2010 (6) TMI 6 - HC - Central Excise

Rebate in case of export of finished goods Rule 18 - claim of rebate of excise duty paid on raw material - The petitioner had claimed rebate in respect of central excise duty paid on raw materials as well as in respect of central excise duty paid on the final products. The petitioner s claim in respect of the rebate qua final products has been allowed by the authorities below. However, the rebate in respect of duty paid on raw materials has been disallowed. It is because of this that the petitioner is before us by way of this writ petition. Held that Legislature was not to grant rebate of duty paid on exported goods as well as on inputs used in such goods simultaneously, which is evident from the language used in Rule 18 of the said Rules itself. - the petitioner was not entitled to rebate of duty paid on raw materials after it had already been granted rebate in respect of duty paid on finished products.

Summary

Issues:
Challenge to order disallowing rebate on raw materials under Central Excise Act, 1944.

Analysis:
1. The writ petition challenged an order disallowing rebate on raw materials under Section 35EE of the Central Excise Act, 1944. The petitioner, a manufacturer of man-made fabrics and polyester/viscose blended yarn, claimed rebate on duty paid on both raw materials and final products. While rebate on final products was allowed, rebate on raw materials was disallowed, leading to the petition.

2. The petitioner's export-oriented production involved duty paid inputs like polyester staple, viscose staple fiber, and other consumables. The petitioner filed 15 rebate claims covering 2005-2006, with disallowed claims totaling Rs 26,11,788. The Central Excise Rules, 2002, Rule 18 empowered the Central Government to grant rebates on duty paid on excisable goods or materials used in manufacturing or processing, as per specified conditions.

3. Notifications No. 21/2004-CE(NT) and No. 19/2004-CE(NT) provided for rebate on inputs and finished goods, respectively. The petitioner contended entitlement to rebate under both notifications for complying with stipulated conditions. However, the revenue argued that rebate could be availed on excisable goods or materials, not both, as the notifications implemented Rule 18's principles.

4. The Assistant Commissioner rejected rebate claims on raw materials and finished products. The Commissioner of Central Excise (Appeals) partially allowed the claims on final products but not on raw materials. The petitioner then sought revision from the Government under Section 35EE, leading to the impugned order based on a Bombay High Court decision.

5. The Bombay High Court's decision in CEE, Nagpur v. Indorama Textiles Ltd. was crucial, interpreting Rule 18 as an "either-or" situation, not allowing simultaneous rebate on exported goods and inputs. The Government, relying on this interpretation, upheld the disallowance of raw material rebate after granting rebate on final products, a decision affirmed by the High Court.

6. The High Court concurred with the Bombay High Court's reading of Rule 18, emphasizing the legislative intent to provide concessions on duty paid either on exported goods or inputs, not both simultaneously. Consequently, the writ petition challenging the disallowance of raw material rebate was dismissed, upholding the impugned order based on the legal interpretation provided by the Bombay High Court.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved, the legal framework, and the interpretation of relevant provisions leading to the final decision.