TMI Blog2012 (5) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... n favour of assessee. - WRIT PETITON (CIVIL) NOS. 271/2012, 273/2012, 378/2012, 3215/ 2011, 3242/2011 & 3696/2011 - - - Dated:- 2-5-2012 - MR. JUSTICE SANJIV KHANNA, MR. JUSTICE R.V. EASWAR, JJ. For Appellant: Mr. Satish Kumar, Sr. Standing Counsel. For Respondents: Mr. Rajeev Tuli, Mr. G.K. Sarkar, Mr.A.Mishra Mr. Saurabh Yadav, Advs. SANJIV KHANNA, J.: These writ petitions have been preferred by Commissioner of Central Excise, Delhi-I impugning orders passed by the Government of India under Section 35EE of the Central Excise Act, 1944(Act, for short). The said orders are authored by Joint Secretary to the Government of India, who has been authorized to pass orders under the said Section in exercise of revisionary jurisdiction. Respondent No. 2 to the present writ petitions are the private parties, who have succeeded in the revision petition before the Joint Secretary, Government of India. 2. We are not required to deal with the individual facts in each 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said section 14 or the tariff value of such article fixed under sub- section (2) of that section, as the case may be; and (ii) any duty of customs chargeable on that article under section 12 of the Customs Act, 1962 , (52 of 1962 ) and any sum chargeable on that article under any law for the time being in force as an addition to, and in the same manner as, a duty of customs, but not including the duty referred to in sub- section (1). (3) If the Central Government is satisfied that it is necessary in the public interest to levy on any imported article[ whether on such article duty is leviable under sub- section (1) or not] such additional duty as would counter- balance the excise duty leviable on any raw materials, components and ingredients of the same nature as, or similar to those, used in the production or manufacture of such article, it may, by notification in the Official Gazette, direct that such imported article shall, in addition, be liable to an additional duty representing 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 makin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rospective vide letter dated 25th February, 2008. It is submitted that the general principle is that any substantive amendment should be prospective and not retrospective. More so, when benefit or exemption is being granted. The amendment is not clarificatory and a new beneficial provision has been incorporated vide notification No. 12/2007. 7. In order to appreciate the controversy, we are required to examine the relevant portion of the notification No. 21/2004 as it existed prior to 1st March, 2007. The said notification prior to 1st March, 2007 reads: 6th September, 2004 Notification No.21/2004-Central Excise (N.T.) In exercise of the powers conferred by of rule 18 of the Central Excise Rules, 2002 and in supersession of the Ministry of Finance, Department of Revenue, notification No.41/2001-Central Excise (N.T.), dated the 26th June, 2001[G.S.R.470 (E) dated the 26thJune, 2001], the Central Government hereby, directs that rebate of whole of the duty paid on excisable goods (hereinafter 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r operation necessary for the manufacture of the finished goods and return the same to his factory without payment of duty for further use in the manufacture of finished goods or remove the same without payment of duty in bond for export, provided that the waste, if any, arising in the course of such operation is also returned to the said factory of the manufacture or process; or (b) for the purpose of manufacture of intermediate products necessary for the manufacture or processing of finished goods and return the said intermediate products to his factory for further use in the manufacture or process of finished goods without payment of duty or remove the same, without payment of duty for export, provided that the waste, if any, arising in the course of such operation is also returned to the factory of manufacturer or processor; (c) any waste arising from the processing of materials may be removed on payment of duty as if such waste is manufactured or processed in the factory of the manufacturer 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 Mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant. 7. Government observes that the issue to be decided is whether the Countervailing Duty (CVD) (Additional duty) leviable under Section 3 of the Customs Tariff Act, 1985 equivalent to the duty of excise paid on the imported inputs/materials used in the manufacture of exported goods is rebatable under Rule 18 of Central Excise Rules, 2002 read with Notification No.21/2004-CE(NT) dated 06.09.04. 