2013 (11) TMI 431 - CGOVT - Central Excise

Dispute over rebate claims for non-compliance with Notification No. 19/2004-C.E. (N.T.) upheld by Supreme Court

The case involved a dispute over the rejection of rebate claims for non-compliance with conditions under Notification No. 19/2004-C.E. (N.T.). The ... Rebate claim under Rule 18 of the Central Excise Rules, 2002 r.w. Notification No. 19/2004 – Non-production of any certification - assessee cleared the goods as “Ship Stores” to be used on ships - there was no proof that the ship is on foreign run – Held that:- The Commissioner (Appeals) has erred in establishing that no Commissioner of Customs can certify that the quantity supplied as ship stores and that the Customs Authorities would allow the ship stores to be loaded on ship only when they are satisfied that they are not unusual and in high quantities unless such quantities of material are genuinely required for the ship - The powers under para 2(C) are vested in Commissioner of Customs and are not delegated to lower authorities - Respondent has not obtained any approval from Commissioner of Customs, the condition 2(C) stands violated. The respondent failed to satisfy the basic mandatory requirement of the Notification No. 19/2004, the rebate claim is not admissible to them- Relying upon M/s. Eagle Flask Industries Ltd. v. CCE, Pune [2004 (9) TMI 102 - SUPREME COURT OF INDIA] - the conditions of the notification are not merely procedural and exemption can be denied for non-observance of the said conditions - order set aside – Decided in favour of Revenue. Issues:1. Rebate claim rejection for non-compliance of conditions under Notification No. 19/2004-C.E. (N.T.).2. Applicability of judgment in the case of M/s. Eagle Flask Industries Ltd. v. CCE, Pune.3. Verification of vessels being on a foreign run for rebate eligibility.4. Certification requirement by the Commissioner of Customs for ship stores.5. Compliance with basic mandatory conditions for claiming rebate.6. Authority's power to reject rebate claims for non-compliance with notification conditions.Detailed Analysis:1. The case involved a dispute over the rejection of rebate claims by the respondents, who exported duty paid goods as ship stores but failed to comply with condition 2(C) of Notification No. 19/2004-C.E. (N.T.). The original adjudicating authority rejected the claims, but the Commissioner (Appeals) allowed them. The government observed that all conditions stipulated in the notification must be fulfilled for claiming the rebate, highlighting the requirement for certification from the Commissioner of Customs for the quantity of goods supplied as ship stores.2. The revision application challenged the order-in-appeal based on the applicability of the judgment in the case of M/s. Eagle Flask Industries Ltd. v. CCE, Pune. The government emphasized that the conditions of the notification were not merely procedural, and exemption could be denied for non-observance of such conditions. The Supreme Court judgment supported the rejection of rebate claims for non-compliance with notification requirements.3. Concerns were raised regarding the verification of vessels being on a foreign run to determine rebate eligibility. The government noted that the certification from the Customs authorities confirming the vessel's foreign run status was crucial and not merely procedural. The absence of such certification raised doubts about the vessels' eligibility for the rebate claimed by the assesses.4. The judgment highlighted the necessity of certification by the Commissioner of Customs for ship stores supplied by the assesses. The government emphasized that the powers under the notification were vested in the Commissioner of Customs and were not delegated to lower authorities. Failure to obtain approval from the Commissioner of Customs resulted in a violation of condition 2(C) and rendered the rebate claim inadmissible.5. The government emphasized the importance of complying with basic mandatory conditions for claiming rebate under the notification. As the respondents failed to satisfy the requirements, including obtaining certification from the Commissioner of Customs, their rebate claims were rightly denied. Previous government orders also disallowed similar rebate claims by the same party, reinforcing the significance of compliance with notification conditions.6. The authority's power to reject rebate claims for non-compliance with notification conditions was reiterated, citing the Supreme Court judgment and previous government orders disallowing similar claims. The government set aside the order-in-appeal and allowed the revision application, restoring the original order-in-original that rejected the rebate claims due to non-compliance with notification conditions.