Gujarat High Court
Shakti vs Union on 7 July, 2011
Author: Harsha Devani
Bench: Harsha Devani
Gujarat High Court Case Information System
Print
SCA/15212/2010 26/ 26 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No. 15212 of 2010
For
Approval and Signature:
HONOURABLE
MS.JUSTICE HARSHA DEVANI
HONOURABLE
MR.JUSTICE H.B.ANTANI
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1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To
be referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge ?
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SHAKTI
SHIPPING INTERNATIONAL - Petitioner(s)
Versus
UNION
OF INDIA & 3 - Respondent(s)
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Appearance :
MR
DEVAN PARIKH for
Petitioner
DS AFF.NOT FILED (N) for Respondent(s) : 1 - 2, 4,
MR
DARSHAN M PARIKH for Respondent(s) :
3,
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CORAM
:
HONOURABLE
MS.JUSTICE HARSHA DEVANI
and
HONOURABLE
MR.JUSTICE H.B.ANTANI
Date
: 28/06/2011
CAV
JUDGMENT
(Per : HONOURABLE MS.JUSTICE HARSHA DEVANI)
1. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the order dated 10th July, 2009 passed by the Joint Secretary to the Government of Gujarat, in exercise of powers under section 35EE of the Central Excise Act, 1944 (the Act) allowing the revision application filed by the Department.
2. The facts as appearing in the petition are that the petitioner, a partnership firm, exported Panmasala falling under Chapter 24 of the Central Excise Tariff as a merchant exporter. In relation to the said exports, the petitioner filed nineteen claims of rebate with the Maritime authority, that is, the Deputy Commissioner, Central Excise Division, Jamnagar. A show-cause notice dated 21st June, 2006 came to be issued by the Deputy Commissioner of Central Excise, Jamnagar proposing to reject the rebate claims. The show-cause notice culminated into an order dated 6th July, 2006 rejecting all the nineteen rebate claims on the ground that the Superintendent having jurisdiction over the factory of the manufacturer had not endorsed the ARE-1 as prescribed under the law for claiming rebate of central excise duty. Being aggrieved, the petitioner preferred an appeal before the Commissioner (Appeals), Rajkot who by an order dated 30th August, 2006 allowed the appeal holding that substantive compliance regarding export of goods had been fulfilled by the petitioner and the non-endorsement of triplicate copies of ARE-1 by the Superintendent having jurisdiction over the factory of manufacturer does not appear to be a substantive condition for allowing the rebate claim.
3. Against the said order of the Commissioner (Appeals), the Department filed a revision application before the Government of India on the ground that endorsement by the Superintendent having jurisdiction over the factory is an essential and foremost criteria in terms of the instruction for disposal of triplicate copies of ARE-1 and, therefore, the claims of rebate were filed without fulfilling the conditions and procedures prescribed under the law. By an order dated 10th July, 2009, the revision application came to be allowed. Being aggrieved, the petitioner has filed the present petition challenging the said order.
4. Mr. Devan Parikh, learned advocate appearing on behalf of the petitioner submitted that the basic policy of the Government of India is that goods which are exported must not be taxed. Thus, as per the Government's policy, all taxes that are paid, including excise duty are either exempted or refunded back by way of rebate. It was further submitted that it is not necessary that the manufacturer himself should directly export the goods and it is possible for traders undertaking exports to claim such rebates. It was submitted that in the present case, the petitioner has exported the goods in question in the same manner on innumerable occasions and on the same facts and on the same documents, it has been granted thirty seven rebates running into as many as a crore of rupees. That while making the present exports, the Superintendent who checked stuffing of containers at Sachana from where the exports were made, certified that the goods were in original packing and that the goods were clearly identifiable as duty paid, in the light of the documents produced. On this certificate, the goods were since exported. It was submitted that now at this stage when the goods have already been exported, the Superintendent having jurisdiction over the factory of the manufacturer of goods, has refused to endorse the ARE-1 certificates on the ground that as the goods do not carry any marking or any serial number which tally with the invoices, he will not certify the ARE-1. According to the learned advocate, the goods in question which are Panmasala pouches are not required to be given serial numbers, as per any law. There is no requirement under any law that even the invoices issued should carry any serial numbers. In such circumstances, the rebate is sought to be cancelled by asking the petitioner to prove that the goods which are cleared without necessity of there being any identification number in law, are the same goods which are covered under the invoices. It was submitted that there is no dispute that the goods are exported under original packing and that the invoices are original. There is also no dispute that these original invoices tally with the duty paid records of the manufacturers. It was urged that it is not understood how such an exporter can show to the Department that these invoices relate to these very goods. It was submitted that there is only one duplicate copy of invoices which is relevant either to take credit or to take rebate, which is produced in original. Thus, there is no chance whatsoever of taking double advantage. It was submitted that recognizing these aspects, the Commissioner (Appeals) had allowed the appeal preferred by the petitioner.
