2024 (9) TMI 613 - AT - Central Excise

Excise duty cannot be demanded on exported goods despite procedural lapses in export procedures

The CESTAT Ahmedabad held that excise duty cannot be demanded on exported goods despite procedural lapses in export procedures. The appellant exported ... Applicability of SSI Exemption Notification No. 8/2002-CE dated 01.03.2002 - Demand of duty on the exported goods on the procedural lapse like goods exported without bond or LUT or non-observation of specific procedure - invocatio of extended period of limitation. HELD THAT:- There is no dispute in the fact that the goods on which the excise duty was demanded have been admittedly exported, only on the premise that the goods were exported without cover of bond or letter of undertaking and ARE 1 as required under Notification No. 42/2001- CE (NT) dated 26.06.2001 issued under Rule 19 of Central Excise Rules, it was held that goods manufactured by the appellant were not exempted as there was an effective rate of duty i.e. 4% without availing CENVAT Credit and 16% with CENVAT Credit in terms of Serial No. 28 and 34 of Notification No. 10/2002 dated 01.03.2002. Irrespective of any procedural lapse once it is undisputed that the goods have been exported, in such case if any duty has been paid the same is liable to be refunded as rebate of duty in terms of Rule 18 of Central Excise Rules, 2002 and if the goods have been cleared without payment of duty then no duty can be demanded once it is established that the goods have been exported. There are force in the submission of the argument that since their entire goods have been exported and if the value of the present case is taken which comes to Rs. 2,01,92,820/-, the appellant is entitled for exemption up to the value of Rs. 1.5 crores to that extent the appellant is not liable to pay duty under SSI Exemption Notification No. 8/2002. Invocation of larger period of limitation for the issuance of show cause notice - HELD THAT:- As the appellant have cleared the goods for export whereby they have filed all the necessary documents such as export invoices which were endorsed by the Central Excise officers for the stuffing supervision, bill of lading, shipping bills, bank religion certificate etc. The appellant have also declared export clearance in their Central Excise returns. With this detailed disclosure before the department, it cannot be said that there is suppression of fact on the part of the appellant. Therefore, the show cause notice issued on 18.05.2007 for the period 01.06.2002 to 28.02.2003 is clearly time barred. Therefore, the demand is also hit by limitation. The impugned order is not sustainable on merit as well as on limitation - Appeal allowed. Issues:1. Classification of manufactured goods under Central Excise Tariff Act, 1985.2. Demand of Central Excise Duty based on availing CENVAT credit.3. Dispute regarding exported goods declared as exempted products in Central Excise Returns.4. Invocation of larger period of limitation for show cause notice.5. Refund of duty for exported goods.6. Applicability of SSI Exemption Notification.7. Allegations of malafide intention to evade Central Excise Duty.Classification of Manufactured Goods:The case involved the classification of kitchen ware items manufactured by the Appellant under Chapter Heading 8215 and other household articles under Chapter Heading 7323 of the Central Excise Tariff Act, 1985. The Appellant availed different duty rates based on conditions specified in various notifications.Demand of Central Excise Duty based on CENVAT Credit:The Central Excise Officer demanded duty on goods exported by the Appellant, citing the non-availability of CENVAT credit on inputs used in manufacturing until December 2002. The duty rate varied based on the period of availing CENVAT credit, leading to a dispute regarding the duty payable by the Appellant.Dispute over Exported Goods Declaration:The Adjudication Authority raised a demand for duty on goods exported by the Appellant, alleging that the Appellant wrongly declared them as exempted products in Central Excise Returns. The Appellant argued that duty should not be demanded for exported goods based on procedural lapses and cited relevant judgments supporting their position.Invocation of Larger Period of Limitation:The Adjudication Authority invoked a larger period of limitation for issuing the show cause notice. The Appellant contested this decision, emphasizing the absence of evidence showing malafide intention to evade duty and citing legal precedents supporting their argument against the invocation of a larger limitation period.Refund of Duty for Exported Goods:The Tribunal noted that the exported goods were undisputedly exported, and duty cannot be demanded on exported goods, even in the presence of procedural lapses. The Tribunal highlighted that duty paid on exported goods is refundable as rebate, and if goods are cleared without duty payment, no duty can be demanded post-export.Applicability of SSI Exemption Notification:The Appellant relied on the SSI Exemption Notification No. 8/2002-CE dated 01.03.2002 to argue for exemption from duty payment based on the value of goods exported. The Tribunal considered the value of goods exported and held that the Appellant was entitled to exemption under the notification.Allegations of Malafide Intention:The Appellant contended that they declared the turnover under exemption in Central Excise Returns due to a reasonable belief that exported goods did not require duty payment. The Tribunal considered the absence of evidence indicating malafide intention and held that the demand was time-barred, supporting their decision with relevant legal precedents.In conclusion, the Tribunal set aside the impugned order, allowing the appeal and ruling in favor of the Appellant based on the considerations of duty demand, limitation period, export procedures, and exemption notifications.