2015 (3) TMI 950 - CGOVT - Central Excise

Gujarat HC: Notification No. 37/2007-C.E. (N.T.) Prospective, Upholds Export Rebate Claims

The Gujarat High Court held that Notification No. 37/2007-C.E. (N.T.), barring rebate claims for goods under area-based exemptions, was prospective. The ... Denial of rebate claim - non-compliance of the provisions of Rule 18 and stipulation of Notification No. 19/2004 ibid inasmuch as the term “duty paid” used in Rule 18 does not include that portion of duty which is subsequently refunded to the manufacturer - Held that:- Respondent procured the said goods from a manufacturing unit M/s. Hanny Fibre Pvt. Ltd. located in North-East who was availing area based exemption of Central Excise duty under Notifn. Nos. 32/2009-C.E., dated 8-7-1999 and 33/99-C.E., dated 8-7-1999 and cleared/ exported the same to SEZ Unit in Falta, West Bengal. Applicant department has contended that the manufacturing unit in North East area is getting refund of the portion of duty paid in cash and therefore in view of C.B.E. & C. clarification vide Circular dated 8-12-2006, M/s. Vedik Vanijya (P) Ltd. the respondent is entitled for rebate claim under Rule 18 of Central Excise Rules, 2002. In this regard, Government observes that C.B.E. & C. vide Circular dated 3-4-2007 has further clarified the instructions contained in Circular dated 8-12-2006. It is pertinent to mention here that as per Section 88 of Finance Act, 2008, Rule 18 of Central Excise Rules, 2002 was amended retrospectively to the effect that rebate of duty on excisable goods cleared from factory for export shall also be admissible for that portion of duty paid for which the refund has been granted in terms of the Notification No. 32/99-C.E., dated 8-7-1999 and 33/99-C.E., dated 8-7-1999 and other area based exemption notifications, during the period 1-3-2002 to 7-12-2006. - by inserting clause (h) in the Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 vide Notifn. No. 37/2007-C.E. (N.T.), dated 17-9-2007 in case of export of goods which are manufactured availing Notifications 32/99 and 33/99-C.E. both dated 8-7-1999 and other such notifications, the rebate shall not be admissible under this notification. Hon’ble High Court in [2010 (2) TMI 547 - GUJARAT HIGH COURT] has held that said notification is applicable prospectively and despite amendment made in Rule 18 as per Section 88 of Finance Act, 2008, the right vested in the exporter to claim rebate in respect of export of goods after 8-12-2006 till 17-9-2007 continued and its validity and enforceability could not be affected. Government notes that in view of said judgment the rebate claims were admissible up to 17-9-2007. - No infirmity in impugned order - Decided against Revenue. Issues Involved:1. Eligibility for rebate under Rule 18 of the Central Excise Rules, 2002.2. Interpretation of the term 'duty paid' in the context of area-based exemptions.3. Applicability of departmental instructions and circulars.4. Retrospective application of amendments to Rule 18.5. Jurisdiction and validity of the Notification No. 37/2007-C.E. (N.T.), dated 17-9-2007.Issue-wise Detailed Analysis:1. Eligibility for Rebate under Rule 18 of the Central Excise Rules, 2002:M/s. Vedik Vanijya Pvt. Ltd. procured inputs from a manufacturer availing area-based exemptions and exported these inputs to an SEZ unit, claiming a rebate of excise duty under Rule 18. The Maritime Commissioner rejected the rebate claim, citing non-compliance with Rule 18 and Notification No. 19/2004-C.E. (N.T.), arguing that 'duty paid' does not include refunded duty. However, the Commissioner (Appeals) overturned this decision, allowing the rebate claim.2. Interpretation of the Term 'Duty Paid':The department argued that the term 'duty paid' in Rule 18 excludes portions of duty refunded to the manufacturer under area-based exemptions. This interpretation was supported by C.B.E. & C. Circulars dated 8-12-2006 and 3-4-2007. The respondent contended that the circulars applied only to manufacturers availing the exemptions, not to units purchasing and exporting such goods.3. Applicability of Departmental Instructions and Circulars:The respondent argued that the instructions restricting rebate payments were not applicable to them as they were not the original manufacturers but purchasers of the duty-paid goods. The clarification in the circular dated 3-4-2007 supported their claim, stating that units outside the exempted areas could claim rebates on exported goods.4. Retrospective Application of Amendments to Rule 18:The respondent emphasized that Notification No. 37/2007-C.E. (N.T.), which barred rebate claims for goods manufactured under area-based exemptions, was only effective from 17-9-2007 and could not be applied retrospectively. The dispute period was from 31-5-2007 to 25-6-2007, predating the notification.5. Jurisdiction and Validity of Notification No. 37/2007-C.E. (N.T.):The Gujarat High Court, in its judgment dated 25-2-2010, held that the notification barring rebate claims was prospective. This judgment affirmed the respondent's right to claim rebates for exports made before the notification's effective date.Conclusion:The government reviewed the case records and upheld the Commissioner (Appeals)'s decision to allow the rebate claims. The circulars and amendments cited by the department were found inapplicable to the respondent's case as they were not the original manufacturers. The retrospective application of Notification No. 37/2007-C.E. (N.T.) was also rejected based on judicial precedents. The revision application filed by the department was dismissed for lack of merit.Order:The revision application is rejected, and the impugned Order-in-Appeal is upheld.