4.1 Next, it was submitted that the Superintendent in charge of the manufacturer's unit does not state that the invoices made by the manufacturer are defective in any manner nor is it anyone's case that these invoices are not genuine or that they are false or fraudulent. That the Department itself allowed the manufacturer to clear these packages under such invoices for years and such packages are sold in the local market under similar invoices and that despite years of operation, the Department is not seizing the goods anywhere on even a suggestion that the co-relation between such invoices and the material is not possible. Thus, the manufacturer is allowed to clear the goods; dealers are allowed to purchase such goods for years together; local trading and sale is carried out for years in this manner; but, in this singular case of claiming rebate, such issues are sought to be raised. It was urged that when a manufacturer is allowed to clear goods in this manner and make the invoices in this manner, which even otherwise is clearly legal, the subsequent purchaser and exporters can hardly be taken to task in the manner in which it is sought to be done in the present case.
4.2 It was argued that on the basis of the same invoices and the same manner of purchasing, the Department had permitted rebate in the past. If the earlier officers had no difficulty in accepting the duty paid nature of the goods, it is not understood how this can change overnight with every different officer, having his own different approach. According to the learned advocate, it is not humanly possible to exactly co-relate a particular invoice with a particular export if this level of proof is intended and that in no exports are these kind of proof required. It was submitted that on the ARE-1 itself, the Superintendent permitting the exports has specifically endorsed that the goods are in original factory packing and clearly identifiable as that of the invoices in question.
4.3 Referring to paragraph 10 of the impugned order, it was pointed out that the revisional authority has held that this is not enough because they have not certified the actual contents of the factory packed cartons and they have not opened the cartons. It was submitted that if this be so, then it was for the Superintendent to do so before he permitted the exports. It cannot now be for the assessee to get back the original packed cartons and that this is an absurd manner of disallowing the rebate by quite an unreasonable approach on the part of the Department. According to the learned advocate, the Department ought not to have permitted the exports or ought to have made any inquiry that it deemed fit at that stage. However, having permitted the exports, and the Superintendent having satisfied himself about the veracity of the goods, the Department cannot now raise such ground at this stage. It was submitted that even if one goes by the cenvat rules which permit credit being taken by the purchaser, the purchaser is not required to see whether the invoices are actually duty paid etc. He is only required to make sure that he knows the address of the manufacturer. Taking of credit and granting of rebate is the same monetary benefit. If the cenvat rules do not require these aspects to be looked into, it cannot be understood how a purchaser who is exporting the goods is made liable for more stringent conditions.
4.4 Next, it was submitted that the Superintendent having jurisdiction over the factory of the manufacturer is to carry out necessary verification, and has to certify the correctness of duty payment on both triplicate and quadruplicate copies of ARE-1 which are sent to him. Hence, even as per the said prescribed procedure, the Superintendent is not required to identify or co-relate the goods as the goods cleared from the factory of manufacturer are already exported, after identification and verification of co-relation at the end of merchant exporter. The Superintendent in charge of the range in whose jurisdiction, the factory is situated was bound to certify only the correctness of duty payment of triplicate and quadruplicate copies of the ARE-1. It was submitted that the Superintendent has not certified on the ground that it was not possible to co-relate the goods exported and the goods cleared by the manufacturer because invoice or the ARE-1 do not show any special particulars about the goods, that is, batch number, mark number or any other specific marking. According to the learned advocate, the Superintendent was not at all required to certify all these aspects as these aspects were already certified by the Superintendent under whose observation the goods were cleared for export and were already mentioned on the body of the ARE-1. The said Superintendent was only supposed to verify the duty payment details as mentioned on the invoices as well as ARE-1s. By not doing so, the Superintendent in charge of the range in whose jurisdiction, the factory is situated has not followed the prescribed procedure which he was duty bound to follow. It was urged that the exporter should not be punished for no fault of his as the he had followed all the prescribed procedure and as such, the claim of the exporter should not be denied on any condition which is to be fulfilled by the departmental officers. In conclusion, it was submitted that the order passed by the revisional authority being ex facie erroneous and arbitrary, deserves to be quashed and set aside and the rebate claim filed by the petitioner is required to be allowed.
5. Vehemently opposing the petition, Mr. Darshan Parikh, learned senior standing counsel appearing on behalf of the respondents submitted that the petitioner is not a manufacturer of the product exported by it but is a merchant exporter. It was submitted that for merchant exporters, special provisions are made under the Notification No.19/2004-CE(N.T.) dated 6th September, 2004 read with Board's Circular No.CBEC Cir. No.294/10/97-CX. dated 30th January, 1997. It was urged that the petitioner had not complied with the conditions laid down in the said notification and Board's Circular for availing the rebate and that even the requirements of the Form ARE-1 were not complied with so as to enable the Department to grant rebate to the petitioner.
