2015 (3) TMI 822 - CGOVT - Central Excise

Sanction of partial rebate claim - applicant exporter has cleared export goods on payment of duty (BED) (a) 10% in terms of Notification No. 2/2008-C.E., dated 1-3-2008 as amended, whereas they were clearing goods for home consumption on payment of duty (BED) @ 4% in terms of Notification No. 4/2006-C.E., dated 1-3-2006 as amended - original authority sanctioned the rebate claims to the extent of duty paid @ 4% and allowed recredit of balance amount in their Cenvat credit account - Held that - both the Notifications prescribed effective rates of duty. Notification No. 30/2004-C.E. prescribed nil rate of duty provided manufacturer does not avail Cenvat credit on inputs. This clarification does not say that duty can be paid at tariff rate when the exemption notification is existing. Simultaneously availment of these notifications is allowed in the said circular as they pertain to different situation like whether he is availing Cenvat credit or not. This circular is of no help to the applicant as in their case there are no two conditional notifications prescribing two effective rates. Moreover, there is no such circular issued in case of pharmaceutical products pertaining to Notification in question allowing their simultaneous availment. The other Circular No. 937/27/2010-CX., dated 26-11-2010 is not applicable as in the instant case there is no applicability of provisions of Section 5A(1A) of Central Excise Act, 1944. 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%. Government is of the considered view that lower authorities are legally right in holding that duty was payable @ 4% in terms of exemption Notification No. 4/2006-C.E., dated 1-3-2006 as amended and rebate is admissible only to the extent of duty paid at the effective rate of duty i.e. 4% in terms of Notification No. 4/2006-C.E., dated 1-3-2006. Government observes that original authority and appellate authority have rightly restricted the rebate claim to the extent of dut2y paid @ 4% (BED) in terms of Notification No. 4/2006-C.E., dated 1-3-2006. The amount of duty paid in excess of duty payable at effective rate of 4% as per Notification No. 4/2006-C.E. is to be treated as voluntary deposit made by applicant with the Government - Decided against assessee.

Issues Involved:
1. Eligibility of rebate claim for duty paid at different rates on exported goods.
2. Applicability of multiple notifications prescribing different duty rates.
3. Legality of sanctioning rebate through Cenvat credit instead of cash.
4. Consistency in the assessment of goods for home consumption and export.
5. Binding nature of CBEC circulars and instructions on departmental authorities.

Issue-wise Detailed Analysis:

1. Eligibility of Rebate Claim for Duty Paid at Different Rates on Exported Goods:
The applicants exported pharmaceuticals/medicaments under CETH 3004, paying duty at 10% as per Notification No. 2/2008-C.E., while for home consumption, they paid 4% as per Notification No. 4/2006-C.E. The adjudicating authority sanctioned the rebate claims at 4% and allowed recredit of the excess duty in the Cenvat credit account. The applicants contended that they should be allowed to claim rebate at the higher rate of 10% for exports. The judgment upheld that the rebate is admissible only to the extent of the effective rate of duty, i.e., 4%, as prescribed by Notification No. 4/2006-C.E., and the excess duty paid should be recredited to the Cenvat account.

2. Applicability of Multiple Notifications Prescribing Different Duty Rates:
The applicants argued that they could choose between two notifications-Notification No. 4/2006-C.E. (4%) and Notification No. 2/2008-C.E. (10%)-for the same goods. The judgment clarified that while the applicants could choose the beneficial notification, they could not simultaneously avail both. The duty for both home consumption and export must be assessed consistently, adhering to the effective rate of duty as per the exemption notification.

3. Legality of Sanctioning Rebate Through Cenvat Credit Instead of Cash:
The applicants challenged the recredit of excess duty in the Cenvat credit account, arguing that refunds or rebates should be given by cheque as per CBEC instructions. The judgment affirmed that the excess duty paid, treated as a voluntary deposit, should be recredited to the Cenvat account, aligning with the CBEC instructions and relevant case laws.

4. Consistency in the Assessment of Goods for Home Consumption and Export:
The judgment emphasized that goods for export must be assessed in the same manner as goods for home consumption. The applicants' practice of paying different rates for export and home consumption was inconsistent with CBEC instructions, which mandate uniform assessment. The effective rate of duty, as per Notification No. 4/2006-C.E., should apply to both.

5. Binding Nature of CBEC Circulars and Instructions on Departmental Authorities:
The judgment underscored that CBEC circulars and instructions are binding on departmental authorities. The authorities must adhere to these instructions, ensuring consistency and discipline. The judgment cited the Supreme Court's stance that departmental actions must align with CBEC circulars, reinforcing the decision to restrict the rebate to the effective rate of duty and recredit the excess amount.

Conclusion:
The judgment rejected the revision applications, upholding the orders of the lower authorities. The applicants were not entitled to claim rebates at the higher rate of 10% for exports while paying 4% for home consumption. The excess duty paid was to be recredited to the Cenvat account, ensuring compliance with CBEC instructions and maintaining uniformity in duty assessment.

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