Karnataka High Court
M/S Radiall India Pvt Ltd vs Union Of India on 24 September, 2018
Equivalent citations: AIRONLINE 2018 KAR 2375
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IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 24th DAY OF SEPTEMBER 2018
BEFORE
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
WRIT PETITION No.15127/2016 (T-EXICSE)
BETWEEN:
M/S RADIALL INDIA PVT LTD
NO.25-D, II PHASE
PEENYA INDUSTRIAL AREA
BANGALORE-560058.
... PETITIONER
(By Mr. M.S. NAGARAJA, ADV.,)
AND:
1. UNION OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
NORTH BLOCK, NEW DELHI-110001
(REPRESENTED BY ITS SECRETARY).
2. THE JOINT SECRETARY TO
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
(REVISION APPLICATION UNIT)
HUDCO VISHALA BUILDING
BHIKAJI CAMA PLACE
NEW DELHI-110066.
3. THE COMMISSIONER OF CENTRAL EXCISE
BANGALORE II COMMISSIONERATE
C R BUILDINGS, QUEENS ROAD
BANGALORE-560001.
Date of Order 24-09-2018 W.P.No.15127/2016
M/s Radiall India Pvt Ltd Vs. Union of India & Ors.
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4. THE ASSISTANT COMMISSIONER
OF CENTRAL EXCISE
E-1 DIVISION, 162/1, I MAIN ROAD
SHESHADRIPURAM, BANGALORE-260020.
... RESPONDENTS
(By Mr. JEEVAN J. NEERALGI, ADV., FOR R1 TO R4)
THIS W.P. IS FILED UNDER ARTICLES 226 & 227 OF THE
CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED
ORDER DTD.29.1.2016 VIDE ANNEX-K. DIRECT R-3 & 4 TO
SANCTION REBATE OF DUTY OF RS.16,60,234/- PAID ON THE
GOODS EXPORTED ALONG WITH INTEREST TO THE
PETITIONER. ISSUE ALTERNATIVELY, DIRECT R-4 TO ALLOW
RE-CREDIT OF AN AMOUNT OF RS.16,60,234/- IN CENVAT
ACCOUNT.
THIS W.P. COMING ON FOR PRELIMINARY HEARING IN 'B'
GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER
Mr. M.S. Nagaraja, Adv. for Petitioner Mr. Jeevan J. Neeralgi, Adv. for R1 to R4
1. The petitioner-company is aggrieved by the order passed by the Revisional Authority namely, the Joint Secretary to Government of India, vide Annexure-
K dated 01.02.2016 dismissing the Revision Application filed by the petitioner-company M/s.Radiall India Pvt. Ltd., Bangalore, who filed the said revision petition, aggrieved by the order dated 24.08.2012 Date of Order 24-09-2018 W.P.No.15127/2016 M/s Radiall India Pvt Ltd Vs. Union of India & Ors.
3/14passed by the Commissioner of Central Excise (Appeals-
I), Bangalore, upholding the Order-in-Original passed by the Asst.Commissioner of Central Excise, E-1 Division, Bangalore. Thus, all the three authorities of the Central Excise Department have held against the petitioner-
assessee that the petitioner-assessee is not entitled to the rebate of duty paid on export of goods, which goods were removed, cleared and sold for the units located in 'SEZ' (Special Economic Zones) which are deemed to be exports under AREs 1 Rules.
2. The reasons assigned by the 2nd Respondent-
Authority in the impugned order are quoted below for ready reference:-
"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 applicants made supply to SEZ under Rule 19 of Central Excise Rules, 2002 Date of Order 24-09-2018 W.P.No.15127/2016 M/s Radiall India Pvt Ltd Vs. Union of India & Ors.4/14
under UT-1 Bond. Subsequently, the applicant found to have paid duty on the said clearances through cenvat account by making consolidated debit entry at the end of the respective months of the clearances and claimed rebate of duty paid on such exported goods. Original authority held that whole export has been done under said Rule 19 ibid, however, the claim was filed under Rule 18 ibid; and as such conditions f the Notification No.19/2004-CE (NT) dated 06-09-2004 issued under rule 18 ibdi, have not complied with. Accordingly, original authority held rebate claims non-admissible. Commissioner (Appeals) upheld impugned Order-in-Original. Now, the applicant has filed this Revision Application on grounds mentioned in para (4) above.
8. Government observes that exports were made under Rule 19 of the Central Excise Rules 2002. The said Rule 19 reads as under:
"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 or processing of such goods and the rebate shall be subject to such conditions or limitations, if any, Date of Order 24-09-2018 W.P.No.15127/2016 M/s Radiall India Pvt Ltd Vs. Union of India & Ors.5/14
and fulfillment of such procedure, as may be specified in the notification.