5.1 It was submitted that during the course of post-audit of rebate claims duly sanctioned earlier, it was observed by H.Q. (Audit) CCE, Rajkot that the procedure prescribed as per the notification and Board's instructions has not been complied with. It was submitted that goods were not exported directly from the factory premises and were exported under the Notification No.40/2001-C.E.(N.T.) read with Circular dated 30th January, 1997. The JRS, AR-V, Jamnagar examined the goods and found that the goods were not sealed (non-containerised cargo) by them at the material time. The goods were subsequently cleared for export through the port of export. During the course of examination, the petitioner submitted duplicate copies of invoices issued by the manufacturer, ARE-1 and copy of invoices of distributors based at Ahmedabad. The duty payment particulars were verified by the JRS, Vadodara (JRS of manufacturer). However, the triplicate copy of ARE-1 was not endorsed by him as there were no identifiable marks to co-relate the goods with the invoices. It was submitted that the endorsement by the Superintendent who checked the stuffing of the containers at Sachana from where exports were to be made cannot be said to have certified the goods to be identified by any mark as required by the said notification. The endorsement would only mean that "the goods are the same, which are mentioned in the invoice" and that "the packing looks Original factory packing". However that would not mean that the goods were the same, which were cleared with the concerned invoices or that the goods were relatable to the invoices.
5.2 It was submitted that since the ARE-1 did not disclose any identification mark as required under the notification and the Form. It was, therefore, not possible to identify the goods to be the same goods which were cleared with the invoices at the factory gate, in view of the fact that the goods/packing did not have any distinct mark as required under the notification to co-relate the goods with the invoices and consequently Form ARE-1 could not be endorsed on non-fulfillment of the requirements under the notification. By way of illustrations as to how identification is possible, it was submitted that when an automobile is the goods in question, it can be identified and co-related with the invoices in view of the distinct engine and chassis number on the goods as well as on the invoices and medicines by their batch numbers. It was submitted that in the present case, no such identification was provided and possible and, therefore, it was not possible to co-relate the goods as having been cleared by the alleged invoices in any of the cases. It was submitted that it may be appreciated that an assessee may pass any goods: (i) which may have been clandestinely removed without payment of duty;
(ii) which may be claimed to be goods cleared with some invoices;
(iii) goods connected with such invoices may actually have not been exported but sold in the open market in India; and thus without paying duty, may obtain rebate by such an ingenious manner, defrauding the exchequer. According to the learned counsel, it was to obviate such a situation that the concept of identification marking and co-relation of goods with invoices is incorporated in the above-referred notification and is clarified in the circular. It was, accordingly, submitted that the provision is strict with respect to identification of goods and is required to be complied with. If the petitioner is not aware as to how to co-relate the goods with the invoices, it is the problem with the petitioner, which it must resolve as the law requires it to identify and co-relate the same. It was submitted that it is not an allegation that the petitioner is taking double advantage but the stand of the Department is that the petitioner is not in a position to identify and co-relate the goods with the invoices.
5.3 The learned counsel further submitted that the petitioner was obliged to fulfil the requirements prescribed in the notification as explained by the circular and correctly fill up the ARE-1 form (describing the mark identifying the goods) and co-relate the packages of the goods with the invoices to claim rebate. The petitioner having failed to do so, rebate has rightly been denied to it. It was, accordingly, submitted that the petition being devoid of any merit, deserves to be dismissed and does not warrant any intervention by this Court.
