s name on AR-5/ARE-2 - HELD THAT - The benefit of input stage rebate shall not be extended where exports are through merchant-exporter. Govt. observes that vide Circular No. 602/39/2001-CX dated 21-11-2001 the CBEC instructed that rebate of input stage duty shall be allowed to manufacturer (Processor) exporter or the merchant-exporter as the case may be where such input are used in the manufacture/processing of export goods and cleared directly from the factory of the manufacturer/Processor. The manufacturer/Processor may export the goods directly himself or through merchant-exporter. Thus it is clear that both manufacturer-exporter and the merchant-exporter are eligible subject to the conditions prescribed. The Dept s main objection is the Respondents are neither manufacturers nor exporters of the impugned goods. In this regard the Respondents contend that they purchase cotton yarns from various manufacturers/dealers and weave cotton fabrics at their own weaving unit situated in Vapi and also at times they get the fabrics woven on their behalf from outside weavers on job work basis by supplying them yarn who then convert the yarn to fabrics by charging them only the conversion cost. These fabrics are then sent for processing to various processors on job work basis. After the required process these fabrics are sent to another job worker for converting these fabrics into bed sheets and pillow covers. At no point of time does the ownership of the fabrics pass on to any of the job workers and all activities are done on their account. In view of the factual and legal position Govt. is of the opinion that it cannot be said that M/s. Creative Mobus Fabrics are neither manufacturers nor exporters of the impugned goods. This objection of the Applicant Commissioner is therefore not sustainable. The respondent submit that this is a hand written invoice prepared by a clerk and in the column of the description of goods shirting width 153 cms is written. The correct reading of the description should be sheeting and not Shirting . In all other invoices the description is read as sheeting and the converter where the said fabric is received has very clearly in his documents shown the description of the fabrics as sheeting . The whole process is carried out under direct control and supervision of the Central Excise officers. If this is correct Govt. is of the opinion that this objection of the department also is not sustainable. Govt. also observes that in para 18 of the impugned Order-in-Appeal Commissioner (A) has given directions to the Assistant/Deputy Commissioner of Central Excise to be followed before passing rebate benefit. Govt. upholds these directions. As discussed disclaimer certificate from other manufacturers of exported goods is also to be submitted to the lower Authority by the Respondents. The Respondents are also directed to submit documentary evidence to substantiate their submissions made before Revisionary Authority regarding all activities being carried out under the supervision of the Central Excise Authorities. With the above modifications the impugned Order-in-Appeal is upheld. So ordered.

Summary

Issues Involved:
1. Eligibility of M/s. Creative Mobus Fabrics Ltd. as manufacturer/exporter.
2. Requirement of disclaimer certificate on AR-4/AR-5.
3. Discrepancy in raw material description.
4. Non-mention of merchant-exporter's name on AR-5/ARE-2.

Summary:

1. Eligibility of M/s. Creative Mobus Fabrics Ltd. as Manufacturer/Exporter:
The department objected that M/s. Creative Mobus Fabrics Ltd. are neither manufacturers nor exporters as per Shipping Bills. The Original Authority noted that only a manufacturer or processor who exports can claim input stage rebate. However, Circular No. 602/39/2001-CX, dated 21-11-2001, allows rebate for both manufacturer-exporter and merchant-exporter if inputs are used in manufacturing/processing and cleared directly from the factory. The Respondents provided detailed processes showing they retained ownership of the fabrics throughout. The Government concluded that M/s. Creative Mobus Fabrics Ltd. are indeed manufacturers/exporters, making the department's objection unsustainable.

2. Requirement of Disclaimer Certificate on AR-4/AR-5:
The department argued that the disclaimer certificate should be on the AR-4/AR-5. The Respondents contended that they provided valid disclaimer certificates separately for each consignment. The Government referenced the case of Simplex Global Impex v. CCE, Nagpur, where it was held that export rebate should not be denied if a disclaimer certificate is produced later. The Government agreed but modified the order to require disclaimer certificates from all manufacturers of the export goods.

3. Discrepancy in Raw Material Description:
The department noted a specific case where the raw material was described as "cotton 100% shtng 153 cms" while the exported goods were bed sheets and pillow covers. The Respondents clarified that the term should be read as "sheeting" not "shirting," attributing the discrepancy to a clerical error. The Government found this explanation plausible and deemed the department's objection unsustainable.

4. Non-Mention of Merchant-Exporter's Name on AR-5/ARE-2:
The department objected to the absence of M/s. IKEA Trading's name on AR-5/ARE-2. The Government observed that the sale and subsequent export by M/s. IKEA Trading were not disputed, and the omission was a procedural lapse that should not hinder substantive benefits.

Conclusion:
The Government upheld the Commissioner (Appeals) directions with modifications, requiring disclaimer certificates from all manufacturers and documentary evidence of activities under Central Excise supervision. The impugned Order-in-Appeal was upheld with these modifications.