2013 (10) TMI 1311 - CGOVT - Central Excise

Denial of rebate claim - goods were not manufactured by the applicant and the same was purchased as inputs and duty on such exported goods should have been paid equivalent to the amount of Cenvat credit availed as instead of duty paid in terms of Section 4 of the Central Excise Act, 1944 - Held that - From perusal of Rule 3(5), it is unambiguously clear that when any inputs are removed as such from factory, duty of an amount equal to the credit availed in respect of such inputs shall be paid. In this case applicant has no duty paying invoice for the said goods therefore duty paid nature of goods and availment of Cenvat credit on said inputs cannot be established. There is no option to assess the inputs cleared as such under Section 4 and pay duty since the provision of Rule 3(5) of Cenvat Credit Rules, 2004 are applicable in this case. Government finds that observations made by appellate authority as reproduced in para (8) above in context of said Rule 3(5) of Cenvat Credit Rules, 2004 is legal and proper. Hence, Government concurs with the findings of the appellate authority. Government finds no infirmity in the order of Commissioner (Appeals) and hence, upholds the same. - Decided against assessee.

Summary

Issues:
1. Rebate claim rejection for exported goods due to duty payment method.
2. Failure to identify input documents and duty payment verification.
3. Discrepancy in duty payment and Cenvat credit availed.
4. Applicability of Rule 3(5) of Cenvat Credit Rules, 2004 for duty payment on cleared inputs.

Issue 1: The case involves the rejection of rebate claims for exported goods by the applicants, based on the grounds that the goods were not manufactured by them but purchased as inputs, leading to a dispute over the duty payment method under the Central Excise Act, 1944.

Issue 2: The Commissioner of Central Excise (Appeals) observed that the applicants failed to identify the input documents for the exported goods, hindering the verification of duty payment. The duty paid nature of the goods could not be confirmed as it was unclear whether the inputs were procured duty-free or with duty payment, essential for rebate grant.

Issue 3: The discrepancy arose from the duty payment on the sale value of items being higher than the Cenvat credit availed, challenging the Commissioner's assertion that duty should align with the Cenvat credit availed. The duty payment under Section 4 of the Central Excise Act, 1944 was questioned, emphasizing the need to follow Rule 3(5) of Cenvat Credit Rules, 2004.

Issue 4: The Government analyzed Rule 3(5) of the Cenvat Credit Rules, 2004, which mandates payment of duty equal to the credit availed for inputs removed as such from the factory. The absence of a duty-paying invoice for the goods in question complicated the verification of duty payment and Cenvat credit availed, reinforcing the application of Rule 3(5) for duty assessment.

The Government upheld the Commissioner's decision, emphasizing the legal and proper application of Rule 3(5) of the Cenvat Credit Rules, 2004 in determining duty payment for inputs cleared as such. The revision application was rejected on the grounds of lacking merit, affirming the Commissioner's order and the duty payment method prescribed by the relevant rules.