Central Excise rebate on exports cannot be denied merely because a merchant exporter claimed drawback.

Rebate of Central Excise duty on exported goods could not be refused to the manufacturer merely because the merchant exporter claimed drawback. The manufacturer had exported terry towels through a merchant exporter, made the required ARE-1 declarations, and complied with the rebate notification issued under Rule 18 of the Central Excise Rules, 2001. The rebate notification did not make entitlement conditional on the exporter's non-claim of drawback. Any irregularity in obtaining drawback could be dealt with under the drawback law, but it was not a valid basis to deny rebate to the manufacturer when the rebate conditions were otherwise satisfied.

---

---

Issues: Whether rebate of Central Excise duty on exported goods could be denied to the manufacturer merely because the merchant exporter claimed drawback, where the manufacturer had complied with the rebate procedure and the conditions of the rebate notification.

Analysis: The claim arose from export of terry towels on payment of duty under Rule 18 of the Central Excise Rules, 2001 and the rebate notification issued thereunder. The records showed that the manufacturer had exported the goods through a merchant exporter, had made the requisite declarations on the ARE-1 forms, and had satisfied the conditions of the rebate notification. The legal position noted was that the rebate notification did not make denial of rebate dependent upon non-claim of drawback by the exporter. The drawback rules, on the other hand, barred drawback where Cenvat credit had been availed. Any irregularity in obtaining drawback by the merchant exporter could justify action under the drawback law, but that circumstance by itself was not a valid ground to refuse rebate to the manufacturer.

Conclusion: Rebate could not be denied to the manufacturer on the ground that the merchant exporter obtained drawback; the rebate claim was entitled to be sanctioned if otherwise in order.

---