2018 (4) TMI 1656 - CGOVT - Central Excise

EOUs Eligible for Rebate on Central Excise Duty: Rule 18 Interpretation

IN RE : TORRENT PHARMACEUTICALS LTD.

The Revision Application was allowed in a case concerning the rejection of a rebate claim under Rule 18 of C.E.R., 2002 for excisable goods manufactured ... Rebate claim - rejection on the ground that the rebate of duty in respect of basic Customs duty was not admissible and the rebate of duty for additional duty of Customs only could be granted - Rule 18 of CER 2002, read with N/N. 21/2004-C.E. (N.T.) - Held that:- The Government finds that the lower authorities have confused the central excise duty paid by the applicant in respect of inputs as customs duty for the reason that measure of levy of central excise duty on the goods manufactured by the 100% EOU is equivalent to the aggregate of the Customs duty under Section 3 of the Central Excise Act. But for this reason alone the excise duty leviable on such goods cannot be misconstrued as duty of customs and the legal reality is that the duty levied under Section 3 of the Central Excise Act on the goods manufactured by 100% EOU is Central Excise only even when the measure of levy is the Customs duty. The Government is fully convinced that entire duty paid by the applicant in respect of the inputs at the rate of 21% is duty of excise only and the rebate of the same is allowed under Rule 18 of the C.E.R., 2002 and Notification No. 21/2004-C.E. (N.T.), as the compliance of these two governing provisions are not doubted by the lower authorities also in his case - The splitting of the central excise duty into B.C.D. and V.D. and to confuse the entire matter was wholly unwarranted - Further the Government’s policy enshrined in the Rule 18 and N/N. 21/2004-C.E. (N.T.) is that no tax should be exported along with the goods. The Government is convinced that the Commissioner (Appeals) has passed an erroneous order by disallowing the rebate of duty of ₹ 2,09,213/- to the applicant - revision application allowed. Issues:Rebate claim rejection under Rule 18 of C.E.R., 2002 for excisable goods manufactured by an EOU. Interpretation of duty payment on inputs procured from 100% EOU for exported goods. Applicability of Central Excise duty on goods manufactured by EOU. Confusion between Central Excise duty and Customs duty. Legal provisions under Rule 18 of C.E.R., 2002 and Notification No. 21/2004-C.E. (N.T.).Analysis:The case involves a Revision Application filed against the rejection of a rebate claim of &8377; 2,09,213/- under Rule 18 of C.E.R., 2002 for excisable goods by an EOU. The applicant contended that full duty of excise paid by EOUs is admissible to them under Section 3 of the Central Excise Act. The Government found that the rebate was reduced due to confusion between basic Customs duty and Additional Duty of Customs (C.V.D.). The applicant argued that the duty paid on inputs from a 100% EOU is Central Excise duty and should be eligible for a rebate. The Government clarified that duty paid by the applicant at 21% on inputs from EOU is Central Excise duty, not Customs duty. The legal reality is that the duty levied on goods manufactured by EOUs is Central Excise duty, even if the measure of levy is based on Customs duty. A previous case decision also supported this interpretation. The Government concluded that the lower authorities erred in disallowing the rebate based on an incorrect understanding of the duty structure. The order-in-appeal was overturned, and the Revision Application was allowed.In summary, the judgment clarifies the distinction between Central Excise duty and Customs duty concerning goods manufactured by EOUs. It emphasizes that duty paid on inputs from EOUs is Central Excise duty and is eligible for a rebate under Rule 18 of C.E.R., 2002 and Notification No. 21/2004-C.E. (N.T.). The decision highlights the importance of correctly interpreting legal provisions to ensure the rightful entitlement of rebates for duty paid on inputs procured from EOUs.