6. The case of the respondents as indicated in the show-cause notice dated 21st June, 2006 is that by virtue of condition No.2 (a) of the Notification No.19/2004-CE (NT) dated 6th September, 2004, as amended, rebate of central excise duty paid on excisable goods is allowed subject to the condition that the same should be exported after payment of duty directly from a factory or warehouse, except as otherwise permitted by a general or special order. The CBEC vide Circular No.294/10/97-CX dated 30th January, 1997 in certain cases, allows exportation of the duty paid goods from a place other than a factory or a warehouse, wherein a general permission has been granted in respect of goods, where it is possible to co-relate the goods and their duty paid character. In the light of the procedure prescribed under para 8.6 (ii) of the said Circular, the respective triplicate ARE-1s as mentioned in Annexure 'A' to the show-cause notice were forwarded to the Jurisdictional Superintendent of Central Excise, that is, AR-IV, Central Excise Division - I, Vadodara-I Commissionerate who certified the duty payment particulars in respect of invoices issued by M/s. Dhariwal Industries Ltd. The Jurisdictional Deputy Commissioner observed that it was not possible to co-relate between the goods exported and goods cleared by M/s. Dhariwal Industries Ltd. because invoices, as well as ARE-1s do not show any special particulars about the goods, that is, batch number, mark number, or any other specific marking from which it can be co-related that the same goods have been exported, which were cleared from the factory. In the ARE-1s, the only particulars shown are R.M.D. Gutkha 3.5 grams and no other specifications are mentioned. Similar items can be procured from the open market also. Thus, in the instant case, it may be construed that the claimant has failed to establish the co-relation between the goods cleared from the premises of the manufacturer and those exported. Thus, triplicate ARE-Is remain unendorsed. That the claimant had procured duty paid goods and stored in their premises and tendered the goods for examination/supervision before the Superintendent of Central Excise Range having jurisdiction over the storage premises of the claimant, who conducted the examination/supervision in terms of the provision contained in the Circular No.294/97 and certified that the goods are in original packing condition on ARE-is, and allowed export. The Superintendent of Central Excise Range having jurisdiction over the storage premises of the claimant forwarded the triplicate copies of the ARE-1s, duly certified, to the Rebate sanctioning authority. The said triplicate copies of ARE-1s were further submitted to the officer having jurisdiction over the factory of manufacturer for necessary verification of duty payment. The officer had verified that duty had been paid on the goods covered under invoices mentioned in the ARE-1s. However, the officer has not endorsed the triplicate copies of ARE-1, for the reason stated hereinabove. Accordingly, as required by the instruction contained in Circular No.294/1997, the triplicate copies of ARE-1 had not been endorsed by the Range Superintendent of Vadodara having jurisdiction over the factory. Accordingly, the document required for sanctioning rebate is not available with the claimant, that is, triplicate copies of ARE-1s duly endorsed by the Range Superintendent of Vadodara having jurisdiction over the factory of the manufacturer.
7. The adjudicating authority after considering the explanation offered by the petitioner found that in all the nineteen cases, the petitioner/claimant had procured duty paid goods from the distributor of the manufacturer, that is,. M/s. Dhariwal Industries Ltd., Vadodara. The claimant prepared export documents including ARE-1, showing details of invoices under which the goods were originally cleared from the factory of manufacturer. The goods were presented before the Central Excise officer having jurisdiction over the storage premises for inspection and examination. The officer had inspected and examined the goods and allowed the export. The officer endorsed the ARE-1 as "The goods as shown in ARE-1 is clearly identifiable and as per invoice No. dated All the packages are in originally factory packed and sealed condition." The goods were exported and the claimant procured required document evidencing proof of export of the said goods. To certify duty payment particulars, the matter was referred to the Central Excise officer having jurisdiction over the factory of manufacturer. The officer had certified that the duty has been paid on the goods covered under invoices mentioned in ARE-1 and also endorsed the Cenvat Credit Account/PLA and relevant invoices to that effect. The adjudicating authority further found that the claimant had shown the chain of movement of goods, that is, goods removed by manufacturer to its consignment agent, who further cleared to their distributor and finally supplied to the claimant and was of the view that the movement of goods appeared to be in a proper and clear manner. The adjudicating authority further found that the distributor supplied copies of invoices under which goods were originally removed from factory. These invoice numbers were mentioned in ARE-1 prepared by claimant. The matters were referred to the Central Excise officers having jurisdiction over the factory of the manufacturer. The officer had certified that the duty has been paid on the goods covered under invoices mentioned in ARE-1 and thus, found that duty of excise on the goods covered by invoices mentioned in the ARE-1 are found paid. The claimant after preparing export documents tendered the goods before the Central Excise officer having jurisdiction over the storage of claimant. The Central Excise officer had inspected the goods in all 19 cases and examined the goods and had endorsed the ARE-1 as "The goods as shown in ARE-1 is clearly identifiable and as per invoice No. dated . All the packages are in originally factory packed and sealed condition." Further, the goods in question are branded goods which are procured from distributor of the manufacturer and found in originally packed condition. Therefore there is no question in respect of original packing. It was further found that the claimant had furnished required documents evidencing export of goods under reference in all 19 cases. The export documents were referred to relevant Customs authority to find out genuineness of the same and the same have been found in order. The adjudicating authority, thus, found that the goods were actually exported. The triplicate copies in all 19 cases were sent to the Central Excise officer having jurisdiction over the factory for compliance to certify the correctness of duty payment and endorsement on triplicate copy of ARE-1. The officer had verified the duty payment particulars in respect of goods covered under the invoices mentioned in ARE-1, but denied to endorse the triplicate copy of ARE-1. For not endorsing the ARE-1 the officer had given the reason that it was not possible to correlate between the goods exported and goods cleared by M/s. Dhariwal Industries Ltd. because invoices, as well as ARE-1(s) do not show any special particulars about the goods, that is, Batch No., Mark No. or any other specific marking, from which it can be correlated that the same goods have been exported, which were cleared from the factory. Despite the aforesaid findings recorded by him, the adjudicating authority observed that in all the 19 claims for rebate of duty on goods exported from a place other than factory and warehouse of manufacturer, a prime condition was that the export document, that is, triplicate copies of ARE-1, should be endorsed by the officer having jurisdiction over the factory of the manufacturer, had not been fulfilled, and accordingly, rejected the rebate claims.
