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M/s Cipla Ltd., Mumbai Versus Commissioner of Central Excise, Mumbai-III

2016 (7) TMI 718 - GOVERNMENT OF INDIA

Rebate/ Refund claim - merchant exporters - The duty was paid @ 10% under Notification No. 2/08-CE dated 01.03.2008, as amended. However, the rebate sanctioning authority, has held that the effective rate of duty on the export goods was 4% vide Notification No. 4/2006-CE dated 01.03.2006 as amended. Hence the claimant was eligible for rebate of duty @ 4% adv. paid on export goods. However the rebate claim was rejected on the grounds that in ARE-I No. 04/10-11 dated 29.052010 the chapter heading .....

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te of duty i.e. 4% or 5% in terms of Notification No. 4/06-CE dated 1.03.06 as amended, as applicable on the relevant date on the transaction value of exported goods determined under section 4 of Central Excise Act, 1944. - As regards the discrepancies in Chapter heading in ARE-I, Excise invoice viz-a-viz Shipping Bills, the applicant themselves admitted to have committed the mistake. They have further stated to have applied for amendment before custom authorities. However, even after more t .....

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the applicant. - 195/385/2012-R.A.(CX) - ORDER NO. 51/2016-CX - Dated:- 28-3-2016 - SMT. RIMJHIM PRASAD, JOINT SECRETARY ORDER: This Revision Application is filed by M/S Cipla Ltd., Mumbai, (hereinafter referred to as the Applicant against the Order-in-Appeal No. BC/367/MUM111/2011-12 dated 13.03.2012 passed by Commissioner of Central Excise (Appeals), Mumbai-Ill with respect to the Order-in-Original No. 154R/RM/AC(RC)/M-III/11-12 dated 29.11.2011 passed by the Assistant Commissioner of Central .....

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y on the export goods was 4% vide Notification No. 4/2006-CE dated 01.03.2006 as amended. Hence the claimant was eligible for rebate of duty @ 4% adv. paid on export goods. However the rebate claim was rejected on the grounds that in ARE-I No. 04/10-11 dated 29.052010 the chapter heading mentioned on the Central Excise Invoice, ARE-I and shipping bill was different. 3. Being aggrieved by the said Order-in-Original applicant filed appeals before Commissioner (Appeals) who rejected the same. 4. Be .....

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essee has the option to choose any of the exemption, even if the exemption so chosen is generic and not specific. 4.3 When two Notifications which are not mutually exclusive co-exist in the books of law, the assessee has option to choose any one of them. (i) In other words, when both the Notifications co-exist simultaneously and do not mutually exclude the other, they had option to choose between the aforesaid notifications. When pluralities of exemption are available, the assessee has the optio .....

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he goods in question, the assessee is entitled to the benefit of that exemption notification which gives him greater relief) regardless of the fact that that notification is general in its terms and the other notifications is more specific to the goods. (ii) They also further referred and relied on following decision of Supreme Court, High Court and CESTAT for this proposition (a) 1997 (92) ELT 13 (SC) -CCE vs. Indian Petro Chemicals, (b) 1991 (53) ELT 347(T) -Indian Oil Corporation Ltd. vs. CCE .....

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under consideration are in existence simultaneously. Both the aforesaid Notifications do not have any provisions excluding the other. In other words, Sr. No. 62C of Notification No. 4/2006 does not have any provision stating that the said Notification has an over-riding effect over Notification No. 2/2008-CE dated 01.03.2008 and similarly, vice-versa. Both the Notifications have been issued under Section 5A of the Central excise act, 1944. 4.5 In view of the settled legal position as explained .....

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tes in the Central Excise Tariff Act, 1985, are to be amended, it has to be done legally by way of a suitable Act of Parliament. Admittedly, there has been no Act of Parliament seeking to amend the rates prescribed in the Tariff. (iii) The Department has not pointed any provision under the Central Excise Act or rules made there under which has the effect of requiring the assessee to mandatorily avail the exemption Notification No. 4/2006-CE dated 01.03.2006 (Sr. No. 62C) only. 4.6 They are entit .....

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rocedure, as may be specified in the notification. (ii) The conditions and procedures to claim rebate are prescribed under Notification No. 19-2004-CE(NT) dated 06.09.04 and the essential condition prescribed under the said Notification is that the goods shall be exported after payment of duty. The fact that the goods which have been exported and have suffered excise duty is also not in dispute. (iii) The CESTAT in the case of Gayatri Laboratories vs. CCE - 2006 (194) ELT 73 (T) held that rebate .....

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ar No.510/06/2000-CX dated 03.02.2000. Hence, the impugned portion of the order-in-original is liable to be set aside, It is well settled that there is no estoppel in taxation. Hence, the fact that the applicants were availing Notification No. 4/2006-CE dated 1.03.06 in past is irrelevant for the present dispute. 4.8 That the matter of discrepancy in description of the product exported, the "ISO-ME-CAPSULES" is a food product and correctly classified by us under Chapter 21069099 of the .....

