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2015 (10) TMI 1106 - PUNJAB AND HARYANA HIGH COURT

2015 (10) TMI 1106 - PUNJAB AND HARYANA HIGH COURT - 2015 (326) E.L.T. 265 (P & H) - Denial of rebate claim - Bar of limitation - Export of goods - petitioner paid duty on inputs and to export the goods on payment of duty and thereafter claimed a rebate of the duty paid in respect of the exported goods - held that:- In exercise of powers under rule 18, the Central Government issued a notification being Notification No. 19/2004 dated 06.09.2004 granting a rebate of the whole of the duty on excisa .....

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ressly provides that where any goods are exported the Central Government may by notification grant a rebate of the duty paid and that rebate shall be subject to such conditions or limitations, if any, and fulfilment of such procedure as may be specified in the notification. Under rule 18, therefore, a party is entitled to the rebate subject to such conditions or limitations as may be specified in the notification. In respect of grant of rebate, it is open to the Central Government to impose cond .....

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s not provide any period of limitation for a claim for rebate. The rejection of the petitioner's claim for rebate, therefore, is not well founded. - impugned order dated 26.05.2014 of the Commissioner of Central Excise (Appeals) is quashed and set aside - Decided in favour of assessee. - Civil Writ Petition No.16018 of 2014 (O&M) - Dated:- 4-8-2015 - MR.S.J. VAZIFDAR AND MR. G.S. SANDHAWALIA, JJ. For The Petitioner : Mr. Jagmohan Bansal, Advocate For The Respondent : Mr. Sukhdev Sharma, Advocate .....

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uthority rejected the claim for rebate on the ground that it was barred by limitation. The appellate authority also dismissed the claim on the same ground. 3. The petitioner's case is that as per rules 18 and 19 of the Central Excise Rules, 2002 read with rule 5 of the Cenvat Credit Rules, 2004, it is entitled to export goods without payment of duty. The petitioner contends that an exporter has several options. The petitioner opted to pay duty on inputs and to export the goods on payment of .....

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d or short-paid or erroneously refunded. - (1) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, for any reason, other than the reason of fraud or collusion or any wilful misstatement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty,- (a) the Central Excise Officer shall, within one year from the relevant date, serve notice on the pe .....

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then, he shall proceed to issue the notice as provided for in clause (a) of that sub-section in respect of such amount which falls short of the amount actually payable in the manner specified under that sub-section and the period of one year shall be computed from the date of receipt of information under sub-section (2). (4) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by the reason of- (a) fraud; or (b) collusion; or (c) a .....

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ty specified in the notice. (5) Where, during the course of any audit, investigation or verification, it is found that any duty has not been levied or paid or has been short-levied or short-paid or erroneously refunded for the reason mentioned in clause (a) or clause (b) or clause (c) or clause (d) or clause (e) of sub-section (4) but the details relating to the transactions are available in the specified record, then in such cases, the Central Excise Officer shall within a period of five years .....

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l to one per cent of such duty per month to be calculated from the month following the month in which such duty was payable, but not exceeding a maximum of twenty-five per cent of the duty, and inform the Central Excise Officer of such payment in writing. (7) The Central Excise Officer, on receipt of information under sub-section (6) shall- (i) not serve any notice in respect of the amount so paid and all proceedings in respect of the said duty shall be deemed to be concluded where it is found b .....

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nt to any notice or notices served under any of those sub-sections, as the case may be, a statement, containing the details of duty of central excise not levied or paid or short-levied or short-paid or erroneously refunded for the subsequent period, on the person chargeable to duty of central excise, then, service of such statement shall be deemed to be service of notice on such person under the aforesaid sub-section (1) or sub-section (3) or sub-section (4) or sub-section (5), subject to the co .....

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under sub-section (4) is not sustainable for the reason that the charges of fraud or collusion or any wilful misstatement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty has not been established against the person to whom the notice was issued, the Central Excise Officer shall determine the duty of excise payable by such person for the period of one year, deeming as if the notice were issued under .....

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o so, in respect of cases falling under sub-section (1); (b) within one year from the date of notice, where it is possible to do so, in respect of cases falling under sub-section (4) or sub-section (5). (12) Where the appellate authority or tribunal or court modifies the amount of duty of excise determined by the Central Excise Officer under sub-section (10), then the amount of penalties and interest under this section shall stand modified accordingly, taking into account the amount of duty of e .....

