2012 (10) TMI 264 - CGOVT - Central Excise

Rebate claims for the duty paid in respect of the inputs and packing materials used in the manufacture of the export products alleged that applicant failed to file correct declaration and the declaration was not got verified from Assistant Commissioner of Central Excise before export Held that - As far as procedural compliance is concerned, applicant has complied the procedural requirement substantially as the declaration was filed - other procedural requirement were duly complied - substantive benefit cannot be denied for procedural infractions/lapses - core aspect or fundamental requirement for claiming rebate is payment of duty on materials and their use in the manufacture of exported goods. Since there is no dispute about this fulfilment of fundamental requirement, the rebate claim cannot be denied - input rebate claim is admissible to the applicant and the same may be sanctioned as per the input output norms approved by the department subsequently - revision applications are allowed

Summary

Issues:
Recovery of erroneously sanctioned rebate claim, procedural compliance for rebate claims, verification of input output ratio, denial of rebate claim for procedural infractions.

Analysis:
The case involved a revision application filed against the order-in-appeal passed by the Commissioner of Central Excise (Appeals) regarding the recovery of erroneously sanctioned rebate claims. The applicants had manufactured and exported bulk drugs and filed rebate claims for duty paid on inputs and packing materials. The department raised a demand for recovery of the rebate due to non-compliance with prescribed procedures under relevant notifications. The Assistant Commissioner ordered the recovery of the erroneously sanctioned rebate claims along with interest.

The applicants contended that the rebate claims were sanctioned by the proper authority and accepted by the Revenue, attaining finality. They argued that the procedural compliance was substantially met, and the fundamental requirement for claiming rebate, i.e., payment of duty on materials used in the manufacture of exported goods, was fulfilled. The applicants also highlighted various judgments supporting their position that substantive benefits cannot be denied for procedural lapses.

The Government carefully reviewed the case records and observed that the rebate claims were initially sanctioned after scrutiny by the Assistant Commissioner. Despite discrepancies in the declaration dates, the Government noted that the payment of duty on inputs used in manufacturing exported goods was not in dispute. The verification of the input output ratio revealed an excess rebate claim amount, which the applicants admitted and requested to sanction the balance rebate claim.

Based on the findings, the Government determined that the rebate claim was admissible to the applicant as the fundamental requirement of payment of duty on materials for exported goods was fulfilled. Therefore, the impugned orders were set aside, and the revision applications were allowed for the sanctioning of the rebate claim as per the approved input output norms.

In conclusion, the Government ordered in favor of the applicant, allowing the revision applications and directing the sanctioning of the rebate claim based on the fulfilled fundamental requirement for claiming rebate.