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TMI Blog2015 (12) TMI 1641X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Somson Exports were engaged in the manufacture and export of diesel engines and parts falling under Chapter 84 of the Central Excise Tariff Act. They also exported "diesel engines, centrifugal pumps and channel frames 10 HP", mountable on the same platform, as a single unit, classifying the same as diesel engines under Tariff Item (TI) 8408 90 90 of the Tariff on payment of duty @ 10% ad val., as applicable during the material period. After due exportation of the impugned goods, the respondents filed rebate claims for amount of Rs. 4,19,735/-. The adjudicating authority vide the impugned order sanctioned cash rebate of Rs. 4,09,016/- and the remaining amount of Rs. 9,819/- was; allowed as recredit in Cenvat account. 3. Being aggrieved by the said Order-in-Original, Department filed appeal before Commissioner (Appeals) stating that the goods exported were not diesel engines but centrifugal pumps falling under Tariff Item No. 8413 70 10 and chargeable to duty @ 4% ad val. and that the applicant had been granted excess rebate, as they had paid excess duty on goods, by misclassifying the same as diesel engines falling under Tariff Item 8408 90 90 and attracting central excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther and thus, the diesel engine, centrifugal pump and channel frame 10 HP as a single unit, all mounted on a single platform is rightly classifiable under Tariff Item 8413 70 10, as per the Central Excise and Customs Tariff; (vii) That the goods exported by the applicant, i.e., the complete unit comprising of engine, centrifugal pump mounted on same platform and classifiable under Tariff Item 8413 70 10 unconditionally attracted duty @ 4% adv. That the applicant however, by misclassifying the goods under Tariff Item 8408 90 90, which attracted duty @ 10% ad valorem has paid excess duty, which in turn has resulted in sanction of excess cash rebate. That the same is thus recoverable under Section 11A of the Act along with interest under Section 11AB of the Act. The Commissioner (Appeals), Chandigarh-I vide Order-in-Appeal No. 395/CE/Appl/LDH/2011, dated 8-12-2011 confirmed the recovery of cash rebate paid in excess to the applicant in cash, under Section 11A of the Act but held that no interest on the excess cash rebate given to the applicant was chargeable. 4. Being aggrieved by the impugned Order-in-Appeal, both the applicant and department have filed these revision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (2), or has paid the duty under sub-section (2B), of Section 11A, shall, in addition to the duty, be liable to pay interest at such rate not below [ten per cent] and not exceeding thirty-six per cent per annum, as is for the time being fixed by the Centra1 Government, by notification in the Official Gazette, from the first date of the month succeeding the month in which the duty ought to have been paid under this Act, or from the date of such erroneous refund, as the case may be, but for the provisions contained in sub-section (2), or sub-section (2B), of Section 11A till the date of payment of such duty. That the above provisions of Section 11A and 11AB (now Section 11AA) provide for recovery of erroneous refund/rebate and charging of interest on erroneous refund/rebate respectively. That as per conjoint reading of both the sections, the interest has to be paid, in all situations where amount has been refunded erroneously, may be on any ground. 4.1.3 That the learned Commissioner (Appeals) has wrongly held that it is a case of just difference in mode of payment of rebate claim but not of erroneous refund falling within the purview of Section 11AB for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant has used and shall be using the Government money till the recovery of same is affected. That the utilization of such money would be for a period of more than a year. That the excess claim by the applicant in cash has deprived the Government exchequer to that extent. That in view of the decision of Hon'ble Apex Court stated above, the Government exchequer must be compensated for such deprivation due to illegitimate cash rebate cleared by the party. 4.1.7 That as a policy matter to build up Foreign Reserves by way of promotion of exports, the Government has granted various export incentives including grant of rebate of central excise duty paid on export goods. That the amounts to be paid back to the exporters are only the amounts actually payable as taxes on the export goods. That if any excess amount has been paid, that is to be refunded back in the manner in which it was paid. That in the instant case, the applicant has by misclassifying its export goods has paid duty, in excess than what was actually payable, from the balance of credit accumulated with them, resulting in excess payment of rebate in cash, which has caused loss to the Government exchequer. That the loss m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods and not of duty payable. That Rule 18 clearly states that rebate claim has to be granted whatever has been debited, i.e., paid in RG 23 A Pt-II. 4.2.11 That the Hon'ble High Court and CESTAT already settled the matter that rebate claim has to be granted whatever is paid by the applicant in the light of Rule 18. 4.2.12 That the applicant has paid Central Excise Duty under the three description which is as under - Diesel Engine Rate of duty 10% Centrifugal Pump Rate of duty 4% Diesel Engine with Centrifugal Pump Rate of duty 10% That export consignment has been sent for both, i.e., under Rebate Claim as well as under the UT-1. That the rebate claim has been taken whatever has been actual debited from the RG 23A Pt-II by the applicant. That neither applicant has taken more rebate claim from the department and nor department has lost any revenue amount because applicant has taken rebate claim on those amounts which was available in the RG 23A Pt-II. That applicant filed rebate claim under Rule 18 of Central Excise Rules which speaks of "rebate of duty paid on the excisable goods" and duty paid on materials used in the manufacture of goods and not of duty payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch was not before the adjudicating authority. 