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2015 (3) TMI 780 - CGOVT - Central ExciseDenial of rebate claim - merchant exporter - excess duty paid by the manufacturer supplier - Notification No. 19/2004-CE(NT) dated 06.09.2004 and Notification No. 4/2006-CE dated 01.03.2006 - original authority held that duty was required to be paid on exported goods at the effective rate of duty @ 4%/5% in terms of Notification No. 4/2006-CE dated 01.03.2006 as amended and sanctioned the rebate claims to the extent of duty payable @ 4%/5% - Simultaneous availment of benefit of two notifications - Commissioner (Appeals), modified the impugned Orders-in-Original and allowed the recredit in cenvat credit account of the amount rejected as rebate. Held that - There is no merit in the contentions of applicant that they are eligible to claim rebate of duty paid @10% i.e. General Tariff Rate of Duty ignoring the effective rate of duty @ 4% or 5% in terms of exemption notification No. 4/06-CE dated 1.03.06 as amended. As such Government is of considered view that rebate is admissible only to the extent of duty paid at the effective rate of duty i.e. 4% or 5% in terms of Notification No. 4/06-CE dated 1.03.06 as amended, as applicable on the relevant date on the transaction value of exported goods determined under section 4 of Central Excise Act, 1944. - Decided against the assessee. Allowing the manufacturer to avail re-credit of the amount paid in excess - revenue contended that manufacturers have already recovered excess duty from its buyer M/s Cipla Ltd., Mumbai and allowing re-credit of excess paid amount in the cenvat credit account of manufacturer will lead to additional benefit to the manufacturer which will amount to unjust enrichment. - Held that - The factual position is to be verified by the original authority from records. Government notes that in these cases claimant is a merchant exporter and duty on exported goods is paid by manufacturer. So, the re-credit of excess paid amount is to be allowed as ordered by Commissioner (Appeals), only if the provisions of section 12B of Central Excise Act 1944 are complied with. - Decided in favor of Revenue.
Issues Involved:
1. Applicability of Notification No. 2/08-CE vs. Notification No. 4/06-CE for duty rate on exported goods. 2. Entitlement to rebate claims of duty paid on exported goods. 3. Whether the rebate sanctioning authority can question the assessment of duty. 4. Issue of unjust enrichment in re-crediting the excess duty paid. Issue-wise Detailed Analysis: 1. Applicability of Notification No. 2/08-CE vs. Notification No. 4/06-CE: M/s Cipla Ltd. contended that both notifications are valid and do not exclude each other, thus allowing them to choose the more beneficial one. They argued that they are entitled to rebate claims based on the 10% duty rate under Notification No. 2/08-CE. The government noted that Notification No. 2/08-CE aimed to reduce the general rate of duty, while Notification No. 4/06-CE provided for an effective rate of duty. The government concluded that the effective rate of duty should be applied to exported goods, as per CBEC instructions, and not the general tariff rate. 2. Entitlement to Rebate Claims: M/s Cipla Ltd. argued that they are entitled to a rebate of the entire duty paid on exported goods under Rule 18 of the Central Excise Rules, 2002. The government observed that the rebate should be granted only for the duty paid at the effective rate (4% or 5%) as per Notification No. 4/06-CE, not the higher general tariff rate. The government's decision was supported by CBEC instructions and previous judgments, which emphasized that rebate claims should be based on the effective rate of duty. 3. Rebate Sanctioning Authority's Jurisdiction: M/s Cipla Ltd. claimed that the rebate sanctioning authority cannot question the assessment of duty on exported goods. The government noted that the rebate sanctioning authority must ensure that the rebate claim is in order and can sanction the claim in whole or part, as per Notification No. 19/04-CE(NT). The authority is not mandated to sanction claims for excess paid duty and then initiate recovery proceedings. 4. Unjust Enrichment: The department argued that allowing re-credit of excess duty paid to the manufacturer would result in unjust enrichment, as the manufacturer has already recovered the excess duty from M/s Cipla Ltd. The government agreed that re-credit should be allowed only if the provisions of Section 12B of the Central Excise Act, 1944, are complied with, ensuring no unjust enrichment occurs. The factual position regarding duty incidence and payment was to be verified by the original authority. Conclusion: The government concluded that the rebate is admissible only to the extent of duty paid at the effective rate (4% or 5%) under Notification No. 4/06-CE. The excess paid amount should be re-credited in the Cenvat credit account, subject to compliance with Section 12B of the Central Excise Act, 1944. The revision applications were disposed of accordingly.
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