2014 (2) TMI 103 - CGOVT - Central Excise

Denial of rebate claim - Conditions, limitations and procedures, prescribed in Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004, as amended, issued under Central Excise Rules, 2002, for grant of rebate of duty on export of goods, have not been adhered - Evidence As per stated that the photocopy of original can t be adduced as a secondary evidence Assistant Commissioner of Central Excise rejected the claim but on appeal filed by the respondent, Commissioner (Appeals) allowed the rebate claim - Held that - applicant failed to comply with the proper procedure as laid down in Notification No. 19/2004-C.E. (N.T.) dated 6-9-2004 issued under Rule 18 of the Central Excise Rules, 2002. As per Para 3(B)(1) of Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 read with Para 8.4 of Chapter 8 of CBEC Excise Manual of Supplementary Instructions, the goods shall be exported on the application in Form ARE-1 specified in the annexure to Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 and procedures as specified in Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 shall be followed. So, it is clear that ARE-1 is the basic and essential export document for such exports for which impugned rebate claims have been filed. The ARE-1 form is an application for removal of excisable goods for export. In the absence of main document ARE-1 and without following the procedure described above, it cannot be established that same goods which were cleared from factory were actually exported. Since original ARE-1 is not produced, the duty paid character of exported goods cannot be established - When non-compliance of said requirement leads to any specific/odd consequences then it would be difficult to hold that requirement as non-mandatory. As such there is no force in the plea of the applicant that this lapse should be considered on a procedural lapse of technical nature which is condonable in term of case laws cited by applicant. Photocopies cannot be received as secondary evidence in terms of Section 63 of the Act and they ought not to have been received since the documents in question were admittedly photocopies, there was no possibility of the documents being compared with the originals. Government, therefore holds that non-submission of statutory document of ARE-1 and not following the basic procedure of export goods as discussed above, cannot be treated as just a minor/technical procedural lapse for the purpose of granting rebate of duty - Decided in favour of Revenue.

Summary

Issues Involved:
1. Non-submission of original and duplicate copies of ARE-1.
2. Procedural compliance under Notification No. 19/2004-C.E. (N.T.).
3. Establishing duty-paid nature of goods.
4. Relevance of secondary evidence under the Evidence Act.
5. Applicability of CBEC Manual provisions for proof of export.

Issue-wise Detailed Analysis:

1. Non-submission of Original and Duplicate Copies of ARE-1:
The core issue revolves around the claimant, M/s. Zandu Chemicals Limited, failing to submit the original and duplicate copies of ARE-1, which are essential for rebate claims under Rule 18 of the Central Excise Rules. The Assistant Commissioner (Rebate) rejected the rebate claim due to this non-submission, despite the claimant's submission of an indemnity bond and FIR for the lost documents. The Commissioner (Appeals) allowed the rebate claim, but the department filed a revision application arguing that the absence of these documents is a crucial procedural lapse that cannot be overlooked.

2. Procedural Compliance under Notification No. 19/2004-C.E. (N.T.):
The department contended that the conditions, limitations, and procedures prescribed in Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004, were not adhered to, particularly the requirement to submit the original copy of ARE-1. The government noted that ARE-1 is the basic and essential export document, and its submission is mandatory as per the notification and CBEC's Excise Manual of Supplementary Instructions. The absence of ARE-1 means the duty-paid nature of the goods cannot be established, thus failing to meet the statutory conditions for rebate.

3. Establishing Duty-Paid Nature of Goods:
The respondents argued that the duty-paid nature of the goods is established from the Central Excise invoice, not from ARE-1 copies. They submitted that other documents like the Central Excise invoice, shipping bill, bill of lading, and bank realization certificate should suffice to prove the export and duty payment. However, the government emphasized that the original and duplicate copies of ARE-1, duly certified by Customs, are necessary to establish that the goods cleared from the factory were actually exported.

4. Relevance of Secondary Evidence under the Evidence Act:
The department relied on the Supreme Court's judgment in J. Yashodha v. Shobha Rani, which held that photocopies cannot be accepted as secondary evidence under Sections 63, 64, and 65 of the Evidence Act, 1872. The government agreed, stating that the non-submission of original statutory documents like ARE-1 cannot be treated as a minor procedural lapse. The requirement for original documents is essential to prevent potential fraud and ensure the authenticity of the rebate claims.

5. Applicability of CBEC Manual Provisions for Proof of Export:
The respondents cited Para 13.7 of Chapter 7 of the CBEC Manual, which allows for verification from Customs authorities or collateral evidence in case of lost documents for goods exported under bond. However, the government clarified that this provision applies only to goods exported under bond and not to those under a claim for rebate. The mandatory requirement of submitting original ARE-1 copies for rebate claims is not covered by this provision, reinforcing the need for strict adherence to the prescribed procedures.

Conclusion:
The government set aside the order-in-appeal by the Commissioner (Appeals) and allowed the revision application, emphasizing the statutory nature of submitting original ARE-1 documents for rebate claims. The non-compliance with this requirement was not considered a minor procedural lapse but a significant omission that justified rejecting the rebate claim. The judgment underscored the importance of following the prescribed procedures to maintain the integrity of the rebate system and prevent misuse.