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Issues: Whether rebate of duty could be denied to a merchant exporter solely because the manufacturer-supplier had allegedly availed Cenvat credit on bogus invoices and wrongly utilised it for payment of duty on the exported goods.
Analysis: The export of goods was not in dispute and the goods were covered by duty-paying documents, ARE-1 forms and customs certification at the port of export. The exporter had purchased the goods in the ordinary course of business, paid the full price inclusive of duty, and there was no material to show any collusion, connivance, mutuality of interest, financial control, flow-back of funds, or lack of bona fides between the exporter and the supplier. The alleged wrongdoing was confined to the supplier's wrongful availment and utilisation of credit, for which the statutory remedy lay against the supplier under the credit recovery and penal provisions. The exporter could not be saddled with the supplier's lapse when the export and duty-paid character of the goods were otherwise supported by the records and the transaction was bona fide.
Conclusion: Rebate could not be denied to the assessee on the basis of the supplier's alleged irregular credit availment, and the claim was admissible.
Final Conclusion: The impugned orders were set aside and the revision application was allowed with consequential relief on the footing that a bona fide exporter cannot be penalised for the supplier's independent default where export of duty-paid goods is established.
Ratio Decidendi: Rebate or similar fiscal benefit cannot be denied to a bona fide purchaser-exporter merely because the supplier wrongly availed or utilised credit, unless the exporter's own transaction is shown to be non-bona fide, collusive, or tainted by participation in the supplier's default.
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