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TMI Blog2013 (7) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... od 29-5-2003 to 8-7-2004 was aimed at facilitating wire drawing units for regularizing availment of Cenvat credits at two stages (i) at the input stage on wire rods (ii) second by the downstream user of drawn wire and the amount paid as Central Excise duty on clearance of drawn wire. Sum paid equal to duty leviable has been treated as duty and shall be allowed as credit to the buyer of drawn wire as per the said amendment. As per Rule 18 of Central Excise Rules, 2002 and Not. No. 19/2004-C.E. (N.T.), dated 6-9-2004, duty paid on exported goods is allowed to be rebated. amount paid is treated as payment of duty by virtue of retrospective amendment in Rule 16, the rebate of the said duty paid is admissible to the applicant. As per CCE, Chandigarh v. Punjab Lighting Aids Pvt. Ltd [2011 (6) TMI 221 - CESTAT, DELHI], amendment in Rule 16 is that units making wire from wire rod were to be treated as the assessee who had received the goods for being “re-made, refined, re-conditioned or for any other reason” under Rule 16(1) and thus he could take Cenvat credit of duty paid on wire rods and the amount paid as duty on the clearances of wires was to be treated as Central Excise duty. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeals before Commissioner (Appeals). 2.4 The applicant filed appeal on the grounds that the Circular No. 720/36/2003, dated 29-5-2003 shall not be applicable in their case and claiming that the process carried out by them amounted to manufacture. 2.5 The department filed appeal on the grounds that when the final product manufactured is not excisable, the applicant was not entitled for Cenvat credit of duty paid on the inputs used in the manufacture of non-excisable finished goods; that applicant was not entitled to take the Cenvat credit or utilize it for payment of duty on the goods exported and claim such duty amounts as rebate for duty; that the Cenvat credit taken on inputs ab initio was without authority of law and its utilization for so called payment of duty on products exported was devoid of law and therefore not in the nature of duties; that the rebate sanctioned for such an amount as duty was not proper, legal and without authority of law. 2.6 On being granted an opportunity for personal hearing, the applicant vide letter dated 17-4-2004 informed that the issue involved in the case was pending before Hon ble High Court of Gujarat in their Special Civil Applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction and order to sanction rebate claims only to the extent as worked out in terms of Rule 16(2) of the Rules is wholly illegal and liable to be set aside. There is no dispute on the fact that the Hon ble High Court allowed the applicant by a judicial order to continue taking Cenvat credit and paying excise duty on the final products and it was in view of this direction of the Hon ble Gujarat High Court that the applicant took credit of duties paid on wire rods and paid excise duties on SS wires cleared from home consumption as well as for export. When duties were thus paid on SS wire pursuant to the directions of the Hon ble Gujarat High Court and also by the Commissioner (Appeals) that the applicant was eligible for rebate of duty debited where the goods were cleared from the factory for export on payment of duty, the Commissioner (Appeals) had no jurisdiction to restrict the actual payment of rebate to the Cenvat credit taken on wire rods thereby denying rebate of the actual amount debited as duty while clearing the goods for export. In view of amendment of Rule 16 by virtue of the above Amendment Act of 2006, the restriction of Rule 16(2) of the Rules was not applicable in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rebate sanctioning authority to decide what was the amount of duty legally payable on the exported goods because the only jurisdiction conferred upon the rebate sanctioning authority is to examine whether the goods were actually exported or not and what was the amount paid/debited as duty on the exported goods; and therefore also the direction and order of the Commissioner (Appeals) at para 15 of the above order are contrary to the scheme of Rule 18 as well as the clarifications can circulars issued by the Government in the matter of sanctioning rebate claims. It is settled legal position that rebate of duty paid on the exported goods has to be allowed and it was not open to examine at the time of considering and sanctioning a rebate claim to decide what was the amount of duty legally payable on the exported goods. It is also a settled legal position that even if higher amount was paid as duty on the exported goods in comparison to the actual duty liability for such excisable goods, rebate of the amount actually paid as duty has to be allowed because the rebate sanctioning authority cannot reduce the amount of rebate by holding what was the excise duty legally payable