2010 (3) TMI 366 - AT - Customs

Rebate- The appellant states that the appellants are regularly exporting bulk drugs and earning precious foreign exchange for the country. . He states that the prevalence of this practice is recognized by the Board s Circular No. 510/06/2000-CX dated 3-2-2000. The appellants were sanctioned similar refunds but there was no specific order to take credit of the remaining amount. Held that- the exporters are required to be encouraged by grant of legitimate rebate due to them, the credit taken by the appellant suo motu is regularized as a one time measure and the demand raised against them is set aside. However, for violation of rules, a token penalty of Rs. 5,000/- (Rupees five thousand only) is imposed on the appellants while setting aside the penalty equal to duty amount imposed by the authorities below. The appeal is thus partly allowed in the above terms.

Summary

Issues:
1. Whether the appellants were entitled to take credit of the remaining amount of duty paid on export goods without a specific order?
2. Whether the penalty imposed on the appellants for taking credit without specific order was justified?

Analysis:
1. The appellant argued that they were regularly exporting bulk drugs and were sanctioned about 98% of the rebate of duty paid on export goods in cash, with the balance allowed as credit in the CENVAT credit, citing Board's Circular No. 510/06/2000-CX. In this case, although there was no specific order to take credit of the remaining amount, the appellants took credit as per usual practice. The appellant contended that denying the credit, which is an export incentive, and imposing a heavy penalty equal to the credit amount was unjust. The Tribunal considered the submissions, Circular No. 510/06/2000-CX, and the need to encourage exporters by granting legitimate rebates. Consequently, the credit taken by the appellant was regularized as a one-time measure, and the demand raised against them was set aside.

2. The respondent argued that the appellants should have approached departmental authorities instead of taking credit suo motu. However, it was acknowledged that the amount involved was due to the appellants as an export rebate. In light of the arguments from both sides and the objective of supporting exporters, the Tribunal decided to set aside the penalty equal to the duty amount imposed by the authorities below. Instead, a token penalty of Rs. 5,000 was imposed on the appellants for the violation of rules. Therefore, the appeal was partly allowed, regularizing the credit taken by the appellants and reducing the penalty imposed.