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TMI Blog2011 (2) TMI 1208X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) Where facility of input stage credit is available under Cenvat Credit Rules, 2002. (iv).......................................... (v)..........................................." 9. From above, it is clear that the merchant exporter/manufacturer exporter cannot claim input stage rebate claim if he chooses to avail duty drawback or input cenvat credit. This provision has been made to deny double benefit to the exporters i.e. to avail cenvat credit on the inputs utilized and also to claim input stage rebate claim on those very inputs utilized in the manufacturing/processing of the finished goods. Government policy is to relieve the burden of the input duties suffered on the exported goods to make them more competitive in the international market. Double benefit cannot be allowed to the exporter as the respondent has already taken cenvat credit on inputs and have also utilized the same for clearance of scrap. 10. Government agrees with the case laws referred by the respondent that procedural lapses may be ignored if there is a substantial proof of export of goods. But their case does not fall in that category as it will amount to granting double benefit to them. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... register maintained under the provisions of Central Excise Rules. 4. Scrap was generated in the manufacture of stainless steel utensils and also at the time of conversion of Stainless Steel Flat/Coils into stainless steel circles. The scrap was sold by the petitioner in the markets in India. Purchasers of scraps were given benefit of the excise duty paid by the petitioner by debiting an amount in the Cenvat credit account of the petitioner. 5. It is the case of the petitioner that they do not make any domestic sales and the entire production of stainless steel utensils and circles was exported. Cenvat credit therefore was not fully utilized. 6. On 19th July, 2004, the petitioner filed a claim for refund of Cenvat Credit in proportion to the material used in the manufacture of the exempted exported product, i.e. stainless steel utensils of Rs. 23,62,737/-. It was submitted that the petitioner could not utilize the Cenvat credit and the same should be refunded as the end product was exported. The petitioner invoked Rule 18 of the Central Excise Rules, 2002 (Rules, for short) and the procedure laid down in Notification No. 41/2001-C.E. (N.T.), dated 26th June, 2001. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the finished goods to be exported; (2) Verification of Input-output ratio - The Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise shall verify the correctness of the ratio of input and output mentioned in the declaration filed before commencement of export of such 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) Procurement of material - The manufacturer or processor shall obtain the materials to be utilized in the manufacture of the finished goods intended for export directly from the registered factory in which such goods are produced, accompanied by an invoice under Rule 11 of the Central Excise (No. 2) Rules, 2001 : Provided that the manufacturer or processor may procu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for manufacture or processing of such export goods." 9. Form ARE-2 is a part of the said notification. The heading of the ARE-2 form reads as :- "Combined application for removal of goods for export under claim for rebate of duty paid on excisable materials used in the manufacture and packing of such goods and removal of dutiable excisable goods for export under claim for rebate of finished stage Central Excise Duty or under bond without payment of finished stage Central Excise Duty leviable on export goods." 10. The said Form also requires a declaration to be given by the applicant. Clause (a) of the declaration is as under : "(a) We hereby certify that we have not availed facility of CENVAT credit under CENVAT Credit Rules, 2001." 11. In the light of the rule and notification quoted above, we have to examine whether the impugned order and the reasoning given therein quoted above, is in accord with the Rule and the notification or not. 12. The impugned order dated 16th February, 2010 has referred to the Central Board of Excise and Custom's Excise Manual of Supplementary Instructions 2005. Paragraph 1.1 of the said manual states that these instructions ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the words 'not availed of facility of Cenvat credit' in the Form/declaration. It has to be examined whether these words mean and include even a part utilization of Cenvat credit in respect of which no rebate is sought or refer to non-utilization of the Cenvat credit in its entirety. In this connection, it may be relevant to refer to paragraph 4(c) of the notification No. 41/2001-C.E. (N.T.), dated 26th June, 2001. The said clause permits removal of waste on payment of duty if such waste is manufactured or processed outside the factory of the applicant seeking rebate. Therefore, removal of waste, or sale thereof in home or domestic market, does not prohibit or bar a claim for rebate under the said Rule or notification. Paragraph 4(c) does refer to payment of duty but the said clause applies when there is removal of material or the same is partially processed at the location different from or outside the factory of the applicant. 16. In paragraph 10 of the impugned order, reference was made to the case law cited by the petitioner that procedural lapses may be ignored, if there is substantial proof of export. The petitioner had not submitted Form No. ARE-2. The said form require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Rule and the Regulations. However, such defence cannot be pleaded if there is a clear statutory prerequisite which effectuates the object and purpose of the statute which has not been met. Substantial compliance means "actual compliance in respect of the substance essential to every reasonable objective of the statute". In Commissioner of Central Excise v. Hari Chand Shri Gopal and Ors. (supra), it has been observed :- "34. The test for determining the applicability of the substantial compliance doctrine has been the subject of a myriad of cases and quite often, the critical question to be examined is whether the requirements relate to the "substance" or "essence" of the statute, if so, strict adherence to those requirements is a precondition to give effect to that doctrine. On the other hand, if the requirements are procedural or directory in that they are not of the "essence" of the thing to be done but are given with a view to the orderly conduct of business, they may be fulfilled by substantial, if not strict compliance. In other words, a mere attempted compliance may not be sufficient, but actual compliance with those factors which are considered as essential." 18.&e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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