8. In this regard, Government observes that the countervailing duty (CVD) is levied on the goods imported into India, equal to the duty of excise leviable on the like goods if produced or manufactured in India. The assesses paying CVD at the time of import of goods is allowed to take the cenvat credit of CVD paid. The exporter exporting the goods can claim rebate of duty under Rule 18 of the Central Excise Rules, 2002 of the duty paid from the cenvat credit taken for CVD. Similarly, the assessee can claim the rebate of duty, paid on the Inputs used in the manufacturing/processing of the exported 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 credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is, therefore, clarified that where only customs portion of duties is claimed as per the all industry rate of drawback, Rule 57F(14), does not come in the way of admitting refund of unutilized.. credit of Central Excise/Countervailing duty paid on inputs used in products exported. 6. Rule 57AC(7) of the Cenvat contains similar provisions for refund of unutilized credit earned on inputs used in goods/intermediate goods cleared for export. Therefore, the interpretation would be applicable to all such cases under the erstwhile modvat urles (sic) as well as the Cenvat rules effective from 1.4.2000. 11. Government has issued two notifications under Rule 18 of the Central excise Rules, 2002 for claiming rebate of duty on export of goods. Notification 19/2004-CE is for claiming rebate of duty paid on finished goods and Notification No.21/2004-CE(NT) is for claiming rebate of duty paid on inputs/materials on goods used in manufacture/processing of export goods. Both the Notifications are issued 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f education cess is eligible from date of effect of levy. The said decision is being followed by the department now in the case of Education cess. The Hon‟ble Supreme Court judgement in the case of Belapur Sugar Allied Inds. Ltd. Vs. Collector of Central Excise, Aurangabad-1999 (108) ELT 9 (SC.) on the interpretation of exemption Notification also lends support to the fact that the Notification No.12/2007-CE(NT) dated 1.03.07 should be retrospective being clarificatory in nature. 13. Government further observes that in the case of M/s Satkar Plywood Pvt. Ltd., the rebate under Rule 18 on the inputs used in the manufacture/processing of the exported goods were denied by the lower authorities on the plea that the CVD is not covered under the definition of duty under notification No.21/2004-CE dated 06.09.04 as is levied under Section 3 of the Customs Tariff Act, 1975. On a revision application filed by the applicant, Government vide its order No.54/07-CE dated 15.3.07 F.No.195/663/06-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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exported out of India. Section 3 (1) of the Central Excise Act, 1944 provides for levying and collection of duty of excise/special duty of excise to be called the Central Value Added Tax (CENVAT) on all excisable goods which are produced or manufactured in India and at the rates set forth in the First and Second Schedules to the Central Excise Tariff Act, 1985. The proviso to this Section has further added that the duties of excise which shall be levied and collected on any excisable goods which are produced or manufactured by a 100% export oriented undertaking shall be an amount equal to the aggregate of the duties of the customs which would be leviable under the Customs Act, 1962 on like goods produced or manufactured outside India if imported into India and where the said duties of customs are chargeable by reference to their value, the value of such excisable goods notwithstanding anything contained in any other provision of this Act be determined in accordance with the provisions of the Customs 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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ksha International Vs. UOI 1993 (39) ELT 503 (SC), the Hon‟ble Supreme Court has observed that an interpretation unduly restricting the scope of beneficial provision is to be avoided so that it may not take away with one hand what the policy given with the other. In the Union of India Vs. A.V. Narasimhalu 1983 ELT 1534 (SC), the Apex Court also observed that the administrative authorities should instead of relying on technicalities, act in a manner consistent with broader concept of justice. Similar observation was made by the Apex Court in the Formica India Vs. Collector of Central Excise 1995 (77) ELT 51 (SC) in observing that once a view is taken that the party would have been entitled to the benefit of the notification had they met with the requirement of the concerned rule, the proper course was to permit them to do so rather than denying to them the benefit on the technical grounds that the time when they could have done so, had elapsed. 