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TMI Blog2017 (11) TMI 1520X X X X Extracts X X X X X X X X Extracts X X X X ..... cal “biscuits” as those received in its factory from CMUs. These could be exported with attendant benefits only with permission from the Commissioner under Rule 16(3). Trade Notice No.2/2001 reveals that Rule 16(1) and (2) may not apply for receiving duty paid biscuits in the factory for export of confectioneries and chocolates, since BFPL had not manufactured these products. A fair reading of the letter reveals that it is in fact a denial of permission. It records in unequivocal terms that during discussions no difficulties were pointed out by BFPL in following the provisions of rules 16(1) and (2) and since no difficulties in following rules 16(1) and (2), the question of seeking permission of the Commissioner under rule 16(3) should not arise. There was a clear direction in the letter to follow procedure as specified under Rule 16(1) and (2) of Central Excise Rules, 2002. - the contention of Mr. Patil to the effect that the authorities of Commissioner had given permission is devoid of merit. In our view in both these matters there was no permission given for bringing goods to the factory of BFPL and for stuffing them in the containers. Since the products have not been manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BFPL ) with effect from September, 2004. BFPL itself manufactured biscuits and would also receive variety of biscuits and confectionery manufactured by other units in terms of the Notification 36. It transpires that in order to receive duty paid goods manufactured by the CMUs in the factory of BFPL, BFPL made an application to the jurisdictional Commissioner of Central Excise requesting permission to receive goods under rule16(3) of the Central Excise Rules, 2002 ('the Rules'). The letter mentioned that no processing had been undertaken in BFPL factory and the goods brought in, were stored and stuffed directly into the export containers. Permission was sought on the basis that similar permission had been granted to the principal manufacturer viz, the petitioners. 4. On or about 15th September, 2003 the Assistant Commissioner of Central Excise declined to grant permission and thereupon BFPL is believed to have made a detailed presentation before the Chief Commissioner of Central Excise, Zone-I vide letter dated 24th September, 2003. On 16th February, 2004 the Assistant Commissioner inquired of BFPL as to why they could not operate under Rule 16 (1) and (2). BFPL vide its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t taken and hence eligible for rebate of duty paid. 7. Vide order dated 26th December 2005 the Assistant Commissioner rejected all 76 rebate claims for an amount of ₹ 25,72,908/- on the basis that (i)rebate is admissible to export only when goods are directly cleared from the place of manufacturer as per conditions prescribed in Notification 41 and Notification 19. (ii) letter dated 26-5-2004 from the Commissioner was not a permission under Rule 16(3) (iii) goods were not exported directly form place of manufacture and (iv) the letter dated 26-5-2004 from the Thane commissionerate was misused and remarks were entered in the ARE 1s to the effect that stuffing permission had been granted. 8. An appeal filed before the Commissioner (Appeals) was rejected vide impugned order dated 17th August 2006 which came to be challenged in a Revision Application before the Joint Secretary, Government of India, Ministry of Finance under Section 35EE of the Act. The said authority also rejected the application concluding inter alia that it was not possible to co-relate the goods exported with the goods cleared from the factory. In other words the goods would have to be exported from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red at various job workers under Rule 16(1) and (2) which were to be exported and the same were not inputs as contemplated by Rule 3(4). Rule 16 referred to finished goods and good received by BFPL were finished goods. Therefore, the rejection for rebate claimed under Rule 3(4) was incorrect. Mr. Patil submitted that the production of the biscuits were undertaken at its own factory but the stock being meant for exports and since Cenvat Credit was taken by BFPL, by virtue of the explanation to Rule 16, the amount of duty paid was to be allowed as Cenvat credit and since the credit of Cenvat was taken by BFPL. The amount of Cenvat credit debited at the time of removal of the goods was nothing but the duty paid on the goods cleared for export under the claim of rebate. It was submitted that the availer of the credit who utilized it for payment of duty on the goods cleared is a deemed manufacturer. He submitted that Rule 16 permits receipt of goods under a factory for being remade, refined or for any other reason. He contended that the expression for any other reason meant that any activity relating to the inputs or final products brought into the factory premises would qualify for b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e condition of exports being made directly from the factory of manufacture should be deemed to have been waived. Making reference to the said compilation of invoices, Mr. Patil referred to several invoices and supporting declarations by BFPL under Rule 16 of the Central Excise Rules and Form ARE-1's. The particulars of the invoices and declarations etc are