2016 (3) TMI 550 - HC - Central Excise

Court denies rebate claim due to availing higher duty drawback rate concurrently - conflicting statutes cited.

The court upheld the rejection of the petitioner's claim for rebate of duty paid on exported goods, as they had availed a higher rate of duty drawback ... Double benefit by availing duty drawback and rebate - rebate under Rule 18 of the Central Excise Rules, 2002 - Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 - proviso to Rule 3 of the Drawback Rules - inapplicability of precedent where reliefs arise under different statutesDouble benefit by availing duty drawback and rebate - rebate under Rule 18 of the Central Excise Rules, 2002 - Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 - proviso to Rule 3 of the Drawback Rules - Whether the petitioner could claim rebate under Rule 18 of the Central Excise Rules, 2002 in addition to having availed duty drawback under the Drawback Rules, 1995 - HELD THAT: - The Court held that sanctioning rebate must take into account benefits already availed under other schemes to ensure no undue or double benefit is granted. After clearing goods on payment of duty under claim for rebate, the petitioners ought not to have also claimed drawback for the central excise and service tax portions without refunding or adjusting the drawback already availed; availing both benefits would result in double benefit. The proviso to Rule 3 of Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 contemplates reduction of drawback where a rebate, refund or credit has been obtained and, on that basis, the petitioners were not entitled to claim both the duty drawback and a cash rebate under Rule 18 as that would duplicate relief for the same duty incidence. The Court therefore found no error in the respondents' rejection of the rebate claims on the ground of double benefit and upheld the orders denying rebate. [Paras 12, 13, 14, 17]Claim for rebate under Rule 18 denied because petitioner had availed duty drawback and could not receive both benefits; rejection of rebate claims upheld.Inapplicability of precedent where reliefs arise under different statutes - rebate under Rule 18 of the Central Excise Rules, 2002 - Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 - Whether the Supreme Court decision relied upon by the petitioner (allowing both kinds of rebate under Rule 18) was applicable to the present case - HELD THAT: - The Court noted that the judgment relied upon by the petitioner concerned entitlement under Rule 18 alone and did not involve overlap of reliefs granted under two distinct statutory schemes. In the present case the benefits claimed arise under two separate statutes/rules - the Drawback Rules, 1995 (under Section 75 of the Customs Act, 1962) and Rule 18 of the Central Excise Rules, 2002 - and therefore the precedent was not applicable. Consequently, the principle in that decision permitting both rebates under Rule 18 did not govern the present factual and statutory matrix where the proviso to Rule 3 of the Drawback Rules requires reduction/adjustment to prevent double relief. [Paras 15, 16]Precedent relied upon by the petitioner is inapplicable because the present claims arise under different statutory schemes; therefore it does not entitle the petitioner to both benefits.Final Conclusion: Writ petition dismissed: the respondents rightly rejected the petitioners' rebate claims because allowance of both duty drawback and a cash rebate under Rule 18 would result in double benefit; the relied-upon precedent was inapplicable as the claims arose under different statutes. Issues:Claim for rebate of duty paid on exported goods and availing higher rate of duty drawback simultaneously.Analysis:The petitioner, a manufacturer of synthetic and blended textile yarn, exported goods without availing the benefit of cenvat credit, paying excise duty on the exported yarn. They sought rebate of duty paid on the finished goods exported. However, their rebate claims were rejected as they had utilized cenvat credit and availed the benefit of a higher rate of drawback, which was not permissible simultaneously as per Customs Notification No.68/2011-Cus (N.T). The rejection was upheld in appeals before the second and first respondents.The petitioner contended that they were entitled to both rebates under Rule 18 of the Central Excise Rules, 2002, citing an unreported Supreme Court judgment. The Supreme Court held that exporters are entitled to both rebates under Rule 18. However, the respondents argued that the benefits claimed by the petitioner fell under two different statutes: Customs, Central Excise Duties and Service Tax Drawback Rules 1995, and Rule 18 of the Central Excise Rules, 2002. Therefore, the Supreme Court judgment was not applicable to the present case.The respondents rejected the petitioner's claim based on the proviso to Rule 3 of the Central Excise Duties and Service Tax Drawback Rules 1995, which stated that a drawback could not be allowed if the exporter had already availed other rebates or refunds on the goods. The court found that the benefits claimed by the petitioner were covered under different statutes, and hence, they were not entitled to claim both rebates. Consequently, the court upheld the rejection of the petitioner's claim, finding no error in the orders passed by the respondents. The writ petition was dismissed.