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TMI Blog2010 (2) TMI 847X X X X Extracts X X X X X X X X Extracts X X X X ..... is allowed with consequential relief if any. - 195/130/2007-RA-CX - 351/2010-CX, - Dated:- 26-2-2010 - Shri D.P. Singh, J. Shri K.I. Vyas, Advocate, for the Assessee. [Order]. This revision application has been filed by M/s. Sheetal Exports, Surat against the order-in-appeal No. CPA(3176)145/MI/2006, dated 7-11-06 passed by the Commissioner (Appeals), Central Excise, Mumbai Zone-I. 2. Brief facts of the case are that the applicant has filed rebate claims in respect of duty paid on the goods manufactured at Sl. No. 1 to 6 by M/s. Globe Traders having ECC No. T-1/K-1/B-5276/2003 pertaining to Division Kalyan-I of Thane-I Commissionerate, at Sl. No. 7 by M/s. Mansa Traders having ECC No. T-I/K-I/B-3351/2003 pertaining to Division Kalyan-I of Thane-I. The goods have been exported through Mumbai Port under ARE-Is and Shipping Bills as indicated below : TABLE Sl. No. RC No. and Date ARE-I No. Date C.Ex. Inv. No. Date Shipping Bill No. Date B/L No. Date of Shipment Amount 1 3724, 25-11-04 108, 16-5-04 109, 16-5-04 5350416, 25-8-04 MUM/DXB/ 12867, 8-9-04 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4. Aggrieved by this order-in-original, the applicant filed the with the Commissioner (Appeal) who rejected the same. 5. Aggrieved by this order-in-appeal, the applicant has filed this revision application on the following grounds : 5.1 The applicant submits that the applicant was served with a show cause notice-cum-deficiency memo dated 5-5-05 which is not containing any allegation on the basis of Thane-I Commissioner s letter dated 2-5-05 and the said letter is not the part of the deficiency memo-cum show cause notice and therefore the findings given by the lower authorities considering the said letter is not sustainable in law as the said letter is not the part of the show cause notice. The applicant therefore submits that orders passed by the lower authorities are beyond the scope of the show cause notice. In view of this, the said orders are required to set aside in the interest of justice. 5.2 The applicant submits that the said orders are not disputing the export of the goods under respective invoices and ARE-1s and proof of export submitted. Thus, the orders of the lower authorities rejecting rebate claims are contrary to the provisions of law laid down for export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t-exporter who procured the duty paid goods from manufacturer M/s. Globe Traders and M/s. Mansa Traders. The goods were exported under rebate claim by following the proper procedure. The rebate claim was rejected by adjudicating authority on the ground that the manufacturer-suppliers had availed fraudulent Cenvat credit on the basis of invoices raised by the non-existent companies and utilized the same for duty payment on goods cleared for export. The said order was upheld by the Commissioner (Appeals). This revision application is filed on the grounds as mentioned in para 5 above. 11. It is observed that this issue has already been decided by Government vide GOI order No. 304-307/07, dated 18-5-2007 in the case of M/s. Shree Shayam International, Mumbai who had exported the goods manufactured by M/s. Radha Dyeing Printing Mill, Bhandup. Assistant Commissioner sanctioned the rebate claim but department filed appeal before Commissioner (Appeals) contending that M/s. Radha Dyeing Printing Mills who processed/cleared the fabrics which were subsequently exported by exporters, M/s. Shree Shyam International had availed wrong Cenvat credit on inputs on the basis of fake and bogus inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he manufacturer/supplier was not at arms length or not in the nature of a transaction in the normal course of business or non-bona fide and influenced by any extra commercial consideration. In fact there is nothing on record to establish much less point out even prima facie any role direct or indirect, connivance or intention of respondent in the act of procurement of inputs by supplier manufacturer on basis of bogus invoices. The charge in the Revision Application is that the manufacturer/supplier had availed Cenvat Credit on basis of bogus invoices which is under investigation and since this wrong credit was availed without taking reasonable steps in terms of Rule 7 of Cenvat Credit Rules, 2002 [now Rule 9(2) of Cenvat Credit Rules, 2004] the duty paid on exported goods through debit entry of this wrongly availed credit cannot be rebated to the respondent/merchant exporter who purchased the goods and exported them. The only charge or allegation forming the genesis and basis for denial of rebate claim to the merchant/exporter is therefore not against him but the manufacturer supplier who availed Cenvat Credit wrongly and availed the same for duty payment of goods exported by the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cturer on the basis that the inputs supplier/supplier manufacturer had wrongly availed and utilized credit for duty payment on basis of forged/bogus invoices had come up for consideration before CESTAT several times wherein it has been consistently held that such credit cannot be denied to the user manufacturer in case the transaction between the two was at arms length and not influenced or tainted by any factor other than commercial, and the credit was availed on basis of Central Excise documents showing duty payment particulars and payment of goods made to the inputs supplier was inclusive of duty element. As per the ratio of these judgments, some of which have also been cited in support by respondent action in such cases for recovery and penal action lies on the supplier manufacturer who wrongly took and utilized the credit and not on user manufacturer. This issue was examined in detail by the Tribunal in case of R.S. Industries - 2003 (153) E.L.T. 114 (T.-Del.) wherein it was held that : In these 12 appeals, arising out of a common Order-in-Original No. 41/2001 dated 30-10-2001 passed by the Commissioner, Central Excise, Delhi-I, the common issue involved is whether the Modv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ltd. v. CCE, Jaipur - 2005 (191) E.L.T. 899 (Tri. - Del.) it was also held that for mistake in payment of duty by supplier, the issue is to he raised at supplier end and not at the applicant s as they had taken credit on the basis of invoice which is specified duty paid document. In a similar matter, in Bhairav Exports v. Commissioner of Central Excise, Mumbai, 2007 (210) E.L.T. 136 (Tri. - Mumbai), the same view was confirmed that if the appellant had taken credit on basis of Central Excise invoices containing duty payment particulars such credit cannot be denied on the basis that such duty had in fact not been paid by the manufacturer supplier. 7. Another ground forming the basis for denial of rebate as per the revision application is also that in terms of Explanation to sub-rule (2) of Rule 7 Cenvat Credit Rules, 2002 [now sub-rule (3) of Rule 9 of Cenvat Credit Rules 2004] responsibility is cast on the manufacturer who avails credit to take reasonable steps to ensure that the inputs in respect of which credit is availed are goods on which appropriate duty of excise as indicated in the documents has been paid. In the instant case, the manufacturer supplier M/s. Ashapura Tex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of lower authorities or in the Revision Application filed to indicate that the manufacturer/supplier is itself a non-existent or bogus unit or had obtained Central Excise registration under erstwhile Rule 12B of Central Excise Rules on basis of any forged/fabricated document or information including identity and address. If such a charge existed then despite purchase of goods by merchant exporter on basis of Central Excise documents/invoices showing duty payment particulars, the entire transaction would have been non bona fide. In the present case there is no such charge. 9. The Export Promotion and Incentive Scheme of Rebate broadly envisage under Rule 18 of Central Excise Rules that whatever duty has been paid on exported goods may be given back as rebate to the exporter who earns valuable foreign exchange. This is the legislative intent of Rule 18 of Central Excise Rules and should form the foundation of judicial interpretation [2007 (211) E.L.T. 12 (S.C.)]. If the exporter as in the instant case has procured goods from the supplier/manufacturer under cover of proper Central Excise documents, including invoices showing duty payment particulars and payment has been made of ent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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