Explanation. - "Export" includes goods shipped as provision or stores for use on board a ship proceeding to a foreign port or supplied to a foreign going aircraft."
The detailed conditions and procedure relating to export without payment of duty has been provided under Notification NO.42/2001-CE(NT) dated 26-06-2001. As such, the export of goods without payment of duty is covered by different set of rule and Notification on compliance of conditions and procedures prescribed therein.
8.1 However, in this case the applicant has claimed rebate of duty under Rule 18 of Central Excise Rules 2002. The said Rule 18 reads as under:
"(1) Any excisable goods may be exported without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, as may be approved by the Commissioner.
(2) Any material may be removed without payment of duty from a factory of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, for use in the Date of Order 24-09-2018 W.P.No.15127/2016 M/s Radiall India Pvt Ltd Vs. Union of India & Ors.6/14
manufacture or processing of goods which are exported, as may be approved by the Commissioner.
(3) The export under sub-rule (1) or sub-rule (2) shall be subject to such conditions, safeguards and procedure as may be specified by notification by the Board."
Further, the detailed condition and procedure relating to export of goods under claims of rebate has been provided under Notification No.19/2004-CE(NT) dated 06-09-2004. As such, the export of goods under claim of rebate is subjected to compliance of certain sets of conditions and procedures as envisaged in the said rule/notification.
8.2 Government observes that for the purpose of export of excisable goods Central Excise Rules 2002 provide for the facility of export under claim for rebate under Rule 18 or for export under bond under Rule 19. These two provisions are two different sets of Rules which provide export benefits to the exporters and applies in different circumstances. The exporter is free to opt for any one of these and once anyone of the options is exercised it attains finality and cannot be reverted back subsequently. In this case it is an Date of Order 24-09-2018 W.P.No.15127/2016 M/s Radiall India Pvt Ltd Vs. Union of India & Ors.
7/14undisputed fact that the applicant clears the goods under bond and hence exercised the option to export goods under Rule 19 and in a way can now claim benefit of Rule 18.
8.3 As the applicant opted to export the goods under Rule 19 without payment of duty and not under Rule 18 on payment of duty, they failed to comply/follow conditions/procedure prescribed under Notification No.19/2004-CE(NT) dated 06-
09-2004. Compliance of these conditions/procedure are substantial in nature and non-adherence to same may lead to denial of rebate claim. In this case mere payment duty at the end of month on consolidated basis, does not entitle the applicant the rebate claim as the substantial condition of statutory condition of statutory requirements are not met with. It has been rightly held by Commissioner (Appeals) that every system has its checks and balances which cannot be exercised other than at the relevant point of time.
9. Government notes that it is a settled issue that benefit under a conditional notification cannot be extended in case of non-fulfillment of conditions and/or non-compliance of procedure prescribed therein as held by the Apex Court in the case of Date of Order 24-09-2018 W.P.No.15127/2016 M/s Radiall India Pvt Ltd Vs. Union of India & Ors.
8/14Government of India vs Indian Tobacco Association 2005(187) ELT 162 (SC); Union of India Vs Dharmendra Textile Processors 2008(231) ELT (SC). Also it is settle that a notification has to be treated as a part of the statute and it should be read along with the Act as held in case of CCE Vs Parle Exports (P) Ltd. 1998(38) ELT 741(SC) and Orient Weaving Mills Pvt. Ltd. Vs UOI 1978(2) ELT 311(SC) (Confiscation Branch). Government also finds support from the observations of Hon'ble Supreme Court in the case of M/s ITC Ltd. Vs. CCE reported as 2004 (171) ELT-433 (SC), and M/s Paper Products Vs CCE reported as 1999 (112) ELT - 765 (SC) that the simple and plain meaning of the wordings of statute are to be strictly adhered to. As such there is no force in the plea of the applicant that the lapse should be considered as a procedural one which is condonable in nature. As such, as the applicant did not follow the requirements of the Notification No.19/2004/CE(NT), the rebate claims are rightly held inadmissible.
9.1 The applicant has also alternatively requested for recredit of cenvat credit. In this regard, Government notes that recredit is allowed Date of Order 24-09-2018 W.P.No.15127/2016 M/s Radiall India Pvt Ltd Vs. Union of India & Ors.
9/14in the cases where the exporter was not required to pay duty at the time of export, however, he pays the same. Such amount paid by the exporter in his own volition cannot be retained by the Government and it is required to be paid back in the form it has been paid. In this case, the applicant was not required to pay duty and hence, the duty was rightly not paid. The duty was paid subsequently at the end of the month on consolidated basis and such duty cannot be treated at par with duty not payable at the time of export and as such, does not qualify for availing of recredit. As such, applicant's request for allowing recredit is not tenable.
