2012 (10) TMI 266 - CGOVT - Central Excise

Government denies rebate claim for availing Cenvat credit on exported goods, citing no double benefit allowed.

The Government upheld the order-in-appeal, denying the rebate claim due to the applicant's violation of conditions for drawback claim by availing Cenvat ... Double benefit prohibition - Condition 12(ii) of Notification No. 68/2007-Cus. (N.T.) - Rule 18 of Central Excise Rules, 2002 - Drawback claim vis-a -vis rebate of duty - Use of Cenvat credit account for payment of duty - One-to-one correlation between input and exported product (drawback condition)Use of Cenvat credit account for payment of duty - Condition 12(ii) of Notification No. 68/2007-Cus. (N.T.) - Drawback claim vis-a -vis rebate of duty - Double benefit prohibition - Whether rebate under Rule 18 of Central Excise Rules, 2002 is maintainable where drawback on the export goods was claimed/availed and duty on exported goods was paid from the common Cenvat credit account despite declaration of non-availment of Cenvat on specific inputs. - HELD THAT: - The Government examined that the factual position - exports effected under DBK while rebate of duty on final clearances was also claimed though duty on those clearances was paid from the accumulated Cenvat credit account - is not in dispute. Condition No. 12 of Notification No. 68/2007-Cus. (N.T.) requires that drawback can be claimed only where no Cenvat facility has been availed for inputs used in manufacture of the export product and, where goods are exported under rebate, certification is required that no Cenvat facility has been availed. The respondents, by utilising the Cenvat credit account to discharge duty on finished products cleared for export, thereby availed the Cenvat facility in respect of the exported goods and thus failed to satisfy the condition for drawback. Allowing rebate under Rule 18 in those circumstances would amount to permitting a double benefit. The Government noted clarifications in departmental circulars and an earlier GOI order relied upon by the Commissioner (Appeals) to the effect that rebate is allowable only if drawback (to the extent claimed) is refunded; having accepted and availed drawback while also paying duty from Cenvat, the applicant could not legitimately claim rebate. The Government accordingly found no infirmity in the Commissioner (Appeals) order upholding denial of rebate and rejecting the revision. [Paras 6, 7, 8, 9, 10]Rebate under Rule 18 was not maintainable; revision rejected as the condition in Notification No. 68/2007-Cus. (N.T.) was breached and allowing rebate would result in double benefit.Cenvat Credit Rules - non-availability of one-to-one correlation - One-to-one correlation between input and exported product (drawback condition) - Whether the applicant's contention that Cenvat Credit Rules do not require one-to-one correlation between inputs and final products, and therefore payment of duty from a common Cenvat account does not disentitle them from drawback and rebate, is tenable. - HELD THAT: - The Government accepted that the Cenvat Credit Rules do not prescribe a one-to-one mapping of every input to a particular final product; however, the determinative statutory and notification condition for drawback requires that the specific inputs used in manufacture of the exported product must not have been under the Cenvat scheme. The Government found that, irrespective of accounting flexibility under Cenvat, utilisation of the Cenvat credit account to pay duty on the exported clearances constituted availment of Cenvat facility in respect of those exported goods for purposes of drawback notification. Consequently, the applicant's argument about general non-requirement of one-to-one correlation under the Cenvat regime did not entitle it to drawback and rebate simultaneously. [Paras 6, 7, 8]The absence of a strict one-to-one input-output rule in the Cenvat Credit Rules does not override the specific condition in the drawback/notification regime; the contention was rejected.Final Conclusion: The Central Government upheld the Commissioner (Appeals) order and dismissed the revision: rebate under Rule 18 was rightly disallowed where drawback had been claimed/availed and duty on exported goods was paid from the Cenvat account, breaching the notification condition and resulting in a prohibited double benefit. Issues:1. Interpretation of Cenvat Credit Rules and Duty Drawback Rules.2. Compliance with Notification No. 68/2007-Cus. (N.T.).3. Claim of rebate and duty drawback simultaneously.4. Double benefit availing concern.5. Violation of conditions for drawback claim.6. Applicability of relevant statutes and instructions.Analysis:1. Interpretation of Cenvat Credit Rules and Duty Drawback Rules:The revision application challenged the order-in-appeal that alleged the applicant wrongly utilized the Cenvat credit. The applicant argued that there is no one-to-one correlation between input and output in the Cenvat Credit Rules, unlike the Duty Drawback Rules. The applicant cited relevant judgments to support their claim. However, the reviewing authority found that the applicant availed Cenvat credit facility for duty payment on exported goods, leading to the denial of the rebate claim.2. Compliance with Notification No. 68/2007-Cus. (N.T.):The reviewing authority pointed out that the applicant failed to comply with Condition No. 12 of the notification, which mandates no Cenvat credit facility should be availed for inputs used in the export product. As the applicant utilized Cenvat credit for duty payment on exported goods, the sanction of drawback was deemed erroneous.3. Claim of rebate and duty drawback simultaneously:The applicant contended that they did not avail Cenvat credit on inputs used for manufacturing exported goods, thus justifying the claim of drawback. However, the authorities found that the applicant violated the conditions for drawback claim by availing Cenvat facility for exported goods' duty payment, leading to the denial of the rebate claim.4. Double benefit availing concern:The reviewing authority highlighted that allowing both rebate and drawback benefits would amount to double benefit for the applicant. Citing relevant circulars and judgments, it was established that no double benefit is permissible when claiming only the customs portion of the drawback.5. Violation of conditions for drawback claim:The Government noted that the applicant violated the conditions specified in Notification No. 68/07-Cus. (N.T.) by availing Cenvat facility for duty payment on exported goods. Despite this violation, the applicant claimed drawback for both excise and customs portions, leading to the rejection of the rebate claim.6. Applicability of relevant statutes and instructions:In line with the applicable statutes and instructions, the Government upheld the order-in-appeal, emphasizing adherence to the plain reading of rules and notifications. Citing Supreme Court judgments, the Government concluded that there was no infirmity in the impugned order-in-appeal and rejected the revision application for lacking merit.