8. The Commissioner (Appeals) in the appeal preferred by the petitioner took note of the fact that the lower authority was satisfied with the description and identity of the goods, authenticity of the export, payment of duty on the said goods and also the chain of movement of goods from the manufacturer to the point of shipment and that the petitioner had followed all the requirements of the Boards Circular No.294/97 CX dated 30.01.97 except for the endorsement on the triplicate and quadruplicate of ARE-1 by the in charge of Range Superintendent in whose jurisdiction the manufacturing unit is located. The Commissioner (Appeals) observed that in the present case, the lower authority had found that the Range Superintendent Central Excise, Vadodara who was having jurisdiction over the factory of the manufacturer had verified the invoices issued by the manufacturer and also certified the correctness of the invoice particulars, value and duty payment and also endorsed on the relevant invoices and PLA Ledger and that the Customs Kandla had certified proof of shipment. The Commissioner (Appeals) also found that the verification reports pertaining to the exports where the rebate had been previously sanctioned by the lower authority and the verification report of the present export goods appeared to be identical. The Commissioner (Appeals) was accordingly of the view that when the lower authority had sanctioned previous rebate claims based on the report from the Range Superintendent, Vadodara there was no justification for the lower authority for rejecting the present rebate claims. According to the Commissioner (Appeals) it was evident that in the present case the Superintendent in charge of the manufacturing unit had certified the duty payment and also endorsed the invoice and PLA payment which satisfied the condition imposed in the Circular No.294/97-CX. dated 30th January, 1997 and did not find any justification in the action of the Superintendent in charge of the manufacturing unit in not endorsing the triplicate copy of ARE-1 when the Superintendent, Jamnagar had already examined the goods as per the invoices and endorsed the ARE-1 in his examination report. He further noticed that when the same Range Superintendent from the manufacturing unit had complied with the above Circular while endorsing the past export clearances of the petitioner based on similar invoices, there was no valid ground for the Superintendent, Vadodara to refuse to do so in respect of 19 claims and state that he cannot co-relate the export goods with the invoices in the present case. The Commissioner (Appeals) found that there was substantive compliance by the petitioner and was of the view that in the light of the various decisions of the Government of India which are referred to in his order, the non-endorsement of triplicate copy of ARE-1s by the Superintendent, Central Excise, Vadodara under whose jurisdiction the manufacturing unit is located did not appear to be a substantive condition. He, accordingly, allowed the appeal and remanded the matter to the lower authority with a direction to condone the procedural lapse of non-endorsement of triplicate copy of ARE-1 by the Superintendent, Central Excise, Vadodara and sanction the rebate claims based on the verification report of invoices, duty paid particulars received from the said Superintendent, Central Excise.
9. A perusal of the impugned order made by the revisional authority show that the revisional authority has allowed the revision application mainly on the ground that from a perusal of the records like ARE-1s, shipping bills, invoices etc., there was no mention of any batch number etc. on the cartons. Moreover, the cartons did not have any distinguishing mark, numbers etc. to establish that the same goods which had suffered duty at the manufacturer's end vide ARE-1s have been exported vide shipping bills. As per the endorsement on the shipping bills, the goods were not opened for examination by the customs. As per the endorsement on the back side of ARE-1 "the goods as shown in the reverse of the ARE-1 is clearly identifiable and in factory packed condition. The goods as per the invoices have been inspected at the party's yard at Sachana and found in Order." According to the revisional authority, this means that the goods were only inspected by the excise authorities who had verified that the goods were in factory packed condition but had not certified the actual contents of the factory packed cartons; similarly, the customs officers have also not examined the contents of the goods by opening the cartons, in the absence of which it was not possible to co-relate the goods - as to whether the same goods which had been cleared from the factory vide ARE-1 have actually been exported vide shipping bills, especially as there was no mention of any mark number, batch number etc. on the body of the various documents by which it could have been possible to co-relate them; which clearly implies that the conditions of the Board's Circular No.294/10/94-CX dated 30th January, 1997 have not been fulfilled. The revisional authority, accordingly, held that the petitioner had failed to establish that the same goods which had suffered duty at the manufacturer's end had actually been exported and as such the rebate claim was not admissible as this was a substantive requirement of law and not merely a procedural lapse as held by the Commissioner (Appeals).
