2013 (10) TMI 1309 - CGOVT - Central Excise

EOU rebate claims rejected due to absolute exemption. Excess duty to be refunded via Cenvat credit.

The court upheld the rejection of rebate claims for duty paid on goods exported by a 100% Export Oriented Unit (EOU) due to absolute exemption under ... Denial of rebate claim - exemption granted under Section 5A(1A) of Central Excise Act, 1944 - 100% EOU - Held that:- Notification No. 24/2003-C.E., dated 31-3-2003 was issued under Section 5A(i) of Central Excise Act, 1944. The goods manufactured by 100% EOU and cleared for export are exempted from whole of duty unconditionally. Therefore in view of provisions of sub-section (1A) of Section 5A, the applicant manufacturer has no option to pay duty. Government notes that there is no condition for availing exemption from payment of duty on goods cleared for exports. Normally the 100% EOU has to clear goods for exports as per the EOU scheme. Since there is no condition in the notification for availing exemption to goods manufactured by 100% EOU and cleared for export, the provisions of sub-section (1A) of Section 5A(1) are applicable and no duty was required to be paid on such export goods. As such rebate claims were rightly held by Commissioner (Appeals) to be inadmissible in terms of Rule 18 of Central Excise Rules, 2002. As such the excess paid amount/duty is required to be returned to the respondent in the manner in which it was paid by him initially. - Therefore, the original authority is directed to allow re-credit in Cenvat credit account of said amount. - Decided partly in favour of assessee. Issues Involved:1. Whether the rebate claims for duty paid on goods exported by a 100% Export Oriented Unit (EOU) are admissible.2. Applicability of Section 5A(1A) of the Central Excise Act, 1944, and Notification No. 24/2003-C.E., dated 31-3-2003.3. Correct mode of refund for duty paid without legal requirement.Issue-wise Detailed Analysis:1. Admissibility of Rebate Claims for Duty Paid on Exported Goods by a 100% EOU:The applicant, M/s. Monomer Chemical Industries Pvt. Ltd., filed four rebate claims for duty paid on goods exported on 15-10-2010, the same day the unit was converted into a 100% EOU. The adjudicating authority rejected these claims, stating that goods manufactured and cleared for export by 100% EOUs are fully exempt from duty as per Notification No. 24/2003-C.E., dated 31-3-2003. Since the goods were absolutely exempted, the claimants were legally bound to avail the exemption and had no option to clear the goods on payment of duty. Consequently, the duty paid could not be considered as legally required under the Central Excise Act, 1944, and related enactments, making the rebate claims inadmissible.2. Applicability of Section 5A(1A) of the Central Excise Act, 1944, and Notification No. 24/2003-C.E., dated 31-3-2003:The applicant contended that Notification No. 24/2003-C.E. is conditional, as it exempts DTA clearances from duty payment, implying Section 5A(1A) is not applicable. However, the judgment clarified that the notification provides an absolute exemption for goods manufactured by 100% EOUs and cleared for export. Section 5A(1A) stipulates that when an exemption is granted absolutely, the manufacturer cannot opt to pay duty. The judgment referenced the Supreme Court's rulings in M/s. ITC Ltd. v. CCE and M/s. Paper Products v. CCE, emphasizing that the plain meaning of the statute must be adhered to. Thus, the applicant had no option to pay duty on the exported goods, and the rebate claims were rightly rejected.3. Correct Mode of Refund for Duty Paid Without Legal Requirement:Although the rebate claims were inadmissible, the judgment recognized that duty paid without legal requirement should be treated as a voluntary deposit. Citing the Punjab and Haryana High Court's decision in M/s. Nahar Industrial Enterprises Ltd. v. UOI, it was held that the excess duty paid should be refunded in the manner it was initially paid. Therefore, the original authority was directed to allow re-credit of the said amount in the applicant's Cenvat credit account.Conclusion:The revision application was disposed of by directing the original authority to re-credit the excess duty paid into the applicant's Cenvat credit account, thereby upholding the rejection of the rebate claims but ensuring the return of the voluntary deposit.