TaxTMI 
TaxTMI 
2024 (9) TMI 692
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....s in WP/3128/2024: Adv. Sangeeta Yadav. For the Respondents in WP/5120/2022: Mr. Jitendra Mishra a/w. Mr. Dhananjay B. Deshmukh. For the Respondents in WP/L/3746/2024: Mr. Karan Adik a/w. Mr. Satyaprakash Sharma. For the Respondent No. 2 in WP/2188/2022: Mr. Karan Adik a/w. Ms. Niyati Mankad. JUDGMENT: (PER JITENDRA JAIN, J.) 1. Rule. By consent of the parties the petitions are taken up for final hearing since the pleadings are completed. 2. On 5th September 2024, we had disposed Respondents' preliminary objection on jurisdiction. We held that this Court has jurisdiction. The petitions were, thereafter, listed on 6th September 2024 for consideration on merits. 3. These two petitions are disposed of by a common order since the issues involved are identical. However, for the sake of disposing of the petitions, we narrate the facts of Writ Petition No. 2837 of 2021. 4. Petitioner is a Bus manufacturer. The buses are sold in the domestic market as well as exported. Petitioner purchases chassis from its sister concern, Volvo India Pvt. Ltd. (Volvo India). The said chassis has been subjected to excise duty at the time of removal of the same from the factory of ....
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....nt No. 2. The revisional authority confirmed the Order-in-Appeal (O-I-A) vide order 15th September 2020. The said revisional authority observed that since Petitioner has failed to file declaration and further failed to submit the verification of input-output ratio, petitioner did not comply with requirements of the Notification No. 21 of 2004 and therefore the rejection of the rebate claim was justified. 8. It is on the aforesaid backdrop that the petitioner has challenged the order dated 15th September 2020 of the revisional authority and further prayed for appropriate direction to Respondents for grant of rebate of Rs. 53,65,198/- alongwith interest. 9. Mr. Sridharan, at the outset, admitted that the declaration and Form ARE-2 and the input-output ratio was not filed as per the Notification. Mr. Sridharan, however, submitted that a substantive benefit cannot be denied on the basis of procedural lapses. He added that there is no dispute that the buses were exported and the sale proceeds were received in foreign exchange. He further submitted, relying upon the invoices raised by Volvo India for sale of chassis and the invoices raised Petitioner on its foreign customer to show....
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.... Vs. Prabhudayal Narain (iv), 1998 (Supp.) SCC 729; (iv) Arun International Vs. C.C.E. Delhi (12015 (317) E.L.T. 465 (Tri-Del)); (v) Intas Pharma Ltd. Vs. Union of India, (2016 (332) E.L.T. 680 (Guj.)); (vi) Commr. Of C. Ex. Chandigarh Vs. Karam Chand Appliances Pvt. Ltd., (2019 (238) E.L.T. 706 (H.P.)); (vii) Eagle Flask Industries Ltd. Vs. Commissioner of Central Excise, Pune, ((2004) 7 SCC 377)" ANALYSIS 11. The objective of granting a rebate of excise duty on materials used in the manufacture of goods which are exported is to make the products manufactured in India and exported outside India more price competitive in international market so that the country can earn valuable foreign exchange to buffer its reserves. With this objective, Rule 18 of the Central Excise Rules, 2002, has been enacted. Rule 18 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 fulfilment of such procedure as may be spec....
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.... goods, if necessary, by calling for samples of finished goods or by inspecting such goods in the factory of manufacture or process. If, after such verification, the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise is also satisfied that there is no likelihood of evasion of duty, he may grant permission to the applicant for manufacture or processing and export of finished goods. (3) .... (4) .... (5) Procedure for export. - The goods shall be exported on the application in Form A.R.E.2 specified in the Annexure to this notification and the procedures specified in Ministry of Finance (Department of Revenue) notification No. 19/2004-Central Excise (N.T.), dated the 6th September, 2004 or in Notification No. 42/2001-Central Excise (N.T.), dated the 26th June, 2001 shall be followed. (6) Presentation of claim of rebate- The claim for rebate of duty paid on materials used in the manufacture or processing of goods shall be lodged only with the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise having jurisdiction of the place approved for manufacture or processing of such export goods.....
