TMI Blog2011 (4) TMI 1013X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 41 of 2001 before the first respondent, to enable him to consider the claim for rebate - Writ Petitions are disposed of with the directions as stated above - Writ Petition Nos. 14884 and 14885 of 2008, - - - Dated:- 25-4-2011 - Chitra Venkataraman and P.P.S. Janarthana Raja , JJ. S/Shri C. Natarajan, SC, for N. Inbarajan, for the Petitioner. S/Shri K. Ravichandrababu, SCGSC, for the Respondent. [Order (Common)]. Both the Writ Petitions, filed by the same assessee, involve very same issue. Hence, common order is passed. 2. In W.P. No. 14884 of 2008, the petitioner herein has sought for a Writ of Certiorarified Mandamus to quash the order of the third respondent in Order No. 1/08, dated 27-3-2008 and to direct the first respondent to restore a sum of Rs. 12,63,03,430/- by way of rebate on export of goods during the period March 2001 to February, 2002 under Rule 18 of the Central Excise Rules, 1944. 3. In W.P. No. 14885 of 2008, the petitioner herein has sought for a writ of Certiorarified Mandamus to quash the order of the third respondent in Order No. 2/08, dated 27-3-2008 and to direct the first respondent to restore a sum of Rs. 5,70,15,438/- by way of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me under the cenvat Credit Rules, 2001. The petitioner exported from the KDP plant on bond and claimed rebate under Rule 13 of the Central Excise Rules, 1944. The credit taken on receipt of the components into the KDP Plant were utilised on the clearance of the manufactured goods from the factory premises under the MODVAT/CENVAT Scheme. 5. It is seen from the documents filed before us that based on the verification of accounts, the Superintendent of Central Excise alleged that the petitioner had had irregular availment of CENVAT credit and thereby contravened the provisions of Rules 57AB, 57AC(7) of the Central Excise Rules, 1944 upto 30-6-2001 and proviso to Rules 3 and 4 of the CENVAT Credit Rules, 2001 from 1-7-2001 onwards. Demand notices were served for a sum of Rs. 4,08,39,896/- for the period 7-6-2000 to 31-3-2001 by the Divisional Preventive Unit and under notice dated 27-7-2002 for the period from 31-3-2000 to December 2001. The notice alleged that the irregular/wrong availment of CENVAT credit was on bought out auto components received directly from the vendors at the KDP plant exclusively for export to South Africa and Mexico. The activity in the KDP plant was only a t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal rejected the claim of the assessee on the ground that all that the assessee had done in the KDP Plant was receiving bought-out auto components and coating it with rust-proof oil and after random testing, sequencing packing/palleting the same, they were exported on bond under Rule 13 of the erstwhile Central Excise Rules. Since the activity undertaken in the KDP plant was not a manufacturing activity, the quality checking, sequencing, packing etc., were preparatory or ancillary to, or otherwise connected with manufacture of cars abroad by the petitioner. This would not come under the benefit of Rule 18 of the Central Excise Rules. Further, the KDP plant was not a factory as per the definition under Section 2(e) of the Central Excise Act. In the circumstances, the Tribunal held that the assessee was not entitled to avail CENVAT Credit on the components purchased from the vendors and directly received into KDP plant and exported to South Africa and Mexico. In the result, the Tribunal rejected the appeals. Consequent on that, the Tribunal also confirmed the levy of penalty imposed by the authorities below. Aggrieved by the same, the petitioner has preferred appeals under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner has preferred W.P. Nos. 14884 and 14885 of 2008, seeking a Writ of Certiorarified Mandamus to quash the order dated 27-3-2008 and to direct the first respondent to grant rebate of Rs. 12,63,03,430/- on the export of goods for the period March, 2001 to February 2002 and for a sum of Rs. 5,70,15,438/- for the period March, 2002 to October, 2002. 8. On notice, the respondents have filed a counter, wherein they deny the petitioner s claim for rebate by preferring a petition before the Government of India and by remitting the duty component on the goods received in the KDP plant. The respondents contend that the assessee was well aware that during the period March, 2001 to October 2002, the availment of credit was rejected by the Department; nevertheless, the assessee continued to avail CENVAT Credit and preferred a rebate claim. Thus the assessee continued to prefer its claim and as against the order of rejection, they filed appeals before the CESTAT, which rejected the same on 21-3-2007. Thus, when the petitioner s claim were already rejected, the assessee is not entitled to maintain the applications for rebate on the duty paid on inputs. The counter further stated that the mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uirements of the Rules and the circulars of the year 1996, or for that matter, 2001, the third respondent ought not to have remanded the matter. 11. In support of the contention, learned senior counsel appearing for the assessee brought to our attention the orders passed by the Government of India in similar circumstances that undue emphasis should not be given on procedural technicalities in the matter of considering the claim for rebate. The understanding of the Revenue as regards the scope of Rule 18 of the Central Excise Rules, as had been expounded in the circulars in the year 1996 and 2001, ought to have been extended to the case of the assessee. 12. In this connection, he placed reliance on the decisions reported in 2006 (204) E.L.T. 632 (In Re : Modern Process Printers) as well as 1995 (77) E.L.T. 511 (Formica India Division v. Collector of Central Excise) and submitted that given the fact that all the particulars as are required under Notification No. 41 of 2001 are available before the first respondent and the fact that the assessee had exported the goods as well as paid the duty, in respect of which CENVAT Credit was availed of, the benefit of rebate, as given under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n repacking is included in the said definition. He also drew our attention to the Circular of the Central Board of Excise and Customs No. 283/117/96, dated 31-12-1996, that export of inputs, as such, under Bond, were also treated as final products, by reason of the definition of manufacture under Rule 57F(1)(ii), to avoid any disadvantage to an exporter of inputs under Bond. Thus, this view was reiterated even under the amended CENVAT Scheme, 2001 and in the Circular No. 345/2/2000, dated 29-8-2000. 