TaxTMI 
TaxTMI 
2011 (4) TMI 1013
X X X X Extracts X X X X
X X X X Extracts X X X X
.... sum of Rs. 5,70,15,438/- by way of rebate on export of goods during the period March 2002 to October, 2002 under Rule 18 of the Central Excise Rules, 1944. 4. The facts herein are as follows : The petitioner herein is a manufacturer of automobiles, parts and accessories, having their factory at Maraimalai Nagar, Chengalpattu District. The petitioner has sales within India on the manufactured automobiles, apart from the sale of parts and other accessories as well as export of automobiles on specific orders received. The KDP plant (Knock Down Pack Plant) was included as part of their factory premises, as the same is situated within the factory premises. To meet its export obligation, KDP plant procures various components from the manufacturing vendors against export orders with the destination code for South Africa and Mexico and some of the parts procured from vendors undergo further processing in the manufacturing unit. The KDP plant receives all these parts along with their manufactured parts and after inspection, have it sequentially packed in the manner in which it is required in the assembly line in the exported countries and in a pallet, according to the export packing....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The activity in the KDP plant was only a trading activity and could not be treated as manufacturing activity. Hence, the receipt of parts and components at the KDP plant, which were subsequently exported, did not qualify as 'inputs' in terms of definition under Rule 57AA of the Central Excise Rules, 1944 and Rule 2F of the CENVAT Credit Rules, 2001. Since the sequential arrangement did not involve any manufacturing or any process leading to fixing of parts together, the parts received at the plant could not be interchanged with that of the manufacturing plant. In the circumstances, the petitioner had contravened the provisions of Rules 57AB and 57AC(7) of the Central Excise Rules, 1944, as it existed and Rules 3 and 4 of the CENVAT Credit Rules, 2001. The undue financial accommodation was an intentional one, attracting penal action under erstwhile Rule 173Q of the Central Excise Rules, 1944 and Rule 13 of the CENVAT Credit Rules, 2001. The petitioner objected to the said notice in detail vide their letter dated 5-10-2001, that the activity undertaken in KDP plant was covered within the concept of "manufacture" and the petitioner also laid reliance on the circular of the Central Boa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....etitioner has preferred appeals under Section 35G before this Court in C.M.A. Nos. 2973 to 2975 of 2007. 7. It is seen from the facts that in the meantime, the petitioner filed rebate claim on 21-3-2002 for Rs. 12,63,03,430/- pertaining to the above-said issue on export undertaken during the period March, 2001 to February, 2002, on the ground that in the event of the credit being denied, they would be eligible for rebate in terms of Rule 18 of the Central Excise Rules, 2001. The said claim was rejected on 18-2-2003. The rebate claim made by the petitioner for the period March, 2002 to October, 2002 for Rs. 5,70,15,438/-, pertaining to the export undertaken for the above-said period, was also rejected under order dated 22-8-2003. The petitioner filed revisions against the same before the Commissioner, which were rejected. Aggrieved by the same, the petitioner preferred revisions before the Government on 29-6-2004 under Section 35EE of the Central Excise Act, 1944 for the period March, 2001 to October, 2002. In the meantime, during the pendency of the revisions before the third respondent, and appeals before this Court as against the orders of CESTAT dated 21-3-2007, the assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....id on inputs. The counter further stated that the mere fact that the goods are exported, by itself, would not strengthen the case of the petitioner, since the petitioner is bound to go by Rule 18 of the Central Excise Rules, which came into effect from 1-7-2001. This means that the assessee should have complied with the conditions therein and in the Notification No. 41 of 2001-Central Excise, dated 26-6-2001, by filing necessary declaration and giving the verification of input output ratio. Evidently, the assessee had not furnished the particulars as prescribed under the Notification. Hence, on the ground of non-compliance of the conditions stated therein, the rebate claim was not maintainable. Considering the fact that the revisional authority had remanded the matter back to the original authority for considering the applications afresh, the Writ Petitions have to be dismissed. 9. The sum and substance of the counter is that the assessee is not entitled to have the claim of CENVAT Credit and rebate, unless and until the assessee comes within the four corners of the requirements of Rule 18 of the Central Excise Rules. 10. Learned senior counsel appearing for the assesse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h CENVAT Credit was availed of, the benefit of rebate, as given under Rule 18 of the Central Excise Rules, ought to have been given. He further pointed out to the undertaking given before the Government of India in its revision as to the petitioner's readiness to withdraw the Civil Miscellaneous Appeals, which are pending before this Court. 13. Learned senior counsel submitted, in the circumstances, that the allegation that the petitioner had not followed the procedure, did not survive. He pointed out that there is no bar in law for an assessee to claim any alternative benefit, if available to an assessee under law. The claim for rebate came to be filed when the Revenue sought to deny the credit on inputs. Thus in the absence of any prohibition under the Act as to the stage at which the rebate should be claimed or the claim to get barred by reason of an appeal pending before this Court, the Revenue should have considered the benefit of rebate under the Scheme. Thus while asserting the stand that the petitioner would be entitled to CENVAT Credit as per Rule 13 and Rule 18 of the MODVAT and CENVAT Rules, as explained in the circular dated 11-10-1996 and the Notification No. 41/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for the assessee and the learned Standing Counsel appearing for the respondents and perused the material records placed before this Court. 