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TMI Blog2012 (9) TMI 710X X X X Extracts X X X X X X X X Extracts X X X X ..... ner, vide Order-in-Original dated 22-5-2007 and 24-5-2007 sanctioned the rebate claim. Subsequently, the department observed that the appellants had taken DFIA Licence (Duty Free Import Authorization Licence), although they had not imported inputs in terms of the said Licence. According to the department, the said amount of rebate claim of Rs. 25,54,281/- was erroneously sanctioned to them inasmuch as they availed/claimed the said rebate of duty by availing the double benefit i.e. availment of Cenvat credit of duty paid on inputs under the Cenvat Credit Rules, 2004 as well as availment of exemption benefits under the DFIA Licence Scheme. Therefore, a show cause notice dated 3-1-2008 was issued to the appellants proposing demand/recovery of the said erroneously amount of the rebate claim under Section 11A(1) of the Central Excise Act along with interest under 11AB of the said Act. The adjudicating authority, vide the impugned order confirmed the above demand of duty and interest thereon. 3. Being aggrieved by the said order-in-original respondent filed appeal before Commissioner (Appeals), who allowed the same. 4. Being aggrieved by the impugned order-in-appeal, the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to double benefit against the spirit and object of the scheme. That in terms of condition (v) of the Notification No. 40/2006-Cus., dated 1-5-2006, Cenvat credit cannot be availed of in respect of inputs used in the manufacture of the goods exported under the DFIA Scheme whereas in the instant case, the party have availed CENVAT credit on the inputs used in the manufacture of the goods exported under DFIA Scheme. The Cenvat credit so availed has been utilized/adjusted by the party towards payment of Central Excise duty on finished goods exported under Rule 18 of the Central Excise Rules, 2002 under claim of rebate which is not proper inasmuch as when Cenvat credit on inputs used in the manufacture of finished goods was not available to the party working under DFIA Scheme in terms of the said condition of the Notification No. 40/2006-Cus., there was no question of utilizing the same towards payment of Central Excise duty on finished goods exported. 5. A Show Cause Notice was issued to the respondent who vide their counter reply mainly stated that :- 5.1 The aforesaid Notification No. 19/2004, dated 6-9-2004, there was no restriction to the extent that Rebate cannot be al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the original Notification No. 40/2006-Cus. has already been amended with the retrospective effect so as to give the true colour and serve the desired purpose of the DFIA Scheme. Since the original Notification has already been amended with retrospective effect henceforth, all the clarification to the previous/unamended notification, shall become ineffective and redundant with retrospective effect. It is further stated that the noticee has never availed any double benefit, while working under the DFIA Scheme. As clear from the facts narrated above, during the relevant time the noticee was working under the Cenvat scheme and only after exporting the goods it availed the DFIA Scheme. Further, it is a matter of record that the noticee has never imported inputs or procured inputs from domestic market against/under the said DFIA authorization. Thus, noticee for procuring the inputs has worked only in the Cenvat scheme in terms of the provisions of the Cenvat Credit Rules, 2004. Further, it is also relevant to note that the Para 4.47 of the Foreign Trade policy has already been amended in the annual supplement for the year 2007-08, of the Foreign Trade policy, to give full benefit and to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is observed that DFIA Scheme is governed by Foreign Trade Policy (2004-09) and custom Notification No. 40/2006-Cus., dated 1-5-2006 was issued to give effect to these provisions of FTP. One of the condition stipulated in para 4.4.7 of the Chapter 4 of FT Policy was that no Cenvat credit facility shall be available on inputs either imported or procured indigenously against the Authorization. The condition (v) of the corresponding Customs Notification No. 40/06-Cus., dated 1-5-2006 issued to implement the DFIA scheme accordingly provided that the Export obligation would be discharged by exporting resultant products manufactured in India which were specified in the said authorization and in respect of which facility under Rule 18 (rebate of duty paid on materials used in the manufacture of resultant products) or sub-rule (2) of Rule 19 of Central Excise Rules, 2002 or Cenvat credit under Cenvat Credit Rules, 2004 in respect of material imported/procured against said authorization has not been availed (hereinafter referred to as such facilities). From the reading of these provisions of Foreign Trade Policy and Customs notification it becomes clear that the Cenvat credit will not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n imported/procured raw material have been availed. In this regard, the relevant Para M.9 under the Miscellaneous and Legislative Amendments of Explanatory Notes - Customs of Budget Bulletin 2009, is reproduced below :- "Notification No. 40/2006 - Customs dated 1-5-06 has been amended retrospectively from its date of issue so as to allow the facility of rebate in respect of locally procured materials used in the manufacture of goods exported under the Duty Free Import Authorisation Scheme and carry out other related changes (Clause 92 of the Finance (No. 2) Bills refers)" which has since been enacted vide Section 93 of Finance (No. 2) Act, 2009 on 19-8-09. 12. Department has not considered this retrospective amendment of Notification No. 40/2006-Cus., dated 1-5-2006. Since the said amendment allowed availment of such facilities w.e.f. 1-5-2006 itself, the grounds of revision application appears contrary to the provisions of Notification. 13. In view of above Government observes that now there is no restriction in the said Notification No. 40/2006-Cus., dated 1-5-2006. On claiming rebate of duty paid on exported goods and availment of Cenvat credit. Since the applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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