2014 (12) TMI 1128 - CGOVT - Central Excise

Government Upheld Calculation of Duty Rebate Based on Notification No. 4/06-CE

The government concluded that the rebate should be calculated based on the effective rate of duty (4% or 5%) as per Notification No. 4/06-CE. The decision ... Rebate claim - effective rate of duty - Applicable Notification - Notification No. 2/08-CE dated 1.03.08 or Notification No.4/06-CE dated 1.03.06 - Held that:- Instructions issued by CBEC regarding assessment of export goods are quite relevant to decide the issue involved in these cases - plain reading reveals that the export goods shall be assessed to duty in the same manner as the good cleared for home consumption are assessed. Further the classification and rate of duty should be as stated in schedule of Central Excise Tariff Act, 1985 read with any exemption notification and /or Central Excise Rules, 2002. The CBEC instructions clearly stipulate that applicable effective rate of duty will be as per the exemption notification. Notification No. 2/08-CE dated .1.03.08 as amended prescribed General Tariff rate of duty @10% which was in fact brought down from 16% to 14% and then to 8% and finally to 10% by different amending notifications. The notification No. 4/06-CE dated 1.03.06 as amended prescribed effective rate of duty from initial rate of 0% to 8%, 8% to 4% and finally to 5% by different amending notifications. As such it is not correct to say that it is a case of applicability of two notifications only and assessee is at liberty to choose anyone notification which is beneficial to. him. In this case, notification No. 2/08-CE as amended provided for General tariff rate of duty and Notification No. 4/06-CE as amended provided for effective rate of duty and they have to be strictly construed.as such. when two notifications co-exit simultaneously, the, assessee has the option to choose anyone of the notifications beneficial to him. Hon'ble Apex Court [2001 (3) TMI 971 - SUPREME COURT OF INDIA] has categorically held that in such a situation assessee has option to choose anyone notification. Apex court has not stated that assessee can avail both the notifications simultaneously. In the instant case applicant has not chosen one notification or all the clearance but decided to avail benefit of both the notifications. There is no merit in the contentions of applicants that they are eligible to claim rebate of duty paid @10% i.e. General Tariff Rate of Duty ignoring the effective rate of duty @4% or 5% in terms of exemption notification No.4/06-CE dated 1.03.06 as amended. As such Government is of considered view that rebate is admissible only to the extent of duty paid at the effective rate of duty i.e. 4% or 5% in terms of Notification No.4/06-CE dated 1.03.06 as amended, as applicable on the relevant on the transaction value of exported goods determined under section 4 of Central Excise Act, 1944. - the amount paid, in. excess of duty payable on one’s own volition cannot be retained by Government and it has to be returned to manufacturer applicant in the manner in which it was paid. Accordingly, such excess paid amount/duty which is required to be returned to the applicants, has already been allowed by the original authority - Decided against assessee. Issues Involved:1. Applicability of two different Central Excise Tariff Notifications.2. Eligibility for rebate of duty paid on exported goods.3. Method of refund/rebate of excess duty paid.4. Adherence to CBEC Circulars and Instructions.5. Legal precedents and their applicability.Detailed Analysis:1. Applicability of Two Different Central Excise Tariff Notifications:The applicant, M/s Cadila Health Care Ltd., argued that they were entitled to choose between two different notifications (Notification No. 4/2006-CE and Notification No. 2/2008-CE) for paying duty on exported goods. They contended that both notifications, approved by the Indian Parliament, allowed them to select the one most beneficial to them. The government, however, clarified that Notification No. 2/08-CE prescribed the general tariff rate, while Notification No. 4/06-CE provided an effective rate of duty. The instructions from CBEC stated that the effective rate of duty should be applied uniformly for both home consumption and export goods.2. Eligibility for Rebate of Duty Paid on Exported Goods:The applicant paid duty at 10% on exported goods under Notification No. 2/08-CE but paid 4% on goods for home consumption under Notification No. 4/06-CE. The government held that the rebate should be calculated based on the effective rate of duty (4% or 5%) as per Notification No. 4/06-CE. The rationale was that the effective rate of duty must be uniformly applied to both domestic and exported goods, as stipulated by CBEC instructions.3. Method of Refund/Rebate of Excess Duty Paid:The applicant argued that the excess duty paid should be refunded in cash rather than recredited to their Cenvat credit account. However, the government cited Chapter 9 of the Supplementary Instructions, which states that refunds or rebates should be given by cheque. The adjudicating authority's decision to recredit the excess duty to the Cenvat account was upheld, aligning with the CBEC's guidelines and judicial precedents.4. Adherence to CBEC Circulars and Instructions:The government emphasized that departmental authorities are bound by CBEC Circulars and Instructions. The CBEC's instructions clearly stated that the effective rate of duty should be applied to export goods. The Supreme Court's ruling in Paper Products Ltd. vs. CCE reinforced that CBEC circulars are binding on departmental authorities, ensuring consistency and discipline in administrative actions.5. Legal Precedents and Their Applicability:The applicant cited several case laws to support their claim that they could choose the more beneficial notification. However, the government noted that these cases pertained to different contexts, primarily involving the admissibility of exemption notifications in classification disputes. The government highlighted that the cited judgments did not apply to the context of rebate claims under Rule 18 of the Central Excise Rules. The government also referenced relevant case laws, such as CCE vs. Parle Exports, which supported the view that rebates should be based on the effective rate of duty.Conclusion:The government concluded that the rebate should be calculated based on the effective rate of duty (4% or 5%) as per Notification No. 4/06-CE. The decision to recredit the excess duty to the Cenvat account was upheld, and the revision applications were rejected. The orders of the Commissioner (Appeals) were found to be in compliance with CBEC instructions and legal precedents, ensuring consistency and adherence to statutory provisions.