17. Although learned Senior counsel made detailed submissions on the merits of the appeals filed as against the orders of the CESTAT, we do not think that the merits of the appeals need to be adverted to herein, considering the fact that the petitioner had remitted the duty and thereby reversed the credit for the purpose of claiming rebate under the relevant Rule 12/18 of the Central Excise Rules, relating to the relevant period. For the present, we propose to deal with the contention in the Writ Petitions only. 18. Chapter AA of the Central Excise Rules deals with credit of duty paid on excisable goods used as 'inputs'. Rule 57 A, as it stood upto 28-6-1995, deals with the applicability of the provision to such finished goods that the Government may specify for the purpose of allowing credit of any duty paid on the goods used or in relation to the manufacture of the said final products. Rule 57F deals with the manner of utilisation of the inputs in respect of which, a credit of duty has been allowed under Rule 57A and the credit all....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment and the provisions relevant for this case during the period 1-3-2001 to 30-6-2001 show that the input definition under Rule 57AA(d) once again retained its content. Rule 57AB relating to CENVAT Credit under sub-rule (1B) stated that CENVAT Credit may be utilised for payment of any duty of excise on any final products manufactured by the manufacturer or payment of duty on inputs or capital goods, if such inputs are removed as such or after the partially processed or such capital goods are removed as such. Rule 57AC(7) reiterated the provisions as before. 22. Rule 12 of the Central Excise Rules, 1944, provides for rebate of the duty paid on the excisable goods and duty paid on materials used in the manufacture of goods exported outside India, subject to such safeguards, conditions and limitations as regards the class or description of goods, class or description of materials used for manufacture, destination, as may be provided for in the Notification. Proviso to Rule 12 states that on satisfaction of the fact of export, the Commissioner of Central Excise shall allow the claim of rebate, even if all or any of the conditions laid down in the Notification, issued under the R....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ointed out that the expression "as if such inputs have been manufactured in the same factory" under the original Rule 57F(1)(ii) covered all such cases within the ambit of proviso to Rule 57F(4). The omission of the fiction, by Notification No. 28/95-C.E. (N.T.), dated 29-6-1995, was with a view to simplify the clearance procedure, which created a doubt in respect of utilisation of credit in such cases. The Board pointed out "it is not the intention of the Government to debar such manufacturer/exporters from utilsing credit. Clearance of inputs as such for export under bond can still be treated at par with 'final product' and the manner of utilisation of credit in such cases will be governed by the provisions of the proviso to Rule 57F(4). It is also observed that in case such inputs are cleared on payment of duty by debit in RG 23A Part-II account by virtue of Rule 57F(4)(iii), the manufacturer will be entitled for rebate under Rule 12(1)(a) of the Central Excise Rules. He is, however, put to disadvantage if he opts for export under bond procedure. The exports under 'claim of rebate' and 'export under bond' should be at parity, since, intention of both the procedures are to make d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t reported in (2008) 13 VST 1 = 2008 (224) E.L.T. 354 (S.C.) (State of Kerala v. Kurian Abraham (P) Limited) as well as the unreported decision of the Supreme Court in Civil Appeal No. 4233 of 2007, dated 21-4-2011 (State of Tamil Nadu v. India Cements Ltd. & another) clearly pointed out to the binding nature of the Circulars issued by the Board espousing the content of the provisions. 30. We also agree with the submission of the learned Senior Counsel as to the compliance of the procedural requirements in the claim for rebate that, so long as their substantive compliance and that the factum of export is not in doubt, rebate being a beneficial scheme, the same should be interpreted liberally. The reliance placed on the decision of the Government of India in a similar situation in the decision reported in 2006 (204) E.L.T. 632 (In Re : Modern Process Printers), relied on by the learned Senior Counsel for the petitioner, fully supports the case of the petitioner. 31. Even though learned standing Counsel appearing for the Revenue submitted that the circulars are not binding on the Court, the question herein is not as to the validity of the circular, but as to the binding n....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... goods which are exported through the KDP plant for the purpose of granting the benefit under Rule 12 of the Central Excise Rules, as such, does not require any consideration before this Court. Since the question as to whether the assessee is entitled to the benefit under Rules 12 or 18 of the Central Excise Rules, as the case may be, is a matter which was not in dispute at all before the Government, all that the third respondent had directed was to find out whether the assessee had complied with the particulars for the purpose of grant of rebate. It would be appropriate to extract the words of the third respondent, as follows : "19. Govt. observes that what needs to be determined in the present case is whether substantive conditions of payment of duty and exportation of goods have been satisfied or not. That export of goods has taken place has not been disputed by the Department, it is also a fact that the applicant has gone in appeal against CESTAT's order. Since the two issues of Cenvat Credit availment and Rebate are related, the Rebate claim cannot be decided in isolation." 20. In this situation Govt. remands the matter to the original authority who is directed to ....