1991 (5) TMI 78 - CGOVT - Central Excise

Summary

Issues:
1. Review proceeding initiated by the Government of India under Section 35EE of the Central Excises & Salt Act, 1944.
2. Rebate claims filed under Rule 12 of the Central Excise Rules for duty paid on electric motors used in the manufacture of Acetylene gas generating plants.
3. Interpretation of Rule 12 and Rule 13 of the Central Excise Rules regarding export of goods and grant of rebate.
4. Compliance with Notification No. 197/62 as amended under Rule 12 for export of goods.
5. Availment of MODVAT credit on duty paid on electric motors and its impact on the export of goods.

Analysis:

1. The case involves a review proceeding initiated by the Government of India under Section 35EE of the Central Excises & Salt Act, 1944, concerning a show cause notice issued to review an Order-in-Appeal passed by the Collector of Central Excise (Appeals), Bombay.

2. The respondents had filed rebate claims under Rule 12 of the Central Excise Rules for duty paid on electric motors used in the manufacture of Acetylene gas generating plants, which were exported under bond. The Assistant Collector rejected the claims, but the Collector of Central Excise (Appeals), Bombay allowed the relief, considering the motors as components of the final product exported without conversion.

3. The Government's show cause notice is based on the view that the electric motors were exported as part of the Acetylene gas plant under Rule 13, and the question of rebate under Rule 12 does not apply. The respondents claimed coverage under Rule 12A/191-A, but the Government questioned the Collector (Appeals) observations regarding compliance with Notification No. 197/62 for export.

4. Referring to the case of Steel Rolling Mills v. Collector of Central Excise, the Government highlighted that the goods were bought out items, disqualifying them from Rule 12 under the proviso to Notification 197/62-C.E. The Government emphasized the incorrect practice of dividing export claims under different rules and the dangerous precedent it sets.

5. The Government noted that the respondents had availed MODVAT credit on duty paid on electric motors, neutralizing the duty burden. As a result, the electric motors were exported without the burden of duty, making them ineligible for rebate under Rule 12A/191-A.

6. During the hearing, the applicant admitted to availing MODVAT credit on duty paid for the motors but clarified that they were unable to use the credit as the goods were cleared without duty payment for export. However, this clarification was deemed irrelevant to the main issue.

7. Considering the above reasons, the Government found no merit in the party's claims and held the order-in-appeal legally incorrect, setting it aside and restoring the original order.