thereb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E.L.T. 209 (S.C.) holding that process of drawing wire from wire rod did not amount to manufacture. However, w.e.f. 9-7-2004 by way of amendment in the Central Excise Tariff Act, 1985, Note 10 was inserted in Section XV of the Tariff to the effect that said process is treated as manufacture. Further in order to extend benefit to wire drawing units. Rule 16 of Central Excise Rules, 2002 was amended retrospectively by Section 39(1) of Taxation Laws (Amendment) Act, 2006. By virtue of said amendment the wire drawing units are termed as assessee and were held eligible for availing Cenvat credit of duty paid on the inputs brought into the factory and utilize the credit in accordance with Central Excise Rules, 2002/2004. 8. In order to understand the issue, the Rule 16 of Central Excise Rules, 2002 is reproduced below :- Rule 16. Credit of duty on goods brought to the factory. - (1) Where any goods on which duty had been paid at the time of removal thereof are brought to any factory for being re-made, refined, re-conditioned or for any other reason, the assessee shall state the particulars of such receipt in his records and shall be entitled to take CENVAT credit of the duty paid as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ules, 2002. The extract of para 4.1. to 4.4 of said circular containing detailed clarification, is as under :- 4.1 Rule 16 of the Central Excise Rules, 2002 has been retrospectively amended to declare wire drawing units as assesses for the period 29-5-2003 to 8-7-2004, hereinafter referred to as the said period. 4.2 The process of drawing of wire from wire rod was held as not amounting to manufacture by the Supreme Court in the case of M/s. Technoweld Industries [2003 (155) E.L.T. 209 (S.C.)]. Therefore, the benefit availment of credit of duty on inputs by the wire drawing units was withdrawn on 29-5-2003 by a circular issued by the Board. However, certain wire drawing units continued to pay a sum representing duty, and continued pass on the credit of amount paid as duty to the ultimate buyer of drawn wire for further manufacture. By an amendment in the Budget, 2004, Note 10 was inserted in Section XV of the Central Excise Tariff Act, 1985 declaring the said process as amounting to manufacture . However, as the said Section Note was effective from 9-7-2004, it did not resolve the problem for the said period. 4.3 Accordingly, show cause notices were issued to wire dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the period of amendment, and at the same time the sum paid by wire drawing unit will be treated as duty and shall be allowed as credit to the buyer of drawn wire in terms of amendment. 8.4 Government notes that the sum paid equal to duty leviable has been treated as duty and shall be allowed as credit to the buyer of drawn wire as per the said amendment. As per Rule 18 of Central Excise Rules, 2002 and Not. No. 19/2004-C.E. (N.T.), dated 6-9-2004, duty paid on exported goods is allowed to be rebated. The Rule 18 of Central Excise Rules, 2002 is extracted as under :- Rule 18. Rebate of duty. - Where any goods are exported, the Central Government may, by notification, grant rebate of duty paid on such excisable goods or duty paid on materials used in the manufacture or processing of such goods and the rebate shall be subject to such conditions or limitations, if any, and fulfilment of such procedure, as may be specified in the notification. Since the said amount paid is treated as payment of duty by virtue of retrospective amendment in Rule 16, the rebate of the said duty paid is admissible to the applicant. Moreover, since, the Cenvat credit of said amount of duty paid i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and thus, he could take Cenvat Credit of the duty paid on wire rods, and the amount paid as duty on the clearance of wires was to be treated as Central Excise duty which was available to buyers of the wire - Held : Wires had been received by respondent assessee during the period for which the first and second provisos had been added to Rule 16(3) ibid. Therefore, the amount paid by the manufacturer supplier of wire has to be treated as duty paid by the respondent assessee who had received the wire would be eligible for its Cenvat credit subject to verification by original authority to whom the matter was remanded for de novo adjudication, as to whether the wire manufacturers had obtained refund of the duty paid by them, in which case, respondent assessee would not be eligible for Cenvat credit. Rule 16 of Central Excise Rules, 2002, retrospective amendment by Section 39 of Taxation Laws (Amendment) Act, 2002 - C.B.E. C. Circular No. 831/8/2006-C.E., dated 26-7-2006 - Notification No. 28/2010-C.E. [paras 1, 5, 7, 8]. The Tribunal in the said judgment has categorically held that the implication of said retrospective amendment in Rule 16 is that units making wire from wire rod we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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