2019 (9) TMI 1009 - HC - Central Excise

Rebate claim - multiple notifications - assessing officer was of the view that since, in the period in question, ie., 07.12.2008 to 06.09.2009, Notification No.58/2008-CE, dated 07.12.2008 prescribed 'nil' rate of duty, such Notification, read with provisions of Section 5A(1A) of the Central Excise Act, 1944, would be applicable and the petitioner is not eligible to the claim of rebate - validity of Circular No.937/27/2010-CX dated 26.11.2010 and Circular No.99/2008, dated 11.12.2008. HELD THAT - The aforesaid two Circulars are in direct contradiction with each other. Circular No.99/2008, dated 11.12.2008 makes it clear that where there are multiple Notifications operating simultaneously in respect of the same commodity and extending different benefits, an option must be given to the assessee to elect and choose the Notification that would be most beneficial to it. Circular No.937/2010, dated 26.11.2010 on the other hand, limits the choice to only the Notification granting unconditional exemption. This does not stand to reason. All the Notifications providing multiple choices to an assessee for tax treatment of the same commodity have been issued by one and the same Department and continued to operate simultaneously. The rationale behind this cannot be fathomed and it was incumbent upon the authorities to withdraw the Notifications that would be unavailable such that the remaining Notifications would prevail - the assessee has to be permitted to elect and choose the Notification of its choice and the Department cannot thrust a Notification of its choice upon the assessee. Petition allowed.

Summary

Issues:
Impugned orders-in-original passed by the Commissioner of Central Excise affecting 23 writ petitions.

Analysis:
The judgment concerns the interpretation of Notifications related to duty exemption on yarn under the Central Excise Tariff Act, 1985. The petitioner, a yarn manufacturer and exporter, claimed rebate under Notification No.59/2008-CE dated 07.12.2008, which prescribed a 4% duty rate. The respondents denied the claim, citing Notification No.58/2008-CE dated 07.12.2008, which prescribed a 'nil' duty rate for the relevant period. The petitioner relied on a Gujarat High Court decision favoring their position, emphasizing that they availed the benefit of Notification No.59/2008 for export clearance and reversed Cenvat Credit on inputs. The Supreme Court also upheld this decision.

The respondents argued that under Section 5A(1A) of the Central Excise Act, an assessee must avail the unconditional exemption if two Notifications coexist. Circular No.937/27/2010-CX supported this view, stating that an assessee cannot opt for a concessional rate if an unconditional exemption exists. However, Circular No.99/2008 allowed assessees to choose the most beneficial rate when multiple Notifications apply. The judgment criticized the contradictory nature of these Circulars and emphasized that assessees should be allowed to select the most advantageous option among coexisting Notifications.

The judgment referred to Supreme Court decisions supporting the assessee's right to choose the beneficial Notification. It concluded that Circular No.937/27/2010-CX did not reflect the correct legal position. As a result, the impugned orders were quashed, and the writ petitions were allowed without costs. The judgment highlighted the importance of providing assessees with the choice to select the most advantageous duty rate when faced with multiple coexisting Notifications.