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TMI Blog2012 (5) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... h of the writ petitions as the controversy and issue raised is legal. Facts relevant for the present decision may however be noticed. The respondent No. 2 assesses are manufacturer exporters of stainless steel utensils (not trader or merchant exporters) and had made applications for rebate/refund of the Countervailing Duty or additional duty (hereinafter referred as CVD) paid on the inputs utilized for manufacture. These applications were made under Rule 18 of the Central Excise Rules, 2002, read with notification No. 21/2004-CE(NT) dated 6th September, 2004. In some cases, the applications were dismissed, in others the applications were allowed. However, in all cases the matter was taken up in appeals before the Commissioner (Appeals) and then made subject matter of revision petitions under Section 35EE of the Act. As noticed above, the Central Government has held that the respondent No. 2 assessees are entitled to rebate/refund of the CVD paid on the inputs. 3. CVD is imposed when import is made under the Customs Act, 1962 read with Section 3 of the Customs Tariff Act, 1975. 4. Section 3 of the Customs Tariff Act, 1975 reads as under: "3. Levy of additional duty equal t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng such portion of the excise duty leviable on such raw materials, components and ingredients as, in either case, may be determined by rules made by the Central Government in this behalf. (4) In making any rules for the purposes of sub- section (3), the Central Government shall have regard to the average quantum of the excise duty payable on the raw materials, components or ingredients used in the production or manufacture of such like article. (5) The duty chargeable under this section shall be in addition to any other duty imposed under this Act or under any other law for the time being in force. (6) The provisions of the Customs Act, 1962 , (52 of 1962 ) and the rules and regulations thereunder, including those relating to drawbacks, refunds and exemption duties, shall,' so far as' may' be, apply to the duty chargeable under this section as they apply in relation to the duties leviable under that Act." 5. It is, therefore, clear from the reading of the aforesaid provision that CVD charged on the imported goods is at par with the excise duty payable on the said goods by the domestic manufacturers. 6. The contention of the Revenue is that the CVD paid is not excise duty as su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter referred to as „materials‟) used in the manufacture or processing of export goods shall, on their exportation out of India, to any country except Nepal and Bhutan, be paid subject to the conditions and the procedure specified hereinafter: - (1) Filing of declaration. - The manufacturer or processor shall file a declaration with the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise having jurisdiction over the factory of manufacture describing the finished goods proposed to be manufactured or processed along with their rate of duty leviable and manufacturing/processing formula with particular reference to quantity or proportion in which the materials are actually used as well as the quality. The declaration shall also contain the tariff classification, rate of duty paid or payable on the materials so used, both in words and figures, in relation 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturer or processor. (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. Explanation: - "duty" means for the purposes of this notification, duties of excise collected under the following enactment, namely: - (a) the Central Excise Act, 1944 (1 of 1944); (b) the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957); (c) the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978); (d) the National Calamity Contingent duty leviable under section 136 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted goods under Rule 18 of the Central excise Rules, 2002. 9. It is observed that the Cenvat Credit of CVD is allowed as per Rule 3(vii) of the Cenvat Credit Rules, 2004. The cenvat credit, in respect of the input or Input service so used shall be allowed to be utilized by the manufacture or provider of output service towards payment of, (I) duty of excise on any final product cleared for home consumption or for export on payment of duty, or (II) Service tax on output service. Where for any reason such adjustment is not possible, the manufacturer, or the provider of output service shall be allowed refund of such amount under Rule 5 of Cenvat Credit Rules, 2004 subject to such safeguards, conditions and limitations, as may be specified by the Central Govt. by Notification. From above, it is clear that the Cenvat credit of CVD paid can be utilized for payment of excise duty on any final product for home consumption or for export. And if such Cenvat credit remain unutilized, it can be refunded to the manufacturer. 