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TMI Blog2016 (4) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... bate erroneously sanctioned on the ground that duty was not payable by the applicant. As held in above paras, the rebate is admissible only to the extent of 0%/4%/5% as the case may be. The Notification No. 4/2006, dated 1-3-2006 issued under Section 5A(1A) of the Act, grants exemption from whole of duty of excise absolutely. So applicant was required not to pay duty. The amount so paid cannot be treated as duty under Section 3 of the Act and therefore, not admissible as rebate under Rule 18 of Central Excise Rules, 2002 read with Notification No. 19/2004-C.E. (N.T.), dated 6-1-2004. Moreover, when goods are exempted from payment of duty, no Cenvat credit is permissible under Rule 6(1) of Cenvat Credit Rules, 2004. In view of the above, Government observes that the applicant was not allowed to pay duty on the exempted goods as per proviso 5A(1A) of Central Excise Act, 1944 and no Cenvat credit on the inputs is available under Rule 6(1) of Cenvat Credit Rules, 2004. Further the applicant has also not claimed that the duty on such fully exempted goods has not been paid from such inadmissible Cenvat credit and therefore, no re-credit is permissible in such cases. Hence, Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aigad, dated 30-4-2012 9. 195/241/13 -DO- BC/432/RGD (R)/12-13, dated 29-11-2012 1363/12-13/DC(Rebate)/ Raigad dated 22-8-2012 10. 195/242/13 -DO- BC/430/RGD (R)/12-13, dated 29-11-2012 1232/12-13/DC (Rebate)/Raigad, dated 2-8-2012 11. 195/430-434/13 -DO- US/871-875/ RGD/12, dated 11-12-2012 323/12-13/DC (Rebate)/Raigad, dated 30-4-2012 others 2. Brief facts of these cases in common are that the applicant, a manufacturer-exporter, filed rebate claims of duty paid on exported goods under Rule 18 of the Central Excise Rules, 2002 read with Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004. The manufacturer had paid duty on said exported goods @ 10% under Notification No. 2/2008-C.E., dated 1-3-2008 as amended. Similarly, the manufacturer had cleared said goods for home consumption on payment of duty at effective rate @ 4% up to 28-2-2011 and @ 5% w.e.f. 1-3-2011 under Notification No. 4/2006-C.E., dated 1-3-2006 as am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents of Heading 3004 of the First Schedule to the said Tariff Act, are assessable to the Cenvat, at the rate of 10% ad valorem and accordingly, the total duty rate on Medicaments of Heading 3004 of the First Schedule to the said Tariff Act, works out to 10.30%, under the said Serial Entry No. 21 of the Table, to the Notification No. 2/2008-C.E., dated 1-3-2008. Notification No. 2/2008-C.E., dated 1-3-2008, has been issued by the same Central Government, under the provisions of Section 5A(1) of the Central Excise Act, with approval of the Indian Parliament. 4.2 In the premises, in respect of Medicaments of Heading 3004 of the First Schedule to the said Tariff Act, the Indian Parliament has floated two different Notifications, namely, (1) Notification No. 4/2006-C.E., dated 1-3-2006, with Serial Entry No. 62-C, whereunder, Medicaments of Heading 3004 of the First Schedule to the said Tariff Act, are chargeable to total Central Excise Duty of 4.12% (5.15% as amended) ad valorem and (2) Notification No. 2/2008-C.E., dated 1-3-2008, with Serial Entry No. 21, whereunder, same Medicaments of the same Heading 3004 of the First Schedule to the said Tariff Act, are chargeable to total Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing duty rate of pharmaceutical products at low rate of 4% is to keep the price of Pharmaceuticals as low as possible and therefore, it cannot be the intention of the Government to export goods at higher price it being the priority area. Government will always want to keep cost of exportable goods low and therefore, it does not fit in to the logic that it was ever intention of the Government to allow export of goods at the Central Excise duty rate of 10%, notwithstanding the rebate but this argument is unreasonable by paying Central Excise duty at the rate of 10.30% of export goods because the foreign buyer is not going to pay the said duty element and the same is returned back by the Central Government to the exporter, given rate at the rate of 4.12% instead of 10.30%, the cost of pharmaceutical products exported would be enhanced. So the arguments of the respondent is contradictory inasmuch as he would like to see that the cost of export of goods reduces but sanctioning rebate claim, at the rate of 4.12% the cost of export goods increased on the contrary. 