2013 (2) TMI 163 - CGOVT - Central Excise

Rebate Claim - Applicant had filed a claim of rebate of duty paid on chassis cleared from Vellivayalchavadi Unit for export - Exported goods were originally manufactured at Applicants Unit at Hosur and subseqnelty transferred to Vellivayalchavadi Unit under Rule 16 and cleared for export after testing Details of production and clearance of the said chassis were not shown in the ER-1 return of Vellivayalchavadi Unit Held that - Credit of duty paid and subsequently reversal made thereof in cases of export rebates represents nothing else but duty already discharged. What is necessary here is fact of discharge of duty and export of the same very goods. As decided in the case of CCE, Raigarh v. M/s. Micro Ink Ltd 2011 (3) TMI 1272 - BOMBAY HIGH COURT denial of rebate on the ground that the duty has been paid by reversing the credit cannot be sustained. Goods were received from their Hosur Unit-II who had paid duty vide Central Excise Invoice No. 14152 dated 29-3-2007, on the basis of which applicant had availed/reversed Cenvat credit under Rule 16 of Central Excise Rules, 2002. The goods were brought to their factory for emission testing as the said facility is not available at Hosur Plant. Hon ble Tribunal has held in the case of CCE, Ahd. v. Tapsheel Enterprises 2007 (5) TMI 97 - CESTAT, AHMEDABAD that third party goods in addition to own goods exported after testing and repacking and duty paid at removal from Cenvat credit taken is available as rebate - The provision of Rule 16 are rightly availed by applicant and therefore goods exported within six months from date clearance from their factory. Boards Circular No. 294/97-CX., dated 30-11-1997 clearly sates that when certain goods having special characteristics and are clearly identifiable with a unique engine No. and chassis No. it is possible to correlate the goods exported and payment of duty thereupon. In this circular the condition of direct export from the factory or payment of duty is also relaxed where such correlation and duty paid nature is established - ARE-1 original/duplicate contains the endorsement of customs that goods mentioned in ARE-1 have been exported vide said Shipping Bill. As such the export of said goods stands established Rebate of duty on exported goods is admissible under rule 18 of the Central Excise Rules, 2002 read with Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004

Summary

Issues Involved:
1. Rebate claim on duty paid for export of goods.
2. Compliance with Central Excise Rules, 2002.
3. Applicability of Rule 16 versus Rule 16C.
4. Correlation between goods cleared and exported.
5. Validity of duty payment through CENVAT credit reversal.

Issue-wise Detailed Analysis:

1. Rebate Claim on Duty Paid for Export of Goods:
The applicant, M/s. Ashok Leyland Ltd., Chennai, filed a rebate claim for the duty paid on chassis cleared for export. The claim was scrutinized against the ER-1 return, revealing discrepancies in production and clearance records. The chassis was initially manufactured at the Hosur Unit and later transferred to Vellivayalchavadi for testing before export. The rebate claim was rejected by the Assistant Commissioner and upheld by the Commissioner (Appeals), leading to the present revision application.

2. Compliance with Central Excise Rules, 2002:
The applicant argued that the goods were transferred under Rule 16 of the Central Excise Rules, 2002, which allows for the inwarding of duty-paid goods for refining, repairing, or any other reason. The department contended that the proper procedure under Rule 16C should have been followed, as the goods were not manufactured at Vellivayalchavadi but were only tested there. The applicant maintained that the testing was the final manufacturing step, making the goods excisable and marketable.

3. Applicability of Rule 16 versus Rule 16C:
The applicant cited the case of CCE, Ahd. v. Tapsheel Enterprises, where the Tribunal held that third-party goods exported after testing and repacking, with duty paid at removal, are eligible for rebate. The Commissioner (Appeals) did not consider this precedent and focused on the procedural aspect, suggesting Rule 16C should have been followed. The applicant argued that Rule 16 was correctly applied, as the goods were exported within six months from the date of clearance.

4. Correlation Between Goods Cleared and Exported:
The department questioned the correlation between the goods cleared from Vellivayalchavadi and those exported, citing differences in tariff headings and descriptions. The applicant clarified that the goods were identifiable by unique chassis and engine numbers, and the short description in the Shipping Bill was due to space constraints. The government noted that the correlation was established through customs endorsements on the ARE-1 forms, confirming the export of the goods mentioned.

5. Validity of Duty Payment Through CENVAT Credit Reversal:
The department argued that reversing CENVAT credit does not constitute duty payment for rebate purposes. The government referred to the Bombay High Court's decision in CCE, Raigarh v. M/s. Micro Ink Ltd., which held that reversing credit amounts to duty payment eligible for rebate. The applicant's reversal of credit at Vellivayalchavadi neutralized any improper credit availment, and the duty paid nature of the goods was established.

Conclusion:
The government concluded that the rebate of duty on the exported goods is admissible under Rule 18 of the Central Excise Rules, 2002, read with Notification No. 19/2004-C.E. (N.T.). The impugned orders were set aside, and the original adjudicating authority was directed to sanction the rebate, if otherwise in order. The revision application succeeded, and the rebate claim was allowed.