2018 (9) TMI 308 - HC - Central Excise

Rebate of Excise duty paid - export of Biscuits - case of the petitioner is that they paid excise duty on goods cleared for the domestic market where per kg. retail sale price was more than INR 100 and that they paid excise duty on goods cleared for export on the basis of transaction value in terms of Section 4. Therefore, the petitioner availed rebate of duty - But the stand of the Department is that the petitioner was not liable to discharge excise duty on the goods exported in view of the absolute exemption from payment of duty under Notification No.12/2012, dated 17-3-2012 and that therefore the amount paid could not have been treated as duty paid, so as to enable them to claim rebate. Whether the exemption granted under Notification No.12/2012, was absolute and unconditional? - Held that - The exemption Notification was not a blanket exemption. It was an exemption available to the goods of a particular description, subject to their satisfying two conditions viz., (a) that they are cleared in packaged form and (b) that their per kg. retail sale price equivalent does not exceed ₹ 100/-. Even the definition of the expression retail sale price is indicated in Explanation 1 and the method of calculation of per kg. retail sale price equivalent is given in Explanation 2. Therefore, the availability of the exemption depended upon all these factors. Hence, it cannot be concluded that the exemption was absolute and unconditional. By holding the exemption to be absolute and unconditional, the Commissioner (Appeals) committed a grave error. The Department may not be right in retaining the duty paid by the petitioner. Petition allowed - decided in favor of petitioner.

Summary

Issues involved:
Challenge to order reversing rebate on excise duty paid on exported biscuits, interpretation of exemption notification, availability of alternative remedy of revision, consideration of CENVAT Credit, determination of absolute exemption from excise duty, relevance of retail sale price in exemption notification.

Analysis:

1. Challenge to Order Reversing Rebate on Excise Duty:
The petitioner challenged an order reversing the rebate granted on excise duty paid on biscuits exported by them. The Appellate Authority allowed the appeals, stating that the goods were unconditionally exempt from duty, hence the duty paid could not be considered for rebate. The petitioner contended that they paid duty based on transaction value for export goods, enabling them to claim rebate.

2. Interpretation of Exemption Notification:
The dispute centered around the interpretation of Notification No.12/2012, which exempted biscuits with a retail sale price not exceeding INR 100 from duty. The Commissioner (Appeals) held the exemption as absolute, leading to the denial of rebate. However, the High Court disagreed, stating that the exemption was not unconditional, as it depended on specific conditions mentioned in the notification.

3. Availability of Alternative Remedy of Revision:
The petitioner had the option of seeking revision under Section 35EE of the Act. The contention arose as to whether the petitioner should have pursued this alternative remedy before approaching the Court. The Court noted that the subsequent nomination of officers as Revisional Authorities did not compel the petitioner to seek revision, as they were disabled from doing so at the time of filing the writ petition.

4. Consideration of CENVAT Credit:
The Commissioner (Appeals) disregarded the petitioner's availing of CENVAT Credit on exported goods while determining the rebate claim. However, legal precedents highlighted the relevance of export obligations and CENVAT Credit eligibility in such cases, emphasizing the importance of considering these factors.

5. Determination of Absolute Exemption from Excise Duty:
The Commissioner (Appeals) concluded that the exemption from duty was absolute, based on the absence of retail sale price on packages. The High Court disagreed, emphasizing that the exemption was subject to specific conditions and calculations as per the notification, leading to a different interpretation of the exemption's nature.

6. Relevance of Retail Sale Price in Exemption Notification:
The Commissioner's decision regarding the absolute exemption was based on the absence of retail sale price on packages. However, the High Court found this reasoning flawed, as the exemption's applicability hinged on various factors, including the retail sale price calculation method specified in the notification.

In conclusion, the High Court allowed the writ petition, setting aside the Commissioner's order and emphasizing the incorrect interpretation of the exemption notification and the relevance of CENVAT Credit in determining the rebate claim on excise duty paid on exported biscuits.