10. CBEC vide its Circulars No.83/2000-Cus of 18.10.2002 has clarified that where ever duty appears, it is construed to having reference to Central Excise or the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued prescribing the procedure for clearance of the exported goods under claim of rebate. Govt. further observes that the exporter has the option to export the goods under Rule 18 under claim of rebate, or under Rule 19 of the Central Excise Rules, 2002 under Bond or undertaking without payment of duty. The purpose of both the schemes is the same that is to relieve the duties paid on the exported goods to make these competitive in International market to earn foreign exchange. As per Rule 18, the duty paid on goods exported and duty paid on materials used in manufacture or processing of such goods is to be rebated. The Rule 18 of Central Excise Rules, 2002 reads as under: Rule 18 reads as under: "Rule 18 : Rebate of Duty : Where any goods are exported, the Central Government may, by Notification, grant rebate of duty paid on such excisable goods and duty paid on materials used in the manufacturer or limitations, if any, and fulfilment of such procedure, as may be specified in the notification." The plain reading of this rule makes it clear that duty paid inputs/materials is to be rebated. 12. Government notes that in the Notification No.21/2004-CE(NT) dated 06.09.04 issued und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RA held that the rebate of duty paid as CVD on the Imported inputs utilized in the manufacture/processing of exported goods is admissible under Rule 18 of the Central Excise Rules, 2002. 14. Now the similar issue is decided by Hon‟ble High Court of Punjab and Haryana vide order dated 14.01.08 in Central Excise Appeal No.10/07, in the case of CCE, Gurgaon Vs. Simplex Pharma Pvt. Ltd. 2008 (229) ELT 504 (P&H). In this case, the merchant exporter exported the goods under Notification No. 21/2004-CE(NT) dated 06.09.04 read with Rule 18 of the Central Excise Rules, 2002 and filed refund claims on the duty (CVD) paid on the imported inputs used in the processing/manufacturing of the exported goods which was rejected by the Assistant Commissioner and Commissioner (Appeals). The merchant exporter filed an appeal with the CESTAT who set aside the order of the Commissioner (Appeals) and allowed the exporter‟s appeal. The department filed an appeal tot he Hon‟ble High Court of Punjab and Haryana who vide order held "Refund of Countervailing Duty-the eligibility of applicant for benefit of Cenvat/Modvat Credit on Countervailing Duty paid by him is not disputed by Revenue the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stoms Act, 1962 and the Customs Tariff Act, 1975. Thus, from the conjoint reading of the above referred provisions of the Act, it is crystal clear that the rebate of duty of excise on goods exported or on excisable material used in the manufacture of goods which are exported are eligible for refund and such refund includes rebate of duty as well as the duty of excise on excisable material and the refund of such rebate of duty is payable in cash to the applicant if such amount is relatable to rebate of duty of excise on excisable goods exported out of India on excisable material used in the manufacture of goods which is exported out of India." Para 11: From the facts on the record, it is not disputed that the countervailing Duty amounting to Rs.9,69,250/- paid by the applicant at the time of import of raw material was in fact a duty of excise equivalent to the excise duty payable on such raw material if manufacturing in India and admittedly, the said raw material was consumed in the manufacturing of excisable goods exported out of India by the time of import of raw material was leviable. Further, the applicant is admittedly eligible for the benefit of Modvat/Cenvat Credit, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings, Govt. observes that the rebate of Countervailing Duty (CVD) paid on inputs/materials used in the manufacture of exported goods is admissible to the applicants under Rule 18 of Central Excise Rules, 2002 read with Notification 21/2004 dated 6.09.2004 provided no cenvat credit or drawback is availed by the applicants." 11. The aforesaid reasoning is logical and merits acceptance. Para 15 quoted above however has to be read with our observation below. Section 11B(2)(a) of the Act provides for "rebate of duty of excise on excisable goods exported out of India or on excisable materials used or manufacture of goods which are exported out of India". Explanation (A) to the Section states that refund includes rebate of any duty of excise on excisable goods exported out of India or on excisable material used and manufactured goods which are exported out of India. 12. Rule 18 of the Central Excise Rules, 2002 provides for rebate of duty and reads: "Rebate of duty RULE 18.. - 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service exported in accordance with the Export of Services Rules, 2005." 15. Rule 3 of the CENVAT Credit Rules, 2004 reads:- "Rule 3. CENVAT credit- (1) A manufacturer or producer of final products or a provider of taxable service shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of - xxxxxxxxx (vii) the additional duty leviable under section 3 of the Customs Tariff Act, equivalent to the duty of excise specified under clauses (i), (ii), (iii), (iv), (v) (vi) and (via); (viia) the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, Provided that a provider of taxable service shall not be eligible to take credit of such additional duty; (viii) the additional duty of excise leviable under section 157 of the Finance Act, 2003 (32 of 2003); xxxxxxxxxxxx (xi) the additional duty of excise leviable under section 85 of Finance Act, 2005 (18 of 2005 ) paid on- (i) any input or capital goods received in the factory of manufacture of final product or premises of the provider of output service on or after the 10th day of September, 2004; and xxxxxxxxxxxxxx Explanation.