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, the person liable to pay the said duty of excise shall pay the amount so determined along with the interest due on such amount whether or not the amount of interest is specified separately. (15) The provisions of sub-sections (1) to (14) shall apply, mutatis mutandis, to the recovery of interest where interest payable has not been paid or part paid or erroneously refunded. Explanation 1. - For the purposes of this section and Section 11-AC,- (a) "refund" includes rebate of duty of ex .....

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he case of excisable goods on which duty of excise has not been levied or paid or has been short-levied or short-paid and the return has been filed on due date, the date on which such return has been filed; (iii) in any other case, the date on which duty of excise is required to be paid under this Act or the rules made thereunder; (iv) in a case where duty of excise is provisionally assessed under this Act or the rules made thereunder, the date of adjustment of duty after the final assessment th .....

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2011 receives the assent of the President, shall continue to be governed by the provisions of Section 11-A as it stood immediately before the date on which such assent is received." ……… ………… ………. ………. "11-B. Claim for refund of duty. - (1) Any person claiming refund of any duty of excise may make an application for refund of such duty to the Assistant Commissioner of Central Excise or Deputy Comm .....

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ided that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this sub-section as amended by the said Act and the same shall be dealt with in accordance with the provisions of sub-section (2) as substituted by that Act: Provided further that the limitation of one year shall not apply where any duty has been paid under protest. (2) If, on receipt of any such ap .....

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of being credited to the Fund, be paid to the applicant, if such amount is relatable to- (a) rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India; (b) unspent advance deposits lying in balance in the applicant's account current maintained with the Commissioner of Central Excise; (c) refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made, or any n .....

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l be issued unless in the opinion of the Central Government the incidence of duty has not been passed on by the persons concerned to any other person. (3) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any Court or in any other provision of this Act or the rules made thereunder or any other law for the time being in force, no refund shall be made except as provided in sub-section (2). (4) Every notification under clause .....

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in the notification or directs that the notification should cease to have effect, the notification shall thereafter have effect only in such modified form or be of no effect, as the case may be, but without prejudice to the validity of anything previously done thereunder. (5) For the removal of doubts, it is hereby declared that any notification issued under clause (f) of the first proviso to sub-section (2), including any such notification approved or modified under sub-section (4), may be resc .....

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the case may be, the excisable materials used in the manufacture of such goods,- (i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India, or (ii) if the goods are exported by land, the date on which such goods pass the frontier, or (iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India; (b) in the case of goods returned for being remade, refined, reco .....

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the basis of the rate fixed by the Central Government by notification in the Official Gazette in full discharge of his liability for the duty leviable on his production of certain goods, if after the manufacturer has made the payment on the basis of such rate for any period but before the expiry of that period such rate is reduced, the date of such reduction; (e) in the case of a person, other than the manufacturer, the date of purchase of the goods by such person; (ea) in the case of goods whi .....

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r or direction; (f) in any other case, the date of payment of duty.' (Emphasis Supplied) 5. Rule 18 of the Central Excise Rules, 2002 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 or duty paid on materials used in the manufacture of processing of such goods and the rebate shall be subject to such conditions or limitations, if any, and fulfilment of such procedure, .....

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d hereinafter". This notification does not prescribe any period of limitation in respect of a claim for rebate. Clause 2 of the notification specifies the "Conditions and Limitations". Sub-clauses (a) to (g) specify various conditions and limitations but do not prescribe any limitation as to the period within which a claim for rebate is to be made. Even more important is clause 3(b) of the notification which relates to presentation of claim for rebate to Central Excise. It reads a .....

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ing jurisdiction over the factory of manufacture or warehouse or, as the case may be, Maritime Commissioner of Central Excise shall compare the duplicate copy of the application received from the officer of customs with the original copy received from the exporter and with the triplicate copy received from the Central Excise Officer and if satisfied that the claim is in order, he shall sanction the rebate either in whole or in part." The remaining sub-clauses of clause 3 provide for detaile .....

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reme Court in Collector of Central Excise v. Raghuvar (India) Ltd. [2000] 5 SCC 299 is well founded. In that case, the respondents filed the declaration under Rule 57-G of the Central Excise Rules, 1944, for adoption of MODVAT Credit in respect of certain inputs used by them. The authorities, contending that the respondents had wrongly availed credit, debited the same. A notice was also served upon the respondents to show cause why a certain amount should not be recovered from them under Section .....

