2017 (6) TMI 568 - AT - Central Excise

Refund claim - manufacture of pan masala and pan masala containing tobacco - the entire goods manufactured during the above period were exported - denial of refund on the ground that the exported goods were manufactured from duty-free material under N/N. 43/2001-CE(NT) dated 26.01.2001 and duty paid goods cannot be exported under Rule 19 of the CER, 2002 - Held that - When goods are manufactured in a factory and these are exported, Central Excise duty paid on such goods will be eligible as a rebate - Since the entire production of goods in the appellant s factory during the disputed period has been exported, there is no justification for non payment of refund of such duty paid - The fact that there was no provision for grant of rebate of excise duty on export of goods covered by the compounded levy scheme cannot be cited as a reason for not grant of rebate. Refund of duty paid under the compounded levy scheme is allowed - appeal allowed - decided in favor of assessee.

Summary

Issues:
- Refund claim rejection based on duty-free material usage for exported goods
- Applicability of amended notification on export duty payment
- Eligibility for duty refund under compounded levy scheme for exported goods

Analysis:
1. Refund Claim Rejection: The appellant, engaged in pan masala manufacturing, exported all goods produced during a specific period. The duty paid was under Pan Masala Packing Machines Rules. The refund claim was rejected, citing exported goods were made from duty-free material. The 1st Appellate Authority upheld this decision. The appellant argued that duty paid in advance should be refunded since goods were exported under bond. The Tribunal noted that duty rebate is permissible for exported goods under Central Excise Rules. The appellant's claim for duty refund was supported based on the compounded levy scheme.

2. Amended Notification Applicability: The appellant contended that a new rule, Rule 14A, prohibited export without duty payment from a specified date. However, the Tribunal ruled that the amendment was prospective and exports under bond were allowed before the effective date. The duty paid under the compounded levy scheme for the disputed period was deemed refundable for exported goods, despite the absence of a provision for rebate under the compounded levy scheme.

3. Duty Refund Eligibility under Compounded Levy Scheme: The Tribunal emphasized that duty paid under the compounded levy scheme for exported goods must be refunded. The absence of a specific provision for rebate under the compounded levy scheme was not a valid reason to deny the refund. The Tribunal highlighted that subsequent restrictions introduced through a new rule did not apply retroactively to the disputed period. Consequently, the impugned order rejecting the refund was set aside, allowing the refund of duty paid under the compounded levy scheme to the appellant.