2016 (7) TMI 433 - CGOVT - Central Excise

Claim of rebate/refund - export of goods from DTA unit to SEZ units - initially applicant cleared excisable goods without payment of duty under UT-I Bond to the SEZ Unit - However, it was found that the applicants have subsequently paid the duty on the said clearances through CENVAT account by making consolidated debit entry at the end of the respective months of clearances and claimed rebate of duty paid on such clearances. - Department rejected the claim on the ground that the applicants have not fulfilled the conditions and limitations prescribed under Notification No.19/2004-CE(N.T) dated 06.09.2004 issued under Rule 18 in respect of clearances to SEZ under the said ARE -Is as the excisable goods were originally cleared without payment of duty under Bond. Held that - As such there is no force in the plea of the applicant that the lapse should be considered as a procedural one which is condonable in nature. As such, as the applicant did not follow the requirements of the Notification No.19/2004-CE(NT), the rebate claims are rightly held inadmissible. The applicant has also alternatively requested for re credit of cenvat credit. In this regard, Government notes that re credit is allowed in the cases where the exporter was not required to pay duty at the time of export, however, he pays the same. Such amount paid by the exporter in his own volition cannot be retained by the Government and it is required to be paid back in the form it has been paid. In this case, the applicant was not required to pay duty and hence, the duty was rightly not paid. The duty was paid subsequently at the end of the month on consolidated basis and such duty cannot be treated at par with duty not payable at the time of export and as such, does not qualify for availing of re credit. As such, applicant s request for allowing re credit is not tenable. Application rejected - Decided against the applicant.

Issues Involved:
1. Eligibility for rebate claims under Rule 18 vs. Rule 19 of Central Excise Rules, 2002.
2. Compliance with Notification No. 19/2004-CE (N.T.) dated 06.09.2004.
3. Entitlement to re-credit of CENVAT credit.
4. Procedural vs. substantive compliance in claiming export benefits.

Issue-wise Detailed Analysis:

1. Eligibility for Rebate Claims under Rule 18 vs. Rule 19 of Central Excise Rules, 2002:
The applicants cleared excisable goods to SEZ units under UT-I Bond without payment of duty under Rule 19 of Central Excise Rules, 2002, and later paid the duty through CENVAT account, claiming rebate under Rule 18. The adjudicating authority and Commissioner (Appeals) rejected these claims, asserting that the goods were exported under Rule 19, not Rule 18, and thus did not meet the conditions for rebate claims under Notification No. 19/2004-CE (N.T.) dated 06.09.2004. The government upheld this view, emphasizing that Rule 18 and Rule 19 are distinct provisions with specific conditions and procedures. Once an option is exercised, it cannot be reverted, and the applicant, having chosen Rule 19, cannot claim benefits under Rule 18.

2. Compliance with Notification No. 19/2004-CE (N.T.) dated 06.09.2004:
The applicants argued that they followed the procedure under Rule 30 of the SEZ Rules, 2006, which does not reference Notification No. 19/2004-CE (N.T.). However, the government observed that compliance with Notification No. 19/2004-CE (N.T.) is mandatory for claiming rebates under Rule 18. The applicants did not adhere to these conditions, and mere payment of duty at the end of the month does not suffice. The government cited precedents, including the Supreme Court's rulings, emphasizing that benefits under conditional notifications cannot be extended without fulfilling the prescribed conditions.

3. Entitlement to Re-credit of CENVAT Credit:
The applicants requested re-credit of CENVAT credit for the duty paid. The government noted that re-credit is permissible when duty is paid at the time of export, which was not required in this case. The duty was paid subsequently on a consolidated basis, and such payment does not qualify for re-credit. The government rejected the request, stating that the duty paid voluntarily cannot be retained by the government but also cannot be re-credited under the given circumstances.

4. Procedural vs. Substantive Compliance in Claiming Export Benefits:
The applicants contended that the procedural lapses should not deny them substantive export benefits, as they fulfilled the conditions of manufacture, export, and duty payment. The government rejected this argument, emphasizing that compliance with conditions and procedures under Notification No. 19/2004-CE (N.T.) is substantial and non-adherence leads to denial of rebate claims. The government upheld the Commissioner (Appeals)'s view that procedural requirements ensure checks and balances, which cannot be overlooked.

Conclusion:
The government found no infirmity in the Commissioner (Appeals)'s order and upheld the rejection of the rebate claims. The revision application was thus rejected, affirming that the applicants did not meet the necessary conditions under Rule 18 and Notification No. 19/2004-CE (N.T.) for claiming rebates, nor were they entitled to re-credit of CENVAT credit.

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