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e matter went before the Supreme Court by way of a reference under Section 35-H of the Central Excise and Salt Act, 1944. The Supreme Court upheld the submission on behalf of the Revenue that Section 11-A had no application whatsoever to the case which was governed by the relevant provision of the MODVAT Scheme which was a special provision with a self contained machinery even for enforcement whereas Section 11-A was a general provision. Paragraphs 7, 13, 14 and 15 of the judgment read as under: .....

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the intention of the legislature to amend the Rule to bring it in conformity with the spirit and scope of Section 11-A. There is no rhyme or reasonable basis for such an assumption. The Division Bench of the Madras High Court, which decided the case in Advani Oerlikon Ltd. [(1993) 63 ELT 427 (Mad)] expressed the view that notwithstanding the omission in Rule 57-I prior to its amendment, to provide for the issue of a notice, the obligation to issue such notice followed from the principles of nat .....

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provision, and that in order to suffer a limitation on the very exercise of the power. A Division Bench of the Bombay High Court also held in the decision reported in Fabril Gasosa case [(1997) 96 ELT 241 (Bom)] that the power to frame rules since was derived from the Act itself and the Rules owe their existence to the Act, as long as there is any provision in the Act, even if the rules are silent on that aspect of the matter, it will have to be presumed that the provisions in the Act will gove .....

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r under Section 37, particularly sub-section (2)(xvia). A Division Bench of the Patna High Court, in the decision reported in TELCO case [(1999) 111 ELT 9 (Pat)] while following the view expressed by the Madras, Karnataka and Bombay High Courts disagreed with the view of the Gujarat High Court and held that when the limitation is provided for in the parent Act, it need not be provided for in the subordinate legislation, viz., the rules, and therefore the limitation prescribed in Section 11-A has .....

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llip;…. ……. …… 13. Any law or stipulation prescribing a period of limitation to do or not to do a thing after the expiry of period so stipulated has the consequence of creation and destruction of rights and, therefore, must be specifically enacted and prescribed therefor. It is not for the courts to import any specific period of limitation by implication, where there is really none, though courts may always hold when any such exercise of power had the effect of .....

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ation on hand and the one which has to be dealt with under Rule 57-I, as it stood unamended, does not fall under any one of those contingencies provided for in Section 11-A of the Act. Part AA of the Rules in which Rule 57-I is found included provides a special scheme for earning credit and adjustment of duty paid on excisable goods used as inputs in the manufacture of what is referred to as "final product", and thereby enable the manufacturer to utilise the credit so allowed towards p .....

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gitimately or factually earned by or due to him. For this purpose, the irregularity and impropriety committed by the manufacturer in maintaining the accounts and the error in the calculation of the credit said to have been earned by him is pointed out, and the manufacturer is only directed to reverse the credit so wrongly and undeservedly made by readjustment and if need be, to recover the amount equivalent to such credit wrongly availed of and disallowed by the proper officer. The recovery of c .....

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t-paid. They fall into two distinct and different categories altogether with basic as well as substantial differences to distinguish them from each other. As a matter of fact, Rule 57-I envisages disallowance of the credit and consequential adjustment in the credit account or the account-current maintained by the manufacturer and if only any such adjustments are not possible proceed to recover the amount equivalent to the credit illegally availed of. Consequently, the situation postulated to be .....

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pplicability or otherwise of the principle of construction - generalia specialibus non derogant, since they do not operate in the same field or cover the same area, to be reconciled in order to avert any clash or inconsistency. That apart, even if it is to be assumed that they relate to one and the same nature of demand from the manufacturer of any amount due from him to the State, the provisions contained in Section 11-A are general in nature and application and the MODVAT Scheme being a specif .....

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Scheme. The question as to the relative nature of the provisions general or special has to be determined, as observed earlier, with reference to the area and extent of their application either generally in all circumstances or specially in particular situations and not on the ground that one is a mere provision in the Act and the other is a provision in the Rule. We are not also concerned in this case with any challenge to the inconsistency of a rule with any statutory provision in the Act. 15. .....

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very act or course of action envisaged under the Act and the Rules, wherever there is no limitation stipulated to the contra. The restricted operation of the provisions contained in Section 11-A is found inherently inbuilt due to the specification of the various categories of cases enumerated in the provision itself to be dealt with. The Scheme of MODVAT, introduced for the first time in 1986, did not consider it necessary either to have its own period of limitation inbuilt in the Rules nor has .....

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putation of such limitation also would militate against the manner of construction adopted by the decisions of the High Courts other than that of the Gujarat High Court." 8. It is important to note that the Supreme Court rejected the respondents' plea of limitation on more than just one ground. This is important in view of the petitioner's reliance upon the judgment of a Division Bench of the Bombay High Court delivered under Section 11-B which has distinguished the judgment of the .....