4.6 Case laws relied upon by the applicants are : Mangalam Alloys Ltd. v. C.C.E., Ahmedabad - 2010 (255) E.L.T. 124 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o that extent only. In some cases the remaining duty paid was allowed to be re-credited in Cenvat account. The Commissioner (Appeals) upheld the impugned Orders-in-Original. Now, the applicants have filed these revision applications against the impugned Orders-in-Appeal on the grounds stated above. 8. The applicants have contended that both the said notifications have approval of Parliament and therefore, they are at liberty to avail any notification whichever they find beneficial to them. Therefore, they have claimed to be eligible for rebate of duty paid on export goods @ 10% in terms of Notification No. 2/2008-C.E., dated 1-3-2008 as amended. 8.1 It is observed that Central Government issued Notification No. 2/2008-C.E., dated 1-3-2008 which had an effect of reduction in general rate of Central Excise duty on various products from 16% to 14%. Subsequent amendment by Notification No. 58/2008-C.E., dated 7-12-2008 reduced the general rate from 14% to 10%. Vide Notification No. 4/2009-C.E., dated 24-2-2009, it was further amended to reduce the general rate of duty from 10% to 8%. Finally the Notification No. 2/2008-C.E. was amended by Notification No. 6/2010-C.E., dated 27-2- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otification cannot be ruled. In such a situation, the rate beneficial to the assessee would have to be extended if he fulfils the attendant conditions of the exemption. 3. Drugs and Pharmaceuticals 3.1 Excise duty on drugs and pharmaceuticals falling under Heading Nos. 3001, 3003 (except Menthol crystals), 3004, 3005 and 3006 (except 3006 60 and 3006 92 00) has been reduced from 16% to 8%. Thus, the general effective rate for all goods of Chapter 30 is now 8%. However, certain specified items such as life saving drugs continue to be fully exempt. Excise duty has been fully exempted on Anti-AIDS drug ATAZANAVIR, and bulk drugs for its manufacture. The Joint Secretary (TRU) C.B.E. C. has hereinabove made it amply clear that reduction in General Tariff Rate has been carried out by notification and therefore, there could be a possibility of same item being covered by two notifications and directed that the rate beneficial to assessee may be extended. However, in the present case the issue involved is not so much regarding the applicability of two notifications for payment of duty but whether rebate of duty paid at tariff rate or effective rate are to be allowed. 8.3 It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r cent, which I propose to do, with the following major exceptions : food items; and drugs, pharmaceuticals and medical equipment. Some of the other items on which I propose to retain the rate of 4 per cent are : paper, paperboard their articles; items of mass consumption such as pressure cookers, cheaper electric bulbs, low priced footwear, water filers/purifiers, CFL, etc. : power driven pumps for handling water and paraxylene. Further, the Hon ble Finance Minister in his speech while presenting the Union Budget for 2010-11 in the Parliament stated that : PART - B INDIRECT TAXES 142. Unlike the time I presented the last Budget, symptoms of economic recovery are more widespread and clear-cut now. The three fiscal stimulus packages that the Government introduced in quick succession have helped the process of recovery significantly. The improvement in our economic performance encourages a course of fiscal correction even as the global situation warrants caution. Therefore, I propose to partially roll back the rate reduction in Central Excise Duties and enhance the standard rate on all non-petroleum products from 8 per cent to 10 per cent ad valorem. From the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8%, 8% to 4% and finally to 5% by different amending notifications. As such it is not correct to say that it is a case of applicability of two notifications only and that the assessee is at liberty to choose any one notification which is beneficial to him. In this case, Notification No. 2/2008-C.E. as amended provided for General Tariff rate of duty and Notification No. 4/2006-C.E. as amended provided for effective rate of duty