5.4 That the issue involves in this case is :- (i) Whether Commissioner (Appeals) can decide the issues which were neither raised/decided by adjudicating authority nor by assessing authority nor by Customs authority in the instant case. (ii) Whether impugned goods are classifiable under Heading 8408 or 8413. 5.5 That the duty payable was determined on ARE-1 and same was duly accepted and signed by jurisdictional Central Excise Authorities. That the applicant has also intimated the same in statutory ER-3 return submitted. That the jurisdictional Range Officer never objected to assessment. That Customs after examination and due satisfaction allowed the goods for export without objecting to classification of impugned goods. That the Customs also signed ARE-1 under reference. 5.6 That the Commissioner (Appeals) has decided the case beyond the scope of adjudication order. That in the instant case department neither alleged nor took the view while passing Order-in-Original dated 31-5-2010 that impugned goods fall under Tariff Item 8413 70 10. 5.7 The applicant placed reliance on the following case l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 applicant had been sanctioned rebate claim under Rule 18 ibid on export of goods claimed to be diesel engines with centrifugal pumps classified under Tariff Heading 8408 90 90 attracting duty @ 10%. Aggrieved by the order of the original authority, Department filed an appeal before Commissioner (Appeals) on the grounds that goods were actually centrifugal pumps fitted with diesel engines classifiable under 8413 70 10 attracting duty @ 4% resulting in excess payment of cash rebate and the same was recoverable under Section 11A ibid along with interest under Section 11B ibid. The Commissioner (Appeals) allowed the appeal of the Department holding the impugned goods to be classifiable under 8413 70 10; ordering recovery of cash rebate paid in excess to the applicant in cash, under Section 11A of Central Excise Act, 1944 but held that no interest on the excess cash rebate given to the applicant was chargeable. Hence both the Department and the applicant aggrieved by the impugned Order-in-Appeal ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following rules :- (a) Parts which are goods included in any of the headings of Chapter 84 or 85 (other than Headings 8409, 8431, 8448, 8466, 8473, 8487, 8503, 8522, 8529, 8538 and 8548) are in all cases to be classified in their respective headings; (b) Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading (including a machine of Heading 8479 or 8543) are to be classified with the machines of that kind or in Heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate. However, parts which are equally suitable for use principally with the goods of Headings 8517 and 8525 to 8528 are to be classified in heading 8517. (c) All other parts are to be classified in Heading 8409, 8431, 8448, 8466, 8473, 8503, 8522, 8529 or 8538 as appropriate or failing that, in Heading 8487or 8548. Thus Note 2 to Section XVI envisages that parts of machine which are themselves goods included in any other heading of Chapter 84 are in all cases to be classified in their respective headings. 9.2 Note 2 to Chapter 84 states that Subject to the operation of Note 3 to Section X ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the Central Excise Tariff and vice versa. This fact has also not been disputed by the applicant. 12. Therefore, the appellate authority has rightly classified the said goods under Tariff Heading 8413 70 10 of Central Excise Tariff and the duty thereon was required to be paid @ 4% ad valorem and not @ 10% ad valorem and excess rebate, erroneously sanctioned thereby, is rightly held to be recoverable from the applicant. 13. Further, Government does not find as tenable the applicant's contention that when classification dispute was not raised by the original authority it cannot be decided by Commissioner (Appeals). Government observes that the classification issue was not raised by the original authority as the Assistant Commissioner found no reason for dispute and accepted the classification of the goods as per the applicant whereas Department during course of review of the impugned Order-in-Original was not for stated reasons in agreement with the original authority and raised the issue of misclassification of the impugned goods and filed appeal before the Commissioner (Appeals). 14. On the issue relating to whether interest is recoverable from the applicant o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to them lawfully has placed the amount in the hands of the applicant and the exchequer must be compensated for such deprivation due to cash rebate taken incorrectly by the applicant. The Commissioner (Appeals) has therefore, erred in holding that no interest is chargeable under Section 11AA ibid on the amount erroneously refunded to the applicant. 15. Government further observes that the plea of the applicant that they are entitled to rebate of the entire amount of duty in terms of Rule 18 is untenable. In this regard, Government notes that duty was required to be paid under Tariff Heads 8413 70 10 @ 4% only. Any amount in excess cannot be treated as duty and, therefore, cannot be claimed as rebate. Cash rebate of the excess amount paid was clearly not payable to them and has been allowed as recredit in their Cenvat credit account by the Commissioner (Appeals) relying upon the view taken by the Hon'ble Punjab and Haryana High Court in Nahar Industrial Enterprises Ltd. v. UOI reported in 2009 (235) E.L.T. 22 (P&H). Government, therefore, finds no merit that the contention of applicant for rebate by way of cash of the entire amount paid by them. 16. In view of above, Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X
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