2019 (7) TMI 563 - AT - Central Excise

Appellant's Manufacturing Activity Qualifies for Rebate Claim; Tribunal Asserts Jurisdiction Over Excisability

The Tribunal held that the appellant's activity qualified as manufacturing, overturning the denial of a rebate claim for supplies to a special economic ... Rebate claim - supplies made to a unit in a ‘special economic zone’ between July 2008 and August 2008 - denial of the claim for rebate on the ground that the activity does not amount to manufacture and, therefore, not being liable to duties of excise at the time of removal from the factory, could not seek rebate - HELD THAT:- Tribunal in its decision SAIL BANSAL SERVICE CENTRE LTD. VERSUS COMMISSIONER OF C. EX., RANCHI [2007 (7) TMI 512 - CESTAT, KOLKATA], held that once the payment of duty has been accepted, there is no scope for denial of credit pertaining to inputs, input services or capital goods to the manufacturer. It is also seen that the activity of the manufacturer was once deemed to be excisable but had been withdrawn subsequently on 2nd March 2005. It is also noted that the appellant cleared the goods against form ARE-I which was required to be certified by the jurisdictional central excise authorities. There is no allegation that these processes was not complied with; indeed, receipt of the goods in special economic zone are also required to be certified so by endorsement in ARE-I. The appellant is a manufacturer of excisable goods and, in these circumstances, could certainly have entertained the bonafide belief that their activity did amount to manufacture and, hence, not barred from discharge of duty liability on clearances to special economic zone against which rebate, under rule 18 of Central Excise Rules, 2001, was sought. Matter remanded back to the original authority to decide on eligibility for rebate after taking into consideration our decision that the activity itself amounts to manufacture - appeal allowed by way of remand. Issues:1. Denial of claim of rebate for supplies to a special economic zone.2. Jurisdiction of the Tribunal to decide on manufacturing activity.3. Entitlement to CENVAT credit on inputs and input services.4. Rejection of rebate claim solely based on manufacturing activity.Analysis:Issue 1: Denial of claim of rebate for supplies to a special economic zoneThe appellant, a registered manufacturer, was denied a claim of rebate amounting to &8377; 9,52,120/- for supplies made to a special economic zone. The denial was based on the argument that the activity did not amount to manufacturing and, therefore, did not qualify for rebate under rule 18 of the Central Excise Rules, 2001.Issue 2: Jurisdiction of the Tribunal to decide on manufacturing activityThe Tribunal clarified that while the acceptance or rejection of rebate claims falls outside its jurisdiction, determining whether the process involved in the production of goods amounts to manufacturing and is excisable is within its purview. The Tribunal asserted its jurisdiction in deciding the matter based on the clear dispute regarding whether the appellant's activity constituted manufacturing.Issue 3: Entitlement to CENVAT credit on inputs and input servicesThe Tribunal referred to a previous decision where it was held that once the duty payment is accepted, the manufacturer is entitled to credit for inputs, input services, or capital goods. The appellant's activity was previously deemed excisable, and the Tribunal noted that the appellant had complied with all necessary processes and certifications required for clearance to the special economic zone.Issue 4: Rejection of rebate claim solely based on manufacturing activityThe Tribunal found the lower authorities' rejection of the rebate claim solely on the grounds of the goods not being manufactured to be incorrect. The Tribunal set aside the impugned order and directed the matter back to the original authority to reconsider the eligibility for rebate, taking into account the Tribunal's decision that the appellant's activity did amount to manufacturing.In conclusion, the Tribunal disposed of the appeal by emphasizing that the appellant's activity qualified as manufacturing, and the denial of the rebate claim based solely on this ground was incorrect. The case was remanded to the original authority for a fresh decision on the eligibility for rebate.