9911796707
TMI Blog2023 (10) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... s registered office in Delhi, is engaged in the business of manufacturing and export of S.S. Utensils etc. and it was having Central Excise Registration No. AAOPJ7853NXM001. It is stated that certain exports obligations were duly undertaken during the period 2003-2004 for which the petitioner filed six separate Rebate Claims in the year 2004 pertaining to the period from September 2003 to March 2004, thereby seeking rebate of duty amounting to a total of Rs. 97,71,926/- that was claimed to have been paid on the inputs used in the manufacturing of the end product. It is stated that the Rebate Claims were lodged in terms of Rule 18 of the CER and in terms of Notification No. 41/2001 dated 26 June 2001. All the relevant documents were submitted with the respondent except that a request was also made by the petitioner to condone the procedural lapse of filing A.R.E. 1 instead of A.R.E. 2 besides submitting a request for fixation of the input-output norms in terms applicable during the export period in terms of letter from the Office of Assistant Commissioner, Central Excise dated 18 March 2004 [C. No. V(87)18/REF/IO/PJS/D-I/2003]. 3. To cut the long story short, six Orders-in-Original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eel flats) used in the manufacture of steel utensils which were subsequently exported. The department has sanctioned the rebate on the basis of SION (Standard Input Output Norms) for coils/springs (1.30: 1.00) whereas the special norms for steel flats were fixed by the department as 1.88: 1.00 on 18.03.2004. 5. The Government has examined the matter. The procedural requirement as provided in the notification no. 41/2001 dated 26.06.2001 specifies that (1) the ratio of input and output has to be mentioned in the prescribed declaration before the commencement of export of such goods. (2) the jurisdictional Assistant Commissioner has to call for sample or even carry out an inspection in factory or process to satisfy the correctness of claim. Since the impugned goods were exported prior to fixation of the special input/output norms for steel flats by the jurisdictional central excise authorities, the mandatory conditions of Notification No. 41/2001 dated 26.06.2001 regarding declaration and subsequent verification remain unfulfilled. These are substantive conditions of Notification No. 41/2001 dated 26.06.2001 for claiming rebate under Rule 18 of Central Excise Rules, 2002. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the DGFT; and that the petitioner accordingly manufactured the product consuming 1.882 kgs of SS Flats for the manufacture of 1.00 kg of SS Utensils. Thus, the grievance of the petitioner is that rebate claims have been disallowed in an arbitrary manner. The relevant details are compiled in tabular form as under: S.No Order No Rebate Claim as per SION norms 1.882:1 Rebate Claim allowed as per SION norms fixed by DGFT 1.30:1 Reduction in claim by change in SION norms. 1. 218-R Rs. 14,76,143 Rs. 10,46,193 Rs. 4,29,950 2. 219-R Rs. 13,78,593 Rs. 9,51,614 Rs. 4,26,979 3. 220-R Rs. 18,23,931 Rs. 13,87,353 Rs. 4,36,578 4. 221-R Rs. 17,68,788 Rs. 12,21,775 Rs. 5,47,013 5. 222-R Rs. 14,04,633 Rs. 6,95,199 Rs. 7,09,434 6. 223-R Rs. 19,19,838 Rs. 13,60,755 Rs. 5,59,083 Total Rs. 31,09,037 REPLY BY THE RESPONDENT: 6. On behalf of respondent No. 2, Mr. Aman Singla, Assistant Commissioner, Central Goods & Service Tax (North), Delhi, has filed a short affidavit and the stand of the department is reiterated that the petitioner filed declaration as per ARE-1 in terms of notification No. 41/2001 dated 26 June 2001 that made applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication of correct SION, it is borne out from the record that pursuant to application moved by the petitioner on 08 January 2004, the office of the Assistant Commissioner of Central Excise vide letter dated 18 March 2004 (Annexure P-2) fixed the input output ratio for different categories of work as under:- S.No. Export Goods Inputs Output Export goods Manufactured out of S.S. Sheets/Coils 1. S.S. Utensils/ Kitchenware 1.30 1.00 Export goods Manufactured out of S.S. Flats 2. S.S. Utensils/ Kitchenware 1.882 1.00 Export Goods Manufactured out of S.S. INGOTS 3. S.S. Utensils/ Kitchenware 1.901 1.00 10. There is no gainsaying that the fixation of input output norms is done to enable the manufacturer exporters to seek rebate for the inputs used in the export of the manufactured product. Admittedly, the goods had been duly exported presumably meeting with all the relevant regulatory norms between the period September, 2003 to January, 2004. It is pertinent to indicate that two rebate claims were filed on 07 January 2004 and third one on 01 March 2004, whereas, the rest of the three were filed after the aforesaid communication dated 18 March 2004. However, the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 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 export of such goods, if necessary, by calling for samples of finished goods or by inspecting such goods in the factory of manufacture or process. If, after such verification, the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise is also satisfied that there is no likelihood of evasion of duty, he may grant permission to the applicant for manufacture or processing and export of finished goods. (3) Procurement of material: - The manufacturer or processor shall obtain the materials to be utilized in the manufacture of the finished goods intended for export directly from the registered factory in which such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the place approved for manufacture or processing of such export goods." 13. A careful perusal of the notification No. 41/2001 dated 26 June 2001 would show that the exporter has to furnish a declaration that CENVAT credit has not been availed and the notification clearly spells out that any waste arising during the manufacture of export goods may be removed on payment of duty as if such waste has been manufactured in the factory of the manufacture. There is a merit in the plea advanced by the learned counsel for the petitioner that Para 4 (c) of the notification 41/2001 dated 26 June 2001 also specifies that even in the case of waste from manufacturing process outside the factory of the applicant seeking rebate, the removal of such waste or sale thereof is neither prohibited nor it debars a claim for rebate under the said rule or notification. Undoubtedly, the form and declaration have to be examined, but what is significant is the interpretation of the words 'not availed of facility of CENVAT Credit' in the form/declaration. Therefore, what follows is that removal of waste, or sale thereof in home or domestic market, does not prohibit or bar a claim for rebate under the said Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding upon the settings on which the provision has been placed in the Statute and the object and purpose to be achieved. If exemption is available on complying with certain conditions, the conditions have to be complied with. The mandatory requirements of those conditions must be obeyed or fulfilled exactly, though at times, some latitude can be shown, if there is a failure to comply with some requirements which are directory in nature, the non-compliance of which would not affect the essence or substance of the notification granting exemption." 16. Reverting to the instant matter, since presumably the export obligations had been met, the Revisionary Authority took a hyper technical view of the matter. It is evident that in terms of the notification No. 10/2003 dated 01 March 2003, the description of the goods in question was covered vide item No. 28 viz. HSM 7323.90, which is code for S.S. Utensils, read with item No. 51, where the rate of duty is spelt out to be 'NIL'. Meaning thereby that no duty was payable on such waste and scrap arising during the course of manufacture of the same goods. This is exemplified from the clarification letter issued by the Office of Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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