10. In view of above, Government finds no infirmity in order of Commissioner (Appeals) and hence, upholds the same.
11. Revision Application is thus rejected.
12. So, ordered.
Sd/-
(RIMJHIM PRASAD) Joint Secretary to the Government of India
3. Learned counsel for the petitioner Mr.M.S.Nagaraja has urged before the Court that since the fact of export made by the assessee is not in dispute Date of Order 24-09-2018 W.P.No.15127/2016 M/s Radiall India Pvt Ltd Vs. Union of India & Ors.
10/14and the goods having been supplied to 'SEZ' unit, therefore, the relief of rebate of duty u/R.18 or in the alternative, export without payment of duty u/R.19, one of these relief had to be given to the assessee and since the assessee has paid the duty and debited its CENVAT account, therefore, the rebate u/R.18 for such deemed exports ought to have been allowed by the authorities below and they have erred in denying such relief to the assessee.
4. Learned counsel for the Revenue Mr.Jeevan J.Neeralgi was unable to dispute the factual position of the matter.
5. Rules 18 and 19 of the Central Excise Rules, 2002, are quoted below for ready reference:-
" 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 or processing of such goods and Date of Order 24-09-2018 W.P.No.15127/2016 M/s Radiall India Pvt Ltd Vs. Union of India & Ors.11/14
the rebate shall be subject to such conditions or limitations, if any, and fulfillment of such procedure, as may be specified in the notification. Explanation. - "Export" includes goods shipped as provision or stores for use on board a ship proceeding to a foreign port or supplied to a foreign going aircraft.
RULE 19. Export without payment of duty. - (1) Any excisable goods may be exported without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, as may be approved by the Commissioner.
(2) Any material may be removed without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, for use in the manufacture or processing of goods which are exported, as may be approved by the Commissioner".
6. A bare perusal of the impugned order shows the utter confusion of the Respondent - Revisional authority when he seeks to quote R.19 in para-8 of the order, he actually quotes R.18 but in para-8.1, when he seeks to quote R.18, he actually quotes R.19. This cannot be Date of Order 24-09-2018 W.P.No.15127/2016 M/s Radiall India Pvt Ltd Vs. Union of India & Ors.
12/14taken as a simple typographical error by a senior officer of the Department dealing with the matter in the third round of litigation by the assessee. This on the other hand, reflects the lack of understanding on the part of the said authority in applying both the Rules on a harmonious reading of the said Rules.
7. When the fact of export by way of supplying to 'SEZ' unit is not in dispute and the fact of payment of duty by debiting the CENVAT account is also not in dispute, there is no question of denying one of the reliefs viz. the Rebate of duty u/R.18 or Export without payment of duty u/R.19, which ought to have been allowed or the rebate of cash refund when once the duty has been paid by debit to CENVAT account u/R.18 ought to have been given. Both the reliefs could not have been simultaneously denied to the assessee on a combined and harmonious reading of Rules 18 and 19.
Date of Order 24-09-2018 W.P.No.15127/2016 M/s Radiall India Pvt Ltd Vs. Union of India & Ors.
13/148. This Court is little surprised and also pained that the casual approach of the three authorities below concurrently although wrong. The tax gatherers though expected to protect the interest of Revenue are at the same time bound in law to act fairly and in accordance with law. They are not allowed to take a distorted and skewed view of the law by interpreting one Rule or the other while forgetting the effect of applicability of the relevant Rules to the facts and circumstances of the case.
9. The present case is a glaring example of such misuse of power by the authorities below. The impugned order therefore deserves to be set aside by imposing exemplary personal costs on all the three authorities below.
10. Therefore, the writ petition is allowed with exemplary costs quantified at Rs.50,000/- to be paid by each of the three authorities below namely, the Date of Order 24-09-2018 W.P.No.15127/2016 M/s Radiall India Pvt Ltd Vs. Union of India & Ors.
14/14Asst.Commissioner of Central Excise (E-1) Division, Bangalore, the Commissioner of Central Excise (Appeals-1), Bangalore, and the Joint Secretary to the Government of India. The respective persons, who have passed the impugned orders will deposit the said personal costs from their personal resources with the Registrar General of this Court within a period of three months from today which will be remitted to 'Prime Minister's Relief Fund', Delhi, for meeting the costs of relief to sufferers of natural disasters.
The Respondents are further directed to re-credit the amount of Rs.16,60,234/- in the GST Electronic Credit Ledger of the Assessee within a period of three months from today.
Sd/-
JUDGE Srl.