15. Per contra, learned standing Counsel appearing for the respondents pointed out to Rules 12, 13 as well as 18 and 19 of the Central Excise Rules and submitted that in the absence of any manufacturing activity in the kdp plant, the assessee is not entitled to have the benefit of rebate. In any event, with the appeals pending before this Court, the petitioner is not entitled to any remedy of rebate as of today without the compliance of the mandatory conditions and rightly, the third respondent remitted the matter to the files of the first respondent. 16. Heard the learned Senior Counsel appearing for the assessee and the learned Standing Counsel appearing for the respondents and pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h or after being partially processed, or such capital goods are removed as such. Explanation. - When inputs or capital goods are removed from the factory, the manufacturer of the final product shall pay the appropriate duty of excise leviable thereon as if such inputs or capital goods have been manufactured in the said factory, and such removal shall be made under the cover of an invoice prescribed under rule 52A. 20. Rule 57AC(7) specifically states that no refund of credit would be allowed, if the manufacturer avails of duty drawback under the Customs and Central Excise Duties and Drawback Rules 1995, or rebate of duty under Rule 12 in respect of such duty. It further pointed out that where inputs are used in the final products, which are cleared for export under Bond, or used in the intermediate product cleared for export, CENVAT credit should be allowed to be utilised by the manufacturer towards payment of excise duty on any final products cleared for home consumption or for export on payment of duty. 21. The provisions under Rule 57AA to Rule 57AK underwent amendment and the provisions relevant for this case during the period 1-3-2001 to 30-6-2001 show that the input de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provides for removal of any material without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises for use in the manufacture or processing of goods which are exported. 25. The Central Board of Excise and Customs considered the scope of the above-said provisions on MODVAT and CENVAT Credit with reference to export of goods and the rebate in the Circular No. 283/117/96-CX, dated 31-12-1996. It referred to the representation made as regards the credit on inputs cleared as such for export under bond, to be utilised for payment of duty on final products cleared for home consumption or alternatively for a refund in cash. considering the doubt that had arisen on the above-said issue, the Board passed the circular, pointing out to Rule 57F providing for the manner of utilisation of the inputs and the utilisation of the credit allowed in respect of the duty paid thereon. It pointed out that Rule 57F(4) proviso treated export of inputs under bond as final product by virtue of deemed manufacture clause. The Board pointed out that the expression as if such inputs have been manufactured in the same factory under the original Rule 57F(1)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is nil . Therefore, there is no bar for a manufacturer to remove the inputs or capital goods for export under bond within the Explanation referred to above. 27. Notification No. 41 of 2001, dated 26-6-2001 provided for the modality on the claim for rebate and the conditions to be complied with. 28. In the background of the above-said provisions and the Circular issued by the Central Board of Excise and Customs, it is clear that clearance of inputs as such for export under bond are treated on par with finished products and that the assessee would be entitled to the utilisation of the credit in terms of the provisions on MODVAT/CENVAT credit. Thus, the exports under claim of rebate and export under bond of the inputs are treated on parity with the export of final products. The view thus taken by the Central Board of Excise and Customs is more in consonance with the object of providing for rebate to encourage export to earn more foreign exchange. 29. As rightly pointed out by the learned Senior Counsel, the decision of the Apex Court 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty and export of goods had been satisfied. Given the fact that the issue on CENVAT Credit availment of rebate are related, the rebate claim, as such, could not be considered in isolation, to grant the relief to the assessee. Rightly, it found, as a matter of fact, that the export of goods had taken place. However, what stood in the matter of granting the relief to the petitioner was the pendency of appeals before this Court filed against the order of the CESTAT. In the circumstances, the Government thought it fit to remand the matter back to the original authority to consider the applications for rebate claim in the light of the circumstances and pass an order regarding the compliance of the mandatory conditions. 35. As already pointed out, given the scope of the circular dated 31-12-1996 that the assessee exporting the inputs, as such, would be entitled to have the claim for rebate under Rule 12 of the Central Excise Rules, we feel that the question as to whether the assessee is a manufacturer in respect of the 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 consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not find such a technicality shall be put forth as a hurdle in considering the claim of the assessee. The reliance placed by the learned Senior Counsel on the decision reported in 2006 (204) E.L.T. 632 (In Re : Modern Process Printers), in this context, needs reference. 38. The Revenue considered the question which arose under similar circumstances, wherein, the Revisional Authority pointed out, as in this case, that the applicant therein had exported the goods out of India under claim of duty under Rule 18 of the Central Excise Rules, read with Notification No. 41 of 2001, dated 26-6-2001, issued in terms of Rule 18 of the said Rules. The Revisional Authority pointed out that in respect of incentive oriented beneficial schemes, intended to boost export and where the substantive fact of export made is not in doubt, liberal interpretation is to be accorded in cases of technical lapses, so that the very purport of the Section is not defeated. The reported decision referred to the decisions of the Apex Court reported in 1989 (39) E.L.T. 503 (Suksha International v. Union of India), 1983 (13) E.L.T. 1534 (Union of India v. A.V. Narasimhalu) and 1995 (77) E.L.T. 511 (Formica India ..... X X X X Extracts X X X X X X X X Extracts X X X X
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