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.... the claim of the petitioner is only qua excise duty paid on chassis purchased and used in the manufacture of buses which are exported. 14. In our view, therefore, the non-filing of declaration, and input-output ratio specified in the procedure notified in Notification No. 21 of 2004 dated 6th September 2004 cannot be treated as a condition to be satisfied on the non-fulfillment of which the claim of rebate is to be rejected. 15. On a query raised by the Court, it was stated by Petitioner that they have been regularly filing the claim for rebate as per the Notification No. 21 of 2004 dated 6th September 2004, even before the present claim which arose for the period from 21st December 2010 to 28th February 2011 was made. On a perusal of the information required to be furnished in the declaration as per the said notification, what is required to be furnished in the said declaration is the rate of duty leviable, manufacturing/processing formulae with particular reference to quantity or proportion in which the materials are actually used, tariff classification, etc. The input-output ratio furnished in the declaration is subject to verification by Assistant Commissioner of Central....
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....te and matters of procedure separately. Some of the conditions and limitations are that the excisable goods shall be exported after the payment of duty directly from a factory or warehouse, except as otherwise permitted by the CBEC; that the excisable goods shall be exported within six months from the date on which they were cleared for export from the factory of manufacture or warehouse or within such extended period as may be allowed by the Commissioner; that the market price of the excisable goods at the time of export is not less than the amount of rebate of duty claimed and that no rebate on duty paid on excisable goods shall be granted where the export of the goods is prohibited under any law for the time being in force. The procedure governing the grant of rebate of central excise duty is specified in the same notification dated 6 September 2004 separately. Broadly speaking the procedure envisages that the exporter has to present four copies of an application in form ARE-1 to the Superintendent of Central Excise. The Superintendent has to verify the identity of the goods and the particulars of the duty paid and after sealing the packet or container, he is required to return ....
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....d and of the goods bearing a duty paid character is fulfilled. The procedure cannot be raised to the level of a mandatory requirement. Rule 18 itself makes a distinction between conditions and limitations on the one hand subject to which a rebate can be granted and the procedure governing the grant of a rebate on the other hand. While the conditions and limitations for the grant of rebate are mandatory, matters of procedure are directory. 13. A distinction between those regulatory provisions which are of a substantive character and those which are merely procedural or technical has been made in a judgment of the Supreme Court in Mangalore Chemicals & Fertilizers Ltd. Vs. Deputy Commissioner - 1991 (55) E.L.T. 437 (SC). The Supreme Court held that the mere fact that a provision is contained in a statutory instruction "does not matter one way or the other". The Supreme Court held that non-compliance of a condition which is substantive and fundamental to the policy underlying the grant of an exemption would result in an invalidation of the claim. On the other hand, other requirements may merely belong to the area of procedure and it would be erroneous to attach equal importan....
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....drawn to an order dated 23 December 2010 passed by the revisional authority in the case of the Petitioner itself by which the non-production of the ARE-1 form was not regarded as invalidating the rebate claim and the proceedings were remitted back to the adjudicating authority to decide the case afresh after allowing to the Petitioner an opportunity to produce documents to prove the export of duty paid goods in accordance with the provisions of Rule 18 read with notification dated 6 September 2004 (Order No.1754/2010-CX, dated 20 December 2010 of D. P. Singh, Joint Secretary, Government of India under Section 35EE of the Central Excise Act, 1944). Counsel appearing on behalf of the Petitioner has also placed on the record other orders passed by the revisional authority of the Government of India taking a similar view (Garg Tex-O-Fab Pvt. Ltd., 2011 (271) E.L.T. 449 and Hebenkraft - 2011 (136) E.L.T. 979. The CESTAT has also taken the same view in its decisions in Shreeji Colour Chem Industries Vs. Commissioner of Central Excise-2009 (233) E.L.T. 367, Model Buckets & Attachments (P) Ltd. Vs. Commissioner of Central Excise-2007 (217) E.L.T. 264 and Commissioner of Central Excise Vs. ....
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....ule 18 of the Central Excise Rules, 2002. The decisions relied upon lay down a general proposition that non-compliance of conditions has to be strictly construed if an assessee makes an application for any benefit or concession. In our view, as observed above, Rule 18 provides for rebate which is subject to conditions and secondly on fulfillment of the procedure notified. We are concerned with the fulfillment of the procedure notified, in the present case and not with the conditions. There is no dispute that petitioner has to comply with the conditions like export of goods, receipt of foreign exchange, etc. which Respondents are entitled to verify. Also it is important to note that in the facts of the present case the claim of rebate is made qua chassis on which excise duty is paid and each one of the chassis can be used to manufacture only one bus. Therefore, on the facts of the present case the decisions relied upon by respondents would not be applicable, but on the contrary the decisions of this Court relied upon by petitioner directly deals with the issue under consideration and therefore respectfully following the decisions of this Court, we are inclined to allow the petition ....