10. It is in the background of the aforesaid facts and contentions that the petitioner's entitlement to the nineteen rebate claims filed by it are required to be examined. At the outset it may be germane to refer to the provisions of the relevant notification and circulars. As noted hereinabove, in respect of the goods exported under claim of rebate the provisions of rule 18 of the Central Excise Rules, 2002 read with the provisions of Notification No. 19/2004-CE (NT) dated 06.09.2004 and Board's Circular No.294/10/1997-CX dated 30.01.1997 are required to be followed.
Rule 18 of the Rules, makes provision for rebate of duty and reads thus:
"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 the rebate shall be subject to such conditions or limitations, if any, and fulfilment of such procedure, as may be specified in the notification."
In exercise of the powers conferred by rule 18 of the Rules, the Central Government has issued Notification: 19/2004-C.E. (N.T.) dated 6th September, 2004 granting rebate of the whole of the duty paid on all excisable goods falling in the First Schedule to the Central Excise Tariff Act, 1985 exported to any country other than Nepal and Bhutan, subject to the conditions, limitations and procedure specified thereunder. Under Condition 2(a) thereof, it is provided, that the excisable goods shall be exported after payment of duty, directly from a factory or warehouse except as otherwise permitted by the Central Board of Excise and Customs by a general or special order. Clause 3 of the said notification lays down the procedures. Clause
(ix) thereof which is relevant for the present purpose provides that where the goods are not exported directly from the factory of the manufacture or warehouse, the triplicate copy of application shall be sent by the Superintendent having jurisdiction over the factory of manufacture or warehouse, who shall, after verification, forward the triplicate copy in the manner specified in sub-paragraph (vii).
12. In the present case, admittedly, the goods which were exported were not exported directly from a factory or warehouse. Hence the present case falls within the ambit of condition 2(a) of the said notification. In relation to goods covered under condition 2(a) of the aforesaid notification, viz., goods exported otherwise than directly from a factory or warehouse, the CBEC has issued a Circular No.294/10/97-CX dated 30th January, 1997 which makes provision for relaxation of condition of direct exports from the factory in Notification Nos.41/94-CE (N.T.) and 44/97-CE(N.T.) dated 22nd September, 1994 and other procedures. Paragraph 8 of the said Circular lays down the procedure required to be followed for waiver from the condition of direct exports from the factory/warehouse. The procedure prescribed under paragraph 8 of the said Circular insofar as the same is relevant for the present purpose is as follows:-
8.1 An exporter, (including a manufacturer-exporter) desiring to export duty paid excisable goods (capable of being clearly identified) which are in original factory packed condition/not processed in any manner after being cleared from the factory stored outside the place of manufacturer should make an application in writing to the Superintendent of Central Excise Incharge of the Range under whose jurisdiction such goods are stored. This application should be accompanied with form AR 4 duly completed in sixtuplicate, the invoice on which they have purchased the goods from the manufacturer or his dealer and furnish the following information:-
Name of the exporter Full description of excisable goods along with marks and/or numbers Name of the manufacturer of excisable goods Number and date of the duty paying document prescribed under Rule 52A under which the excisable goods are cleared from the factory and the quantity cleared.(Photo copy of invoice/duty paying documents can be submitted).
The rate of duty and the amount of duty paid on excisable goods.
8.2 The AR from should have a progressive number commencing with Sl. No.1 for each financial year in respect of each exporter with a distinguishing mark. Separate form should be made use of for export of packages/consignments cleared from the same factory/warehouse under different invoices or from the different factories/warehouses. On each such form it should be indicated prominently that the goods are for export under claim of rebate of duty.
8.3 On receipt of the above application and particulars, the particulars of the packages/goods lying stored should be verified with the particulars given in the application and the AR 4 form, in such manner and according to such procedure as may be prescribed by the Commissioner.
8.4 If the Central Excise Office deputed for verification of the goods for export is satisfied about the identity of the goods, its duty paid character and all other particulars given by the exporter in his application and AR 4, he will endorse such forms and permit the export.
8.5 The exporter will have to pay the supervision charges at the prescribed rates for the services of the Central Excise Officer deputed for the purpose.