and they have to be strictly construed as such. Therefore, they have to be read together as stipulated in para 4.1 of Part-I of Chapter 8 of C.B.E. C. Excise Manual. In fact, this confusion has arisen since in this case the General Tariff rate was reduced through notification when special economic stimulus package was announced in 2008 by Government to deal with ongoing economic recession. Normally changes in General Tariff rate are carried out through Finance Bill/Act. Government, therefore, is of the view that duty was payable @ 0%/4%/5% on the export goods and rebate cannot be granted on the duty paid in excess of effective rate prescribed in the Notification No. 4/2006-C.E., dated 1-3-2006 as amended, as stipulated in the above said C.B.E. C. Instruc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial to him. Government notes that in the cases cited namely : i. CCE, Baroda v. Indian Petro Chemicals - 1997 (92) E.L.T. 13 (S.C.) ii. HCL Ltd. v. CC, New Delhi - 2001 (130) E.L.T. 405 (S.C.) iii. M/s. Arvind Ltd. v. UOI - 2014 (300) E.L.T. 481 (Guj.). Hon ble Supreme Court has held that when two notifications co-exist simultaneously, then assessee has the option to choose any one of the notifications beneficial to him. Hon ble Supreme Court has categorically held that in such a situation assessee has option to choose any one notification. Apex Court has not stated that assessee can avail both the notifications simultaneously. Whereas in the instant case applicant has not chosen one notification for all the clearances, but decided to avail benefit of the Notifications viz. 2/2008, dated 1-3-2008 as amended and 4/2006 dated 1-3-2006 as amended. 8.8 The applicant during the course of personal hearing, has further relied upon the case of M/s. Arvind Ltd. v. UOI, which was decided by Hon ble Gujarat High Court. The applicant, in this case, paid 4% duty in terms of Notification No. 59/2008-C.E., while absolute exemption was available under Notification No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al schemes and changing thereof in between a given financial year, thereby leading to different question of law. 8.10 Government further notes that following case laws lend support to the view that rebate is to be allowed of the duty paid on exported goods at effective rate prescribed in the notification and the excess paid amount as duty from the Cenvat credit is to be refunded in the Cenvat credit account. 8.10.1 Hon ble Supreme Court has held in the case of CCE v. Parle Exports - 1988 (38) E.L.T. 741 (S.C.) that when a notification is issued in accordance with power conferred by statute, it has statutory force and validity and therefore, exemption under notification is, as if it were contained in the Act itself. Apex Court has clearly observed that any exemption notification specifying effective rate has to be complied with. In this regard, Hon ble CESTAT, Ahmedabad Bench in its judgment in the case of Mahendra Chemicals v. CCE, Ahmedabad - 2007 (208) E.L.T. 505 (Tri.-Ahmd.), while relying on above said Apex Court judgment has held that exemption notification has to be construed as if this rate was prescribed by statute and when the legislature has decided to exempt certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was NIL in terms of Notification No. 4/2006, dated 1-3-2006 read with Notification No. 21/2002-Cus., dated 1-3-2002 or confirmed recovery of rebate erroneously sanctioned on the ground that duty was not payable by the applicant. As held in above paras, the rebate is admissible only to the extent of 0%/4%/5% as the case may be. 11.1 Further, notwithstanding the above Government observes that when the goods are absolutely exempted from payment of duty, the assesse cannot pay duty as per Section 5A(1A) proviso wherein it has been provided that where an exemption under sub-section (1) in respect of any excisable goods from the whole of duty of excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not pay the duty of excise on such goods . The Notification No. 4/2006, dated 1-3-2006 issued under Section 5A(1A) of the Act, grants exemption from whole of duty of excise absolutely. So applicant was required not to pay duty. The amount so paid cannot be treated as duty under Section 3 of the Act and therefore, not admissible as rebate under Rule 18 of Central Excise Rules, 2002 read with Notification No. 19/2004-C.E. (N.T.), dated 6-1-2004 ..... 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