2019 (7) TMI 396 - HC - Central Excise

High Court overturns denial of rebate to exporter under Central Excise Rules, 2002, emphasizing reevaluation and prompt decision.

Vandana Overseas Versus The Union of India & Others

The High Court set aside the order denying rebate under Central Excise Rules, 2002 to a petitioner, a merchant exporter, based on alleged fake invoices ... Rebate of duty - goods exported under the Central Excise Rules, 2002 - Section 35EE of the Central Excise Act, 1944 - HELD THAT:- The entire basis/ foundation of the orders passed against Petitioner, denying the benefit of rebate under Rule 18 of the said Rules, was the order dated 31st July, 2009 passed by the Additional Commissioner of Central Excise in the case of M/s. Rachana. The aforesaid order dated 31st July, 2009 in the case of M/s. Rachana, has now been set aside by the Tribunal and a fresh order dated 31st May, 2019 was passed by the Adjudicating Authority holding that the demand on M/s. Rachana for reversal of CENVAT Credit is not maintainable. The impugned order dated 31st January, 2018 of the Government of India in Revision, be set aside - Respondent-Revenue's Revision Application is restored to the Government of India in Revision, for fresh consideration, taking into account the subsequent developments. Issues:Challenge to order denying rebate under Central Excise Rules, 2002 based on CENVAT Credit availed on alleged fake invoices.Analysis:The petition challenged the order passed by the Government of India in Revision under Section 35EE of the Central Excise Act, 1944, which denied the petitioner's entitlement to rebate on goods exported under the Central Excise Rules, 2002. The petitioner, a merchant exporter, had exported fabrics under rebate claims between November 2002 and February 2005, purchased from a supplier who availed CENVAT Credit. Subsequently, a show cause notice was issued to the supplier for disallowing the CENVAT Credit on the basis of fake invoices. This led to a notice being issued to the petitioner, rejecting their rebate claims, which was confirmed by the Additional Commissioner of Central Excise. However, the Commissioner of Central Excise (Appeals) allowed the petitioner's appeal, stating that the supplier had paid the equivalent amount in cash to the Revenue, entitling the petitioner to the rebate. The Revenue then filed a Revision, which was allowed by the Government of India solely based on the order against the supplier dated July 31, 2009.The petitioner subsequently brought to light that the order against the supplier was set aside by the Tribunal in 2011, and the demand raised in the show cause notice was dropped in 2019 as time-barred, restoring the CENVAT Credit. Based on these developments, the High Court set aside the impugned order of the Government of India and directed fresh consideration, noting that the order against the supplier could no longer be the basis for denying the petitioner's rebate claims. The Court emphasized that the subsequent developments necessitated a reevaluation of the Revenue's appeal, leaving all contentions open for further consideration by the Government of India in Revision.In conclusion, the High Court disposed of the petition by setting aside the impugned order and instructing the Government of India to decide the Revenue's Revision Application promptly, considering the recent developments in the case.