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equently rejected our rebate claim without issuing show cause notice or granting personal hearing. The act of Assistant Commissioner is in violation of principal of natural justice. We have correctly classified the said product under chapter 21069099 and assessed @ 10% at the time of removal from the factory. Also payment of excise duty and export of goods is not in dispute and same has not been denied by Assistant Commissioner. After noticing the discrepancy of tariff heading, we have applied f .....

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eena, Assistant Division, Wagle Division on behalf of the respondent who stated that Order-in-Appeal being legal and proper, may be upheld. The applicant vide their undated letter requested to decide the case on merits. 6. Government has carefully gone through the relevant case records available in case files, oral & written submissions and perused the impugned order-in-original and order-in-appeal. 7. On perusal of records, Government observes that the original authority held that the appli .....

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ve said notifications has approval of Parliament and therefore they are at liberty to avail any notification which ever they find beneficial to them. Therefore they have claimed themselves to be eligible to rebate of duty paid on export goods @10% in terms of Notification No. 2/08-CE dated 1.03.08 as amended. 8.1 It is observed that Central Government issued Notification No. 2/08-CE dated 01.03.08 which has an effect of reduction in general rate of Central Excise Duty on various products from 16 .....

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st Schedule to Central Excise Tariff Act, 1985 covered under serial entry No. of table to Notification No. 2/08-CE dated 01.03.08 as amended, attracted general tariff rate of duty @10%. At the same time the Notification No. 4/06-CE dated 01.03.06 providing for effective Nil rate of duty was amended vide Notification No. 4/08-CE dated 01.03.08 by inserting Sr. No. 62A, 62B, 62C, 62D & 62E for CETH 3001, 3003, 3004, 3005 & 3006(except 3006.60 & 3006.92) prescribing effective rate of du .....

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ctive rate of duty was reduced to 4%. The Notification No. 4/06-CE was further amended vide Notification No. 4/11-CE dated 01.03.2011 and effective rate of duty was enhanced to 5% which was prevalent during the period when said exports were made. 8.2 The Joint Secretary (TRU) CBEC in his D.O. Letter DOF No. 334/1/2008-TRU dated 29.02.08 explained the changes made in excise and customs duties through Finance Bill, 2008 introduced in Lok Sabha on 29.02.08. In para 1, 2 & 3, he informed as unde .....

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n the general rate has been carried out by notification, the possibility of the same product item being covered by more than one notification cannot be ruled. In such a situation, the rate beneficial to the assessee would have to be extended if he fulfils the attendant conditions of the exemption. 3. Drugs and Pharmaceuticals 3.1 Excise duty on drugs and pharmaceuticals falling under Heading Nos. 3001, 3003 (export Menthol crystals), 3004, 3005 and 3006 (except 3006 60 and 3006 92 00) has been r .....

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cations and directed that the rate beneficial to assessee may be extended. In the instant case, the applicant has availed both the rates of duty, which is not allowed in TRU letter. Here basically the issue involved is whether rebates of duty paid at tariff rate or effective rate is to be allowed and not exactly regarding applicability of two notifications for payment of duty. 8.3 It is felt that it is necessary to go into background to find out the reason behind the issue of these two notificat .....

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2011 and the effective rate of duty was enhanced to 5%. On the other hand, the tariff rate of duty for the Chapter heading 3004 was 16% adv. However subsequently reduction in general tariff rate of duty was effected as under: The Hon'ble Finance Minister in his speech while presenting the Union Budget for 2008-09 in the Parliament stated that PART-B Vlll. PROPOSALS TAX Para 144. The manufacturing sector is the backbone of any economy. It is consumption that drives production and it is produc .....

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in the Parliament stated that: PART B PROPOSALS TAX 116. Hon'ble Members are aware that the Government announced a series of fiscal stimulus packages, one of the key elements of which was the sharp reduction in the ad valorem rates of Central Excise Duty for non-petroleum products by 4 percentage points across the board on 7fl1 of December, 2008 and by another 2 percentage points in the mean Cenvat rate on the 24th February, 2009. 117. ……………… 118. &h .....

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ls and medical equipment. Some of the other items on which I propose to retain the rate of 4 per cent are paper, paperboard & their articles; items of mass consumption such as pressure cookers, cheaper electric bulbs, low priced footwear, water filers / purifiers, CFL etc.: power driven pumps for handling water and paraxylene. Further, the Hon'ble Finance Minister in his speech while presenting the Union Budget for 2010-11 in the Parliament stated that: PART - B INDIRECT TAXES 142. Unlik .....

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ll non-petroleum products from 8 per cent to 10 percent ad valorem. - From above, it is quite clear that Notification No. 2/08-CE dated 1.3.08(14%) and subsequent amending Notification No. 58/08-CE dated 7.12.08 (10%), 4/09-CE dated 24.02.09(8%) and 6/10-CE dated 27.02.2010(10% were issued to reduce/alter the general tariff rate of duty. 8.4 Government observes that the instructions issued by CBEC regarding assessment of export goods are quite relevant to decide the issue involved in these cases .....