16. In view of the above discussion and findings, 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 Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... export on payment of duty; or (ii) service tax on output service, and where for any reason such adjustment is not possible, the manufacturer or the provider of output service shall be allowed refund of such amount subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification: Provided that no refund of credit shall be allowed if the manufacturer or provider of output service avails of drawback allowed under the Customs and Central Excise Duties Drawback Rules, 1995, or claims rebate of duty under the Central Excise Rules, 2002, in respect of such duty; or claims rebate of service tax under the Export of Service Rules, 2005 in respect of such tax. Provided further that no credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act shall be utilised for payment of service tax on any output service. Explanation: For the purposes of this rule, the words 'output service which is exported' means the output 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed as under: 9. The Cenvat credit is allowed the duty paid on inputs to mitigate the effect of double taxation of levying duty on inputs as also on the final product. If, however, the exempted final product is exported it calls for a special relaxation/dispensation to make the goods of the country internationally competitive. As an illustration suppose a final product like tractor is otherwise exempted from excise duty even for domestic consumption and such tractors are exported. The various inputs like engines, etc., used in the tractor may have suffered excise duty. The intention is not to export taxes but only to export the goods. If the inputs like engine going into the manufacture of export commodity namely tractors are subject to excise duty, the Indian manufacturer of tractors becomes internationally uncompetitive. This appears to be the object behind the Government enacting special scheme to ensure that the duty is not levied even on inputs going to the export products. Rule 6(6)(v) has 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 fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19. We may note that after the decision in Repro India Limited (supra) vide notification No. 24/2010-CE(NT) dated 26th May, 2010, the Government has amended and stated that export of excisable goods which are chargeable to nil rate of duty or are wholly exempt from payment of duty, other than the goods cleared by the 100% export oriented undertaking, shall not be allowed to take the benefit under Rule 6 of the CENVAT Credit Rules, 2004. Circular No. 928/18/10-CX dated 28th June, 2010 has stated that the notification No. 24/2010 is not retrospective. 20. Going by the aforesaid reasoning, in case the assessee had applied in terms of Rule 6(6)(v) of the CENVAT Credit Rules, 2004, they would have been entitled to refund of the CVD paid by them. This is an important and a relevant circumstance which we have to keep in mind, though in the present case the assessee had not applied for refund under Rule 6(6)(v) and the applicable notifications issued thereunder, namely, notification Nos. 41/2001 and 42/2001. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturer where only Customs portion of All Industry Rate of Drawback is claimed, if refund of unutilised credit is given, as no MODVAT (now CENVAT) credit facility is permissible for Customs duty suffered on imported inputs. Denial of refund of MODVAt credit of Excise/Countervailing duty paid on inputs relating to export products, if this cannot be used otherwise, will thus not be only act harshly on the exporters, it will not be in accordance with the provisions of the MODVAT rules. 24. The Supreme Court in S.K. Pattanaik versus State of Orissa, (2000) 115 ELT 9 (SC) has held as under:- 4. Excise duty and countervailing duty are well-known concepts and are attracted in different situations. Excise duty is essentially a duty on manufacture of goods, and the taxable event is the manufacture of the excisable goods. Countervailing duty , on the other hand, is imposed when excisable articles are imported into the State, in order to counterbalance the excise duty, which is leviable on similar goods 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad manufactured the goods in India and determine the amount of excise duty that he would have been called upon to pay in that event . To our mind the genesis of Section 3(1) of the Customs Tariff Act has been brought out in the aforesaid observations of this Court, namely, that for the purpose of saying what amount, if any, of additional duty is leviable under Section 3(1) of the Customs Tariff Act, it has to be imagined that the articles imported had been manufactured or produced in India and then to see what amount of excise duty was leviable thereon. 26. We have quoted Rule 3 of the CENVAT Credit Rules, 2003 in which the term duty on which credit can be allowed includes additional duty or CVD leviable under Section 3 of the Customs Tariff Act, 1975. 27. A harmonious and cumulative reading of the said provisions would show that there was no good cause or reason why CVD paid should not be or was not intended to be included in the term duty in the notification No. 21/2004. Excise duty payable under the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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