set out in a tabular form for ease of reference:- Sr no. Excise Invoice no. date Declaration no. date Form ARE-1 date Bill of lading no. date Petitioner's proforma Invoice no. date BFPL Invoice no. date 1 1071 03/09/2004 03/2004-2005 17/09/2004 35 23/09/2004 TALNHVDAM 1502992 18/10/2004 PPPL No.SAACL-003 23/9/2004 35 23/9/2004 2 4803 17/09/2004 03/2004-2005 17/09/2004 3 04924 23/09/2004 05/2004-2005 23/09/2004 4 1236 03/09/2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent to BFPL received at BFPL and stuffed into containers are BFPL premises at Ambernath. He submitted that the declarations by BFPL clearly set out the fact that Commissioner of Central Excise had given permission for export clearance on 26th May, 2004 and accordingly goods were cleared and export. He submitted that even otherwise a general permission was always there in order to export the goods and as such there cannot be any doubt in a genuineness of the transaction. In support of his contentions Mr. Patil relied upon the judgments of this Court in ( Commissioner of Central Excise, Raigad v/s. Micro Inks Ltd. 2011 (270) E.L.T. 360 (Bom.). He also relied upon a judgment of the Madras High Court in the case of Ford India Pvt.Ltd. v/s. Assistant Commissioner of Central Excise, Chennai. He submitted that technicalities in following statutory procedure would be cut down especially technicalities which are not essential for fulfillment of the legislative purpose. He relied upon the decision of this Court in Madhav Steel and another v/s. Union of India Ors. 2010 TIOL 575 HC-MUM-CX wherein the Court relied upon the observations of the Supreme Court in the case of Mangal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly be done after obtaining permission from the Central Board of Excise and Customs ('CBEC' ). In the instant case, the petitioner had not obtained such permission. It is submitted that these goods were being exported from BFPL premises without any process being carried out after reversal of the CENVAT credit so availed and although prescribed in Rule 16(1) and (2) of the Rules. The Chief Commissioner of Central Excise found that no process had been carried out and there was a case of irregular availing of Cenvat credit. Since the BFPL was bringing the finished goods from other manufacturers on payment of duty, availing of credit and reversing the amount of credit on exporting the finished goods received from other manufacturers and therefore the benefit of the rebate cannot be availed of. 18. Mr. Bangur further submitted that although the biscuits were received from the CMUs at the premises of BFPL and their excise numbers have mentioned in form ARE-1 but the rebate could not be claimed. There was no process carried out on the goods despite the benefit was being claimed. Furthermore, there was no permission for stuffing goods into containers at the premises of the BFPL. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permission granted for stuffing of container those and which was referred to in the declaration in the remarks column. For ease of reference the contents of the said letter purporting to be the permission is reproduced below:- --------------------------------- I am directed to your letter dated 4.3.2004 on the above subject. In this connection reference is invited to the discussions held with you on 5.4.2004 when it was clarified that unless the difficulties in observing the provisions of Rule 16(1) and (2) were established, there was no case for granting permission by Commissioner under Rule 16(3). No difficulties were pointed out by you during the discussions and also in your letter dated 25.2.2004. Accordingly you were advised to follow the provisions of Rule 16(1) and (2). Since no difficulties in following Rule 16(1) and (2) have been reported the question of seeking the permission of the Commissioner under Rule 16(3) should not arise. You may therefore follow the procedure as specified in Rule 16(1) (2) of Central Excise Rules, 2002. ------------------------------------ 22. Perusal of this letter is reveals that in response to the prior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les were not followed. Reliance is placed on the very same letter dated 26th May 2004. 25. A fair reading of the letter reveals that it is in fact a denial of permission. It records in unequivocal terms that during discussions no difficulties were pointed out by BFPL in following the provisions of rules 16(1) and (2) and since no difficulties in following rules 16(1) and (2), the question of seeking permission of the Commissioner under rule 16(3) should not arise. There was a clear direction in the letter to follow procedure as specified under Rule 16(1) and (2) of Central Excise Rules, 2002. In the circumstances, we are of the view that the contention of Mr. Patil to the effect that the authorities of Commissioner had given permission is devoid of merit. In our view in both these matters there was no permission given for bringing goods to the factory of BFPL and for stuffing them in the containers. Since the products have not been manufactured by BFPL there was no occasion to export them. In the circumstances, the contention that the permission granted was in the nature of a misrepresentation and an attempt to mislead the authorities and this Court. 26. For the aforesaid rea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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