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onsumption. The classification and rate of duty should be in terms of Central Excise Tariff Act, 1985 read with any exemption notification and or Central Excise Rules, 2002. The value shall be the 'transaction value and should conform to Section 4 or section 44 as the case maybe, of the Central Excise Act, 1944. It is clarified that this value may be less than, equal to or more than the FOB value indicated by the exporter on the Shipping Bill. " The plain reading of said para, reveals t .....

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rebate claim of duty paid on exported goods and therefore the whole issue will have to be examined in the light of these instructions. As explained above, Notification No. 2/08-CE dated 1.03.08 as amended prescribed General Tariff rate of duty @10% which was in fact brought down from 16% to 14% and then to 8% and finally to 10% by different amending notifications. The notification No. 4/06-CE dated 1.03.06 as amended & described effective rate of duty from initial rate of 0% to 8%, 8% to 4% .....

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ated in para 4.1 of Part-I of Chapter 8 of CBEC Excise Manual. In fact, this confusion has arisen since in this case the General tariff rate was reduced through Notification when special economic stimulus package was announced in 2008 by Government to deal with ongoing economic recession. Normally changes in General tariff rate are carried out through Finance Bill / Act. Government, therefore is of the view that duty was payable @4%/5% on the export goods also and rebate cannot be granted on the .....

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r cleared for export or home consumption in a same manner. He cannot assess export goods as higher rate of duty @ 10% and good cleared for home consumption at lower rate of duty @ 4% or 5%. He has to choose any one notification and assess all clearance of goods in the same manner even if there are two effective rates of duty -as per two notifications. In this case, the situation is different since Notification No. 2/08-CE as amended prescribed duty at General Tariff rate of 10% whereas effective .....

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ructions and they have to comply with the same. Hon'ble Supreme Court has held in the case Paper Products Ltd. vs, CCE 1999 (112) ELT 765 (SC) that circulars issued by CBEC are binding on departmental authorities, they cannot take a contrary stand and department cannot repudiate a circular issued by Board on the basis that it was inconsistent with the statutory provision. Hon'ble Apex nas further held that department's actions have to be consistent with the circulars, consistency and .....

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, Hon'ble Supreme Court has categorically held that when two notifications co-exit simultaneously, then assessee has the option to choose any one of the notifications beneficial to him. Apex court has not stated that assessee can avail both the notifications simultaneously. Whereas in the instant case applicant has not chosen one notification for all the clearance but decided to avail benefit of both the notification. The apparent motive of clearing export goods at higher rate of duty @10% a .....

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late to admissibility of exemption notification benefit in case of dispute of classification / eligibility of claimant. None of the said judgement are on the issue of sanctioning rebate of duty paid on exported goods. Hon'ble Supreme Court in paras 10 & 11 of the judgement in case of Escorts Ltd. vs. CCE Delhi-Il 2004 (173) ELT 113 (SC) observed that circumstantial flexibility, one additional or different fact may make a world of difference between conclusion of two cases Disposal of two .....

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rated that there cannot be any strict relied upon citation which can be taken as guiding precedents because each one of the citations have different set of facts pertaining to manufacturing goods of different subheadings, following different set of Notifications, choosing different beneficial schemes and changing thereof in between a given financial year thereby, leading to different question of law. 8.9 Government further notes that following case laws lend support to the view that rebate is to .....

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ct itself. Apex Court has clearly observed that any exemption notification specifying effective rate has to be complied with. In this regard, Hon'ble CESTAT Ahmedabad Bench in its judgement in the case of Mahindra Chemicals vs. CCE Ahmedabad 2007 (208) ELT 505 (T-Ahd.) while relying on above said Apex Court judgement has held that exemption notification has to be construed as if this rate was prescribed by statute and when the legislature has decided to exempt certain goods by notification, .....

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(b)(ii) of Notification No. 19/04-CE(NT) dated 6.09.04, the rebate sanctioning authority has to satisfy himself that rebate claim is in order before sanctioning the same. If the claim is in order he shall sanction the rebate either in whole or in part. The said para 3(b)(ii) is reproduced below: 3(b) Presentation of claim for rebate to Central Excise: (i) ………………… (ii) The Assistant Commissioner of Central Excise or the Deputy Commissioner of Centr .....

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late that after examining the rebate claim, the rebate sanctioning authority will sanction the claim in whole or part as the case may be depending on facts of the case. Government notes that said notification issued under Rule 18 of Central Excise Rules, 2002, prescribes the conditions, limitations and procedure to be following for claiming as well as sanctioning rebate claims of duty paid on exported goods. The satisfaction of rebate sanctioning authority requires that rebate claim as per the r .....

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