2023 (9) TMI 452 - CESTAT CHANDIGARH

Recovery of alleged excess grant of rebate - in terms of Notification No.02/2011-CE dated 01.03.2011, Excise Duty in excess of 5% was exempted whereas the appellants paid duty at the rate of 10% - HELD THAT:- A conjoint reading of the provisions of Section 5 and the notification cited above reveals that the impugned goods are partially exempted; a manufacturer has no choice to pay duty when it is wholly exempted; however, when the item is partially exempted and that there is no prescription that the manufacturer shall not pay duty at the higher rate. Further, as submitted by the learned Counsel for the appellant, Notification No.19/2004 provides for the payment of rebate of “duty paid” and not the “duty payable”. Therefore, it is found that there is no reason as to why the contention of the appellants should not be accepted - the issue of availability of choice, of not opting for an exemption notification, to the manufacturer has been decided by the Tribunal in many cases.

Tribunal in the case of BOMBAY DYEING & MANUFACTURING CO. LTD. VERSUS CCE., MUMBAI-IV [2000 (6) TMI 98 - CEGAT, MUMBAI] held that It is settled law that an exemption has to be claimed and that the burden of proving that he falls within the exemption falls upon the person who claims it. In such cases therefore we must independently of our earlier reasoning come to the conclusion that there is always an element of choice in availing of an exemption notification.

As far as availability of rebate is concerned, the notification providing for rebate talks of “duty paid” rather than “duty payable” and as such a manufacturer-exporter has a choice to pay the duty as per the basic rate or after availing the partial exemption and rebate shall be granted on the “duty paid”. We find that this issue was settled by the Tribunal in the case of AJANTA MANUFACTURING LTD. VERSUS COMMISSIONER OF C. EX. & CUS., RAJKOT [2009 (4) TMI 655 - CESTAT, AHMEDABAD] which was upheld by the Hon’ble Supreme Court in COMMISSIONER VERSUS AJANTA MANUFACTURING LTD. [2011 (4) TMI 1394 - SC ORDER] - Tribunal observed that The very fact that no provision has been made in Section 5A while amending the same to prohibit manufacturer from paying duty in case of unconditional partial exemption at higher rate, the appellant cannot be found fault with for having paid higher rate of duty. Further it is to be observed that having advised the appellant to reclassify the product under a different heading holding the same ineligible for a partial exemption, the departmental officers should not have rejected the refund claim.

Thus, the appellants are eligible for the rebate of the “duty paid” irrespective of the fact as to whether a partial exemption was applicable to the impugned goods.

The appellants further contended that the Department has not appealed against the rebate order and no higher authority has set aside the same; therefore, the rebate alleged to have been erroneously granted cannot be demanded by way of a show-cause notice issued under Section 11A of the Central Excise Act, 1944. We find that the Tribunal in the case of SHREE NATH INDUSTRIES VERSUS C.C.E., JAMMU [2018 (5) TMI 195 - CESTAT CHANDIGARH] held that In this case, it is the case of the Revenue itself that they were not required to pay duty, therefore, the excess amount paid by the appellant is merely a deposit not a duty. Hence, the provisions of Section 11A of the Act, is not applicable to the case. In that circumstances, the appellant is not required to pay the excess refund claimed by them.

The appellants have already paid duty at the rate of 10%. In case, they are to pay back the additional 5% rebate, Department requires to credit the excess 5% duty paid into CENVAT account. Since, CENVAT account is no more in existence; it is a foregone conclusion that the refund, if any, requires to be paid in cash - no purpose will be served if the rebate, alleged to have claimed and sanctioned in excess, is recovered and the 5% of excess duty paid is refunded by way of cash refund. Such an act would be not only revenue neutral but would be a futile academic exercise.

Appeal allowed.