2014 (12) TMI 1128 - CGOVT - Central Excise

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

M/s Cadila Healthcare Ltd., Ahmedabad Versus CCE, Ahmedabad-II

M/s Cadila Healthcare Ltd., Ahmedabad Versus CCE, Ahmedabad-II - 2016 (343) E.L.T. 852 (G. O. I.) 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.