2024 (10) TMI 1059 - HC - Central Excise

Petitioner wins rebate claim under Rule 18 for exported biscuits despite revenue's exemption arguments

The Bombay HC allowed the petitioner's claim for rebate under Rule 18 of Central Excise Rules, 2004 for exported biscuits. The court held that rebate can ... Rebate / refund of sum so wrongly paid - Applicability of exemption notification No. 3/2006-CE for biscuits exported out of India - whether goods under consideration exported out of India answers the description of goods mentioned in column 3 of the notification? - HELD THAT:- The claim of the Petitioner is under Rule 18 of the Central Excise Rules, 2004, which provides that where any goods are exported, the Central Government may, by notification, grant rebate of duty paid on such excisable goods or duty paid on materials used in the manufacture or processing of such goods and the rebate shall be subject to such conditions or limitations, if any, and on fulfillment of such procedure, as may be specified in the notification. Section 2(d) of the Central Excise Act, 1944 defines “excisable goods” to mean goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 as being subject to a duty of excise and includes salt. Rule 2(d) of Cenvat Credit Rules, 2004 defines “exported goods” to mean excisable goods which are exempt. Clause 1 (1.2) of Part V of the CBEC’s Excise Manual of Supplementary Instructions 2005 clarifies that in Rule 18 and in the notification allowing rebate, the expression ‘export goods’ has been used, which refers to excisable goods (dutiable or exempted) as well as non-excisable goods. It is further clarified that the benefit of the input stage rebate can be claimed on the export of all finished goods, whether excisable or not - the contention of the revenue that the goods exported were exempted under Notification No. 3 of 2006 and the petitioner was not required to pay duty and consequently cannot claim a rebate under Rule 18 is contrary to the said clarification. Notification No. 19/2004 dated 6th September 2004 as amended from time to time under Central Excise Rule 18 providing for procedure, conditions and limitations for the grant of rebate of duty do not state that if the Petitioner has wrongly paid excise duty (assuming the department’s contention on this is accepted), the rebate claim will not be considered. Mahindra and Mahindra [2015 (9) TMI 403 - BOMBAY HIGH COURT] was a case where the goods were exempt under a particular notification. In contrast, in the present case before us, we have already observed above that the goods cleared by the Petitioner export are not covered by exemption notification No. 3 of 2006. In the case of Mahindra and Mahindra, the claim was not made under Rule 18 of the Central Excise Act, 2002, whereas in the present case before us, the claim was made under Rule 18 of the Central Excise Rules - It is a well-settled position that the decision is rendered in the context of the facts before the Court. If the facts are different, then the ratio of the said decision cannot be applied to another case mechanically. The decision is an authority for what it actually decides, having due regard to the factual conceptus. The ratio is of the essence, and not every observation found therein nor what may appear to logically flow from the various observations in the judgment. Therefore, the decision relied upon by the Revenue in the case of Mahindra and Mahindra Ltd. does not apply to the facts of the Petitioner’s case. The Revisional Authority's order is set aside - the Respondents are directed to grant and sanction the Petitioner's rebate claims - The Petition is allowed. Issues Involved:1. Applicability of exemption notification No. 3/2006-CE for biscuits exported out of India.2. Entitlement to rebate claim under Rule 18 of the Central Excise Rules, 2002.3. Legality of retaining duty paid on exported goods by the revenue.4. Relevance of prior appellate decisions and Tribunal orders on similar issues.5. Application of Article 265 of the Constitution of India regarding tax collection.Issue-wise Detailed Analysis:1. Applicability of Exemption Notification No. 3/2006-CE:The primary issue revolves around whether the exemption notification No. 3/2006-CE applies to biscuits exported by the Petitioner. The notification grants exemption to biscuits cleared in packaged form with a retail sale price not exceeding Rs. 100 per kg. The Petitioner argued that since the exported goods do not bear a retail sale price in rupees, they do not qualify for this exemption. The Court observed that the Standards of Weights and Measures Act and Rules do not apply to exported goods, thus the description in the notification does not match the exported biscuits. Consequently, the Petitioner was justified in paying duty based on transaction value under Section 4 of the Central Excise Act.2. Entitlement to Rebate Claim under Rule 18:The Petitioner claimed a rebate for the duty paid on exported biscuits under Rule 18 of the Central Excise Rules, 2002. The Court noted that the goods exported do not fall within the exemption description, thus the Petitioner was right in claiming the rebate. The Court also referenced CBEC's Excise Manual and Circular, supporting the Petitioner's stance that exported goods without MRP are not covered by the exemption. The Court concluded that the revenue's basis for rejecting the rebate claim was unfounded.3. Legality of Retaining Duty Paid on Exported Goods:The Court addressed the revenue's retention of duty paid by the Petitioner, stating that if the goods were exempt, retaining the duty would violate Article 265 of the Constitution, which mandates that no tax shall be levied or collected without authority of law. The Court emphasized that even if duty was wrongly paid, the revenue cannot retain it, as it would amount to unjust enrichment.4. Relevance of Prior Appellate Decisions and Tribunal Orders:The Petitioner highlighted previous appellate decisions and Tribunal orders allowing similar rebate claims, which the revenue had accepted. The Court found it significant that the revenue had not challenged these prior decisions, and thus, the current stance of the revenue was inconsistent. The Court also noted the Tribunal's reversal of the Commissioner of Central Excise, Thane's order, which was accepted by the revenue, further supporting the Petitioner's claim.5. Application of Article 265 of the Constitution of India:The Court reiterated that retaining duty paid without authority of law contradicts Article 265. It emphasized that the revenue's argument of no enabling provision for refund does not justify retaining the amount paid by the Petitioner. The Court underscored the principle that unless a person is liable to pay duty, any amount collected must be refunded if not legally due.Conclusion:The Court allowed the Petition, setting aside the Revisional Authority's order and directing the Respondents to grant and sanction the Petitioner's rebate claims. The judgment emphasized the legal principle that taxes or duties collected without authority must be refunded, aligning with constitutional provisions and prior judicial decisions.