2012 (9) TMI 241 - CGOVT - Central Excise

Government allows re-crediting duty in Cenvat Credit Account under Notification No. 24/2003-C.E.

The government allowed the applicant to re-credit the erroneously paid duty in their Cenvat Credit Account as duty payment was not required under the ... Export of goods - payment of duty on exempted goods - claim of rebate under ruel 18 - By virtue of this amendment and insertion of explanation in clause 5A(1A), the applicant cannot pay duty as the goods were exempted from payment of duty of excise – Held that:- Duty paid erroneously cannot be called as duty of excise but it becomes mere a deposit with Government - Govt. cannot retain any amount which is not due to it, the amount so collected is allowed to be re-credited in Cenvat Account. Government allows the applicant to take re-credit of said amount in their Cenvat Credit Account. The impugned order-in-appeal is modified to this extent. Issues:1. Interpretation of Notification No. 24/2003-C.E., dated 31-3-2003 for 100% EOU regarding duty payment on export clearance.2. Whether the exemption under the notification is absolute or conditional.3. Validity of the rejection of rebate claim by the adjudicating authority.4. Compliance with Section 5A(1A) of the Central Excise Act, 1944.Analysis:Issue 1: Interpretation of Notification No. 24/2003-C.E., dated 31-3-2003The case involved a dispute over the interpretation of Notification No. 24/2003-C.E., dated 31-3-2003, which exempted all excisable goods produced in an Export Oriented Undertaking (EOU) from the duty of excise on export clearance. The central question was whether a 100% EOU was required to pay duty on export clearance despite the exemption provided under the said notification.Issue 2: Absolute or Conditional ExemptionThe applicant department argued that the exemption under the notification was absolute and mandatory for all 100% EOUs, leaving no discretion to pay duty on export clearance. The notification did not prescribe any conditions for availing its benefits, and the insertion in Section 5A of the Central Excise Act, 1944 reinforced the mandatory nature of the exemption. The contention was that the Commissioner (Appeals) erred in treating the exemption as conditional.Issue 3: Rejection of Rebate ClaimThe rebate claim of the respondent was initially rejected by the Assistant Commissioner on the grounds that as an export-oriented undertaking, the EHTP Unit was not required to pay duty on goods due to the unconditional exemption provided by Notification No. 24/2003-C.E. However, the Commissioner (Appeals) allowed the appeal, considering the exemption as conditional since DTA clearances were not exempted from duty payment.Issue 4: Compliance with Section 5A(1A) of the Central Excise Act, 1944The government analyzed the records and concluded that the exemption under Notification No. 24/2003-C.E., dated 31-3-2003 was unconditional for all goods produced or manufactured in an EOU. The exemption did not apply to goods cleared for home consumption but was absolute for exported goods. The government found that the duty paid erroneously by the applicant was not rebatable under Rule 18 of the Central Excise Rules, 2002, as the goods were exempted from duty payment.In conclusion, the government allowed the applicant to re-credit the erroneously paid duty in their Cenvat Credit Account, as it was determined that the duty payment was not required under the absolute exemption provided by Notification No. 24/2003-C.E., dated 31-3-2003. The revision application was disposed of accordingly.