- Where the provisions of any other rule or notification pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been consciously and expressly enacted with the specific objective to ensure that duty is not levied even on inputs going to the export products. This method of adjustment, both from the point of Government and the assessee is to allow the assessee to take Cenvat credit on the inputs used in the export products and allow the assessee himself to adjust it for payment of duty on other products. If the adjustment is not possible, Cenvat credit is refunded in cash. This appears to be the Scheme of Rule 5 of the Cenvat Credit Rules, 2004. With a view to achieve this object, the Central Government has specifically enacted Rule 6(6)(v) of the Cenvat Credit Rules, 2004 to the effect that the bar created by Rule 6(1) will not apply for goods exported. Considering the conscious and express provisions contained in Rule 6(6)(v) for exported goods, to deny the permission to export under bond and/or to levy 10% on the value of the exported goods under Rule 6(3)(b) on the footing that the printed books exempt and, therefore, attract Rule 6(1) would be incorrect and completely nullify and frustrate Rule 6(6)(v)." 18. This decision of the Bombay High Court was followed in Union of India versus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We may also note that the term "duty" as defined in the notification No. 41/2001 and 42/2001, which are both dated 26th June, 2001, are identical. However, these relate to export of goods on bond or export under the bond procedure without payment of duty. These notifications have been issued under Rule 19 of the Central Excise Rules, 2002. 21. The contention of the petitioner, if accepted, would result in an anomalous situation. In case the assessee had followed procedure prescribed under Rule 6(6)(v) in terms of notification No. 41 and 42/2001, they would have been entitled to refund of the excise duty paid on the raw material in form of CVD, but they would be denied the benefit under notification No. 21/2004, which has been issued under Rule 18 of the Rules. The aforesaid distinction does not merit acceptance. 22. Issue of notification No. 24/2010-CT(NT) dated 26th May, 2010 is an acceptance by the Government that till the said date, the exporters were entitled to claim refund/rebate on the CVD paid on the raw material even when the exported goods were excisable at nil rate of duty or were wholly exempt from payment of duty. Even after notification No. 24/2010 has been issued, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if manufactured within the State. So far as countervailing duty is concerned, the incidence of the impost is on the import of the excisable articles, i.e., at the time of entry into the State." 25. In Hyderabad Industries Limited versus Union of India, (1999) 108 ELT 321 (SC) it was held: 10. Section 3(1) of the Customs Tariff Act, 1975 provides for levy of an additional duty. The duty is, in other words, in addition to the customs duty leviable under Section 12 of the Customs Act read with Section 2 of the Customs Tariff Act. Secondly this duty is leviable at a rate equal to the excise duty for the time being leviable on a like article to the one which is imported if produced or manufactured in India. The explanation to this sub-section expands the meaning of the expression "the excise duty for the time being leviable on a like article if produced or manufactured in India". The explanation to Section 3 has two limbs. The first limb clarifies that the duty chargeable under sub-section (1) would be the excise duty for the time being leviable on a like article if produced or manufactured in India. The condition precedent for levy of additional duty thus contemplated by the explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act was included in the term duty. CVD which is imposed is equal to the excise duty and partakes the character of excise duty. The amendment notification No. 12/2007 clears and was issued with the intention to bring all debates and disputes to an end. It ensures that it fully applies to all cases and there is no discrimination. Even without the aforesaid notification there is a valid, plausible and a good case to include and treat CVD as a duty covered by the Notification no. 21/2004. 28. There is law in which it has been held that exemption notification should be construed strictly and literally. There are also observations that notification should be interpreted in the light of the words employed and there is no room for intendment. (see Commissioner of Central Excise, New Delhi vs. Hari Chand Shri Gopal, (2011) 1 SCC 236, quoting from Novapan India Ltd. vs. Commissioner of Customs & Excise, 1994 Supp. (3) SCC 606 and TISCO Ltd. vs. State of Jharkhand (2005) 4 SCC 272). These are decisions relating to eligibility clause in which it has been held that strict interpretation and meaning should be given. The person who claims exemption or concession has to establish that he is entit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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