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2018 (6) TMI 857 - AT - CustomsRebate Claim - Sugar Cess - meaning of duty‛ explained in the N/N. 21/2004-CE (NT) - Rule 18 of CER, 2002 - CBEC vide its circular dt. 22.1.2007 - Held that - The Circular clarified as Since right from the beginning the objective of condition (v) was to debar the simultaneous availment of rebate of duty paid on the materials and the benefit of Advance Licence Scheme only (there was no bar in the said condition from availing of rebate of terminal excise duty paid on the export goods and the benefit of Advance License Scheme), in order to set right the anomaly, a Corrigendum was issued vide PN 9/2002, dated 29-11-2002 to provide that an exporter operating under Advance Licence Scheme could also avail of the rebate on terminal excise duty paid on the resultant export product under Rule 18 - a corrigendum was issued to N/N. 93/2004-Cus. vide Public Notice 2/2005, dated 17-5-2005 in order to restore the status quo ante i.e. the licence holder was debarred from availing of rebate of duty paid on materials used in the manufacture of export goods. The corrigendum was issued to set right an inadvertent error which occurred for the second time at the time of issuance of N/N. 93/2004-Cus. pursuant to coming into force of the new Foreign Trade Policy w.e.f. 1-9-2004. Impugned order cannot sustain - appeal allowed - decided in favor of appellant.
Issues:
1. Violation of Customs Notification No.95/2004 regarding duty rebate eligibility. 2. Interpretation of condition (v) of Customs Notification No.93/2004-Cus. 3. Applicability of Central Excise Tariff in determining manufacturing processes. 4. Misunderstanding and misinterpretation by the Commissioner in the adjudication process. 5. Clarifications provided by CBEC regarding export of excisable goods under Rule 18 of Central Excise Rules. Issue 1: Violation of Customs Notification No.95/2004 regarding duty rebate eligibility The case involved the appellant, M/s.EID Parry (India) Ltd., importing Raw Sugar without paying Customs Duty under Advance Licences and subsequently exporting White Crystal Sugar manufactured from this raw material. The department alleged that the appellant availed both duty-free import benefits and rebate benefits in violation of condition No.(v) of the notification. A show cause notice was issued proposing the recovery of duty forgone amounts along with penalties. The Commissioner confirmed the demand for duty forgone but dropped the penal proceedings. The appellant challenged this decision. Issue 2: Interpretation of condition (v) of Customs Notification No.93/2004-Cus. The appellant argued that the notice issued was based on a wrong premise regarding the interpretation of condition (v) of the Customs Notification. They contended that the condition only covered claiming a rebate of duty paid on inputs used in manufacturing the resultant product, not on the resultant product itself. The appellant emphasized that the condition applied to them as the importer, and not to the third-party exporter. They highlighted that the Commissioner misunderstood the issue and wrongly interpreted the condition, failing to consider that the rebate on PP bags had been repaid. Issue 3: Applicability of Central Excise Tariff in determining manufacturing processes The appellant pointed out that according to the Central Excise Tariff, only the packing from bulk packing into retail packing in respect of tariff heading 1702 amounts to manufacturing. They argued that the packing done by the third-party exporter was not relevant in deciding the importer's eligibility for exemption under the Advance Licences. Issue 4: Misunderstanding and misinterpretation by the Commissioner in the adjudication process The Tribunal found merit in the appellant's arguments, especially in light of the circular issued by CBEC regarding the export of excisable goods under Rule 18 of the Central Excise Rules. The circular clarified the intention behind the conditions related to availing rebate benefits under the Advance Licence Scheme. It highlighted that the corrigendum issued was to rectify inadvertent errors in the notifications, ensuring that exporters under the scheme could avail of the rebate on terminal excise duty paid on the resultant export product. The Tribunal concluded that the impugned order could not sustain in light of these clarifications and set it aside, allowing the appeal with consequential relief. Issue 5: Clarifications provided by CBEC regarding export of excisable goods under Rule 18 of Central Excise Rules The Tribunal extensively discussed the circular issued by CBEC, which provided crucial clarifications on the conditions related to availing rebate benefits under the Advance Licence Scheme. The circular explained the historical context of the conditions and the corrigendum issued to rectify errors, ensuring that exporters could avail of the rebate on terminal excise duty paid on the resultant export product. This clarification played a significant role in the Tribunal's decision to set aside the impugned order and allow the appeal. This detailed analysis of the judgment covers all the relevant issues involved, providing a comprehensive understanding of the legal complexities and arguments presented in the case.
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