2013 (3) TMI 363 - CGOVT - Central Excise

Rebate claims - Procurement of excisable goods duty free - Exported the said goods on payment of duty under Rule 18 of Central Excise Rules, 2002 - Penalty under Rule 27 - Consumer Welfare Fund - Rule 18 or Rule 19 of the Central Excise Rules, 2002 - Held that - applicant had opted to work under Rule 19 by procuring raw materials duty free under Not. No. 43/2001-C.E. (N.T.). The amendment made in said notification makes it mandatory for the exporter to export goods under bond only and facility of rebate of duty under Rule 18 is not admissible in such cases.So duty paid raw materials are to be exported under bond in application form in ARE-2 in terms of Rule 19(1) of CER 2002. Similarly in case of refund of rebate - Held that - Rebate/Refund - Mode of payment - Petitioner paid lesser duty on domestic product and higher duty on export product which was not payable - Petitioner entitled to cash refund only of the portion deposited by it by actual credit and for remaining portion, refund by way of credit is appropriate as per M/s. Nahar Industrial Enterprises v. UOI (2008 (9) TMI 176 - PUNJAB AND HARYANA HIGH COURT ) In view of above circumstances, the impugned order-in-appeal is modified to the above extent and revision application is allowed.

Issues Involved:
1. Rejection of rebate claims under Rule 19 of Central Excise Rules, 2002.
2. Imposition of penalty under Rule 27 of Central Excise Rules, 2002.
3. Applicability of Notification No. 43/2001-C.E. (N.T.) dated 26-6-2001 and its amendments.
4. Transfer of rebate claims to the Consumer Welfare Fund.
5. Correctness of duty payment and eligibility for rebate under Rule 18 of Central Excise Rules, 2002.

Detailed Analysis:

1. Rejection of Rebate Claims under Rule 19 of Central Excise Rules, 2002:
The applicant filed rebate claims for goods exported, but the adjudicating authority rejected these claims. The rejection was based on the observation that the applicant procured raw materials duty-free under Notification No. 43/2001-C.E. (N.T.) and exported the goods on payment of duty, which was against the conditions laid down in the notification. The Commissioner (Appeals) upheld this rejection, emphasizing that the goods should have been exported without payment of duty under bond as per Rule 19(1) of Central Excise Rules, 2002. The government reaffirmed this stance, stating that the rebate claims could not be sanctioned as the goods were not exported in compliance with the mandatory conditions of Notification No. 43/2001-C.E. (N.T.) and its amendments.

2. Imposition of Penalty under Rule 27 of Central Excise Rules, 2002:
The adjudicating authority imposed a penalty of Rs. 5000/- in each case under Rule 27 of Central Excise Rules, 2002. However, the Commissioner (Appeals) set aside these penalties. The government upheld the Commissioner (Appeals)' decision to set aside the penalties, agreeing that the penalties were not warranted in this case.

3. Applicability of Notification No. 43/2001-C.E. (N.T.) dated 26-6-2001 and its Amendments:
The applicant contended that the goods exported were manufactured using both duty-free and duty-paid raw materials, and hence, the conditions of Notification No. 43/2001-C.E. (N.T.) were not violated. However, the government clarified that the notification and its amendments explicitly required that goods manufactured using duty-free raw materials must be exported under bond without payment of duty as per Rule 19(1). The government emphasized that the statutory requirements must be strictly adhered to, and any deviation would render the rebate claims inadmissible.

4. Transfer of Rebate Claims to the Consumer Welfare Fund:
The applicant argued that the rebate claims could not be transferred to the Consumer Welfare Fund if they were not sanctioned on merits. The government agreed with this contention, noting that as per Section 11B(2) of the Central Excise Act, 1944, the duty paid by the manufacturer should be refunded if it was not passed on to any other person. Therefore, the duty paid by the applicant should be refunded in the manner it was initially paid.

5. Correctness of Duty Payment and Eligibility for Rebate under Rule 18 of Central Excise Rules, 2002:
The applicant argued that the rebate should be granted regardless of whether the duty was correctly or wrongly paid, as long as the goods were exported. The government, however, reiterated that the rebate claims could only be considered if the goods were exported in compliance with the conditions of Notification No. 43/2001-C.E. (N.T.) and its amendments. The government also referenced previous decisions and circulars that clarified the procedures and conditions for exporting goods under bond without payment of duty.

Conclusion:
The government concluded that the rebate claims were not admissible under Rule 18 of Central Excise Rules, 2002, as the goods were not exported in compliance with the mandatory conditions of Notification No. 43/2001-C.E. (N.T.). The portion of the order setting aside the penalties was upheld, and the duty paid by the applicant was to be refunded in the manner it was initially paid. The revision application was allowed to the extent of modifying the impugned order-in-appeal.

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