8.6 The disposal of different copies of AR 4 forms should be in the following manner:-
the original and duplicate copies are to be returned to the exporter for being presented by him alongwith his shipping bill, other documents and export consignment at the point of export.
triplicate and quadruplicate copies to be sent to the Superintendent In charge of the Range in whose jurisdiction the factory from which the excisable goods had been originally cleared on payment of duty is situated. That Superintendent will requisition the relevant invoice/duty paying document which the manufacturer shall handover to the Superintendent promptly under proper receipt, and the Superintendent will carry out necessary verification and certify the correctness duty payment on both triplicate & quadruplicate copies of AR 4. He will also endorse on the reverse of manufacturers' invoice - "GOODS EXPORTED - AR 4 VERIFIED", (and return it to the manufacturer under proper receipt). He will forward the triplicate copy to the Maritime Commissioner of the port from where the goods were/are exported. The quadruplicate copy will be forwarded to his Chief Accounts Officer. The Range Superintendent will also maintain a register indicating name of the exporter, Range/Division/Commissionerate under whose jurisdiction the exporters' godown, warehouse etc. are located and where AR-4 is prepared. AR-4 No. and date, description of items, corresponding invoice No. of the manufacturer, remarks regarding verification, date of despatch of triplicate & quadruplicate copy.
The quintuplicate copy is to be retained by the Superintendent Incharge of the range from where the goods have been exported for his record.
The sixtuplicate copy will be given to the exporter for his own record.
8.7 The goods, other than shipstores, should be exported within a period of six months from the date on which the goods were first cleared from the producing factory or the warehouse or within such extended period (not exceeding two years after the date of removal from the producing factory) as the Commissioner may in any particular case allow, and the claim for rebate, together with the proof of due exportation is filed with the Assistant Commissioner of Central Excise before the expiry of the period specified in section 11B of the Central Excise Act, 1944.
88.
The rebate will be sanctioned, if admissible otherwise, after following the usual procedure.
11. On a bare reading of the above referred provisions, it is apparent that in case where goods are exported otherwise than by way of direct exports from factory/warehouse, the exporters are required to follow the procedure as laid down under paragraph 8 of the above Circular. Paragraph 8.4 of the said Circular lays down that if the Central Excise officer deputed for verification of the goods for export is satisfied about the identity of the goods, its duty paid character and all other particulars given by the exporter in his application and AR-4, he should endorse such forms and permit the export. Thus, it is apparent that the stage for verification of identity of the goods and its duty paid character and all other particulars is at the stage prior to the export of the goods. This presumably is because the identity of the goods which are exported can be established only prior to the export. Once the goods have been exported, it would be well-nigh impossible to subsequently establish the identity of the goods. Hence, insofar as verification of the nature specified in paragraph 8.4 of the Circular is concerned, the same has to be carried out by the Central Excise officer prior to the export of the goods. In the present case, the Superintendent of Central Excise Range having jurisdiction over the storage premises of the petitioner had after examining the goods in question, endorsed the triplicate copies of ARE-1s and certified that the goods as shown in ARE-1 are clearly identifiable and as per the invoice number date and that all the packages are in originally factory packed and sealed condition.
12. The procedure prescribed under paragraph 8 further provides that the different copies of ARE forms are required to be disposed of in the manner as provided under paragraph 8.6 thereof. Under sub-paragraph
(i) of paragraph 8.6 the original and duplicate copies are to be returned to the exporter for being presented by him along with his shipping bill, other documents and export consignment at the point of export. Sub-paragraph (ii) of paragraph 8.6 lays down that the triplicate and quadruplicate copies are to be sent to the Superintendent in charge of the Range in whose jurisdiction the factory from which the excisable goods have been originally cleared on payment of duty is situated. That Superintendent will requisition the relevant invoice/duty paying document which the manufacturer shall hand over to the Superintendent promptly under proper receipt and the Superintendent will carry out necessary verification and certify the correctness of duty payment on both triplicate and quadruplicate copies of AR-4. He will also endorse on the reverse of the manufacturer's invoice - "Goods exported - AR-4 verified".
13. Thus, a per the procedure laid down under paragraph 8 of the Circular, the obligation imposed upon the Superintendent in charge of the Range in whose jurisdiction the factory from which the excisable goods have been originally cleared on payment of duty is situated is to requisition the relevant invoices/duty paying documents from the manufacturer and carry out necessary verification and certify the correctness of duty payment on both triplicate and quadruplicate copies of AR-4. The said condition does not impose any obligation upon the said Superintendent to co-relate between the goods exported and the goods cleared from the factory of the manufacturer. In the circumstances, the Superintendent having the jurisdiction over the factory of the manufacturer was not required to examine as to whether there was any co-relation between the good exported and the goods cleared by the manufacturer and as to whether the ARE-1s showed any special particulars about the goods, viz., batch number, mark number or any other specific marking from which it can be co-related that the same goods had been exported, which were cleared from the factory. This co-relation is the obligation imposed upon the Central Excise officer having jurisdiction over the storage premises of the petitioner prior to the export of the goods in question. In the circumstances, there being no requirement for the Superintendent in charge of the Range under whose jurisdiction the factory of the manufacturer is situated to co-relate between the goods exported and the goods cleared by the manufacturer, he could not have refused to endorse the ARE-1s on this ground.