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er, the matter was dealt with on a different basis. The Supreme Court held that even assuming that section 11-A and rule 57-I relate to one and the same nature of demand, the provisions contained in section 11-A are general in nature and application and the MODVAT Scheme being a specific and special beneficial scheme with a self-contained procedure, manner and method for its implementation providing for its own remedies, the provisions of the special scheme would govern a situation and that ther .....

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onditions or limitations, if any, and fulfilment of such procedure as may be specified in the notification. Under rule 18, therefore, a party is entitled to the rebate subject to such conditions or limitations as may be specified in the notification. In respect of grant of rebate, it is open to the Central Government to impose conditions or limitations including as to the period within which the rebate ought to be claimed. The rule is wide enough to authorise the Central Government to impose a c .....

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he Central Excise Rules, 1944, reads as under:- "12. Rebate of duty. - (1) The Central Government may, from time to time, by notification in the Official Gazette, grant rebate of- (a) duty paid on the excisable goods; (b) duty paid on materials used in the manufacture of goods; If such goods are exported outside India or shipped as provision or stores for use on board a ship proceeding to a foreign port or supplied to a foreign going aircraft, to such extent and subject to such safeguards, .....

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such rebate, even if all or any of the conditions laid down in any notification issued under this rule have not been complied with." A notification was issued under rule 12 of the Central Excise Rules, 1944. The notification in so far as it is relevant reads as under:- "Export - Rebate of duty on export of all excisable goods except mineral oils and ship stores. In exercise of the powers conferred by clause (a) of sub-rule (1) of rule 12 of the Central Excise Rules, 1944, the Central .....

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the relevant export documents; together with the proof of due exportation within the time limit specified in section 11B of the Central Excises and Salt Act, 1944 (1 of 1944);" (Emphasis supplied) 12. Thus, where the Central Government intended imposing a time limit in respect of a claim for rebate, it provided for the same in the notification issued under the rule i.e. rule 12 of the 1944 rules which corresponds to rule 18 of the Central Excise Rules, 2002. 13. Even in Raghuvar (India) Ltd .....

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decisions of some of the High Courts which read into rule 57-I the limitation prescribed in Section 11-A. These observations clearly support Mr. Bansal's submission on a parity of reasoning. 14. A Division Bench of the Madras High Court in Dy. CCE v. Dorcas Market Makers (P.) Ltd 2015 (321) E.L.T. 45 (Mad.) dealt specifically with Section 11-B. In that case also the respondent had filed a claim for rebate under rule 18 of the Central Excise Rules, 2002, for refund of the duty paid for the e .....

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;s claim for refund would be governed by rule 18 of the Central Excise Rules, 2002 read with the notification issued thereunder. The said notification does not provide any period of limitation for a claim for rebate. The rejection of the petitioner's claim for rebate, therefore, is not well founded. 16. Mr. Sukhdev Sharma relied upon a Division Bench judgment of the Bombay High Court dated 29.03.2012 in Everest Flavours Ltd. v. Union of India Writ Petition No. 3262 of 2011. This case is inde .....

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behalf of the petitioner sought to place reliance on a decision of the Supreme Court in Collector of Central Excise v. Raghuvar (India) Ltd. The issue which fell for determination before the Supreme Court, inter alia, was whether action for the recovery of MODVAT credit wrongly availed of or utilised in an irregular manner under Rule 57-I would be governed by the period of limitation of six months (at the relevant time) prescribed in Section 11A. The Supreme Court noted that Section 11A is not a .....

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only if such adjustments are not possible, that an amount equivalent to the credit illegally availed of could be recovered. Consequently Rule 57-I, it was held, could not involve a case of manufacture and removal of excisable goods without subjecting such goods to levy or payment in the various circumstances enumerated in Section 11-A. Hence, on its own terms, it was held that Section 11A will have no application or operation to cases covered under Rule 57-I. The Supreme Court ruled that the sit .....

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rview, a rebate of excise duty on goods exported out of India or materials used in the manufacture of such goods, Rule 18 cannot be read independent of the requirement of limitation prescribed in Section 11B. The Judgment of the Supreme Court in Raghuvar dealt with a situation where Section 11A did not bring within its purview an action for the recovery of MODVAT credit wrongly availed of which formed the subject matter of Rule 57-I. It was in this view of the matter that the Supreme Court held .....

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