14. The revisional authority in the impugned order has observed that a perusal of the records like ARE-Is, shipping bills, invoices, etc., indicates that there was no mention of any Batch No. etc. on the cartons and that the cartons were not having any distinguishing mark numbers etc. to establish that the same goods which have suffered duty at the manufacturer's end vide ARE-1s have been exported vide shipping bill. That looking to the nature of the endorsement on the shipping bills, the same means that the goods were only inspected by the Central Excise officers, who have verified that the goods are in factory packed condition, but have not certified actual contents of the factory packed cartons. Similarly, the customs officers have also not examined the contents of the goods by opening the cartons, in absence of which it was not possible to correlate the goods as to whether the same goods which have been cleared from the factory vide ARE-1 have actually been exported vide shipping bills, especially as there was no mention of any mark No., Batch No. etc., on the body of the various documents by which it could have been possible to correlate them. In this regard it may be pertinent to note that no provision of the Act or rules framed thereunder has been pointed out to show that there was any obligation on the manufacturer to mention Mark No., Batch No. etc. on the goods in question prior to clearing the same from the factory of manufacture, consequently, the goods in question may not have borne any such Mark No. or Batch No, etc. When there is no such obligation on the manufacturer, it defies logic as to how such an obligation can be read on the part of the buyer/trader. The contention that if the petitioner is not aware as to how to co-relate the goods with the invoices, it is the problem with the petitioner, which it must resolve as the law requires it to identify and co-relate the same does not merit acceptance. If there is no obligation on the manufacturer to put distinguishing marks like Mark No., Batch No., etc., on the goods manufactured by it, it is beyond comprehension as to how the trader is expected to resolve the problem regarding lack of distinguishing mark. In the present case the manufacturer removed the goods on payment of duty to its C & F agent M/s. Ambica Distributors, Ahmedabad under cover of duty paying documents; the said goods were again removed to M/s. Mustafa Sales Agency, Ahmedabad and M/s. Sojas Corporation, Ahmedabad under cover of bills/invoices containing the details of goods viz., description, quantity, value of goods, by the C & F agent of the manufacturer; the petitioner procured the goods from the said distributors; at the time of procurement of the said goods, the certificate to the effect that the goods manufactured by M/s. Dhariwal Industries Ltd., Vadodara also contained other details such as bill number, GP number, description of goods, quantity of goods, assessable value at the time of clearance of goods from the factory, rate of duty, total excise duty paid, registration number of the manufacturer, duty debited particulars in PLA register and the said goods were sold under Distributor's Bill No. and date, issued by the said distributors; the said certificate was also accompanied by duplicate copy of manufacturer's invoices and disclaimer certificate issued by the distributors that they have no objection if rebate is paid to the petitioner. Thus, the petitioner procured the goods in question from distributors and stored the same in its premises in originally factory packed condition. The petitioner prepared ARE-1s incorporating details such as Invoice No., Name of Manufacturer, description of goods having brand 'RMD Gutkha", quantity of goods, number of packages, number of pouches, type of packing, value of goods and particulars of duty of excise, etc. and requested the jurisdictional Central Excise officer for physical inspection and verification, who carried out inspection and verification and allowed the export under ARE-1 with endorsement as noted hereinabove. The goods were verified and examined by the Customs officers and exported. If it is the case of the respondents that the Superintendent having jurisdiction over the storage premises of the petitioner had failed in his duty to examine the goods exported properly, the petitioner cannot be penalized for the same. The verification which is required to be carried out at the end of the Superintendent of Central Excise Range having jurisdiction over the storage premises of the claimant is required to be done prior to the stage of export when it is possible to make such verification. Once the goods are exported and leave the Indian shores, it is no longer possible to make such verification. In the circumstances, on account of the default, if any, on the part of the concerned Superintendent or the customs authorities while inspecting the goods in question, the petitioner cannot be put to a disadvantage. In the circumstances, the Commissioner (Appeals) was justified in holding that there was substantial compliance of the conditions laid down under the relevant notification and the circulars and that non-endorsement of triplicate copy of ARE-1 by the Superintendent, Central Excise Vadodara under whose jurisdiction the manufacturing unit is located does not appear to be a substantive condition. The revisional authority was, therefore, not justified in setting aside the order of the Commissioner (Appeals).
15. For the foregoing reasons, the petition succeeds and is accordingly allowed. The impugned order dated 10th July, 2009 passed by the Joint Secretary to the Government of India (Annexure 'E' to the petition) is hereby quashed and set aside. Consequently, the order made by Commissioner (Appeals) stands restored. Rule is made absolute accordingly with no order as to costs.
( Harsha Devani, J. ) ( H.B. Antani, J. ) hki/parmar* Top