Custom, Excise & Service Tax Tribunal
M/S.Arun International vs Cce, Delhi-I on 26 December, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing:30.07.2014
Date of decision: 26.12.2014
Excise Appeal No.895/2006-EX(DB)
[Arising out of Order-in-Appeal No.153-CE/DLH/2005 dated 8.12.2005 passed by the Commissioner of Central Excise (Appeals), New Delhi.].
M/s.Arun International Appellant
Vs.
CCE, Delhi-I Respondent
For approval and signature:
Honble Smt. Archana Wadhwa, Member (Judicial) Honble Shri Rakesh Kumar, Member (Technical) 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?3
Whether Their Lordships wish to see the fair copy of the Order?4
Whether Order is to be circulated to the Departmental authorities?
Appearance: Rep. by Shri Rajiv Tuli, Advocate for the appellant.
Rep. by Shri Ranjan Khanna, DR for the respondent.
Coram: Honble Smt. Archana Wadhwa, Member (Judicial)
Honble Shri Rakesh Kumar, Member (Technical)
Order No 54835/ 2014 Dated: 26.12.2014
Per Rakesh Kumar
The facts leading to filing of this appeal are, in brief, as under:-
1.1 The appellant are manufacturers of stainless steel utensils from S.S. Flats. The stainless steel utensils during the period of dispute were fully exempt from duty and, therefore, the appellant had not taken central excise registration. The period of dispute in this case is from 31.12.2002 to 31.03.2003 and during this period, they exported stainless steel utensils under claim for rebate under Rule 18 of the Central Excise Rules, 2002 of the excise duty paid on the inputs used in the manufacture of the stainless steel utensils. The rebate claims totaling Rs.9,26,000/- were rejected by the Asstt. Commissioner vide order-in-original dated 13.11.2004 on the ground that the input duty rebate under Rule 18 of the Central Excise Rules, 2002 was subject to following the condition and the procedure prescribed in this regard, under Notification no.41/2001-CE(NT) dated 26.06.2001 read with Notification No. 42/2001-CE (NT) dated 26.06.2001 and the procedure for claiming rebate was not followed by the appellant inasmuch as the appellant neither made the required input output ratio declaration as a result of which their input output ratio could not be verified nor cleared their finished products under ARE-2. The Asstt. Commissioner while rejecting the refund claims observed that there is not even substantial compliance of the procedure prescribed under Notification no.41/2001-Cus (NT) and, therefore, in view of the judgement of the Apex Court in the case of Mangalore Chemicals & Fertilizers Ltd. Vs. Dy. Commissioner reported in 1991 (55) ELT 437 (SC), the rebate cannot be sanctioned, as the conditions prescribed in this case are not of technical nature but have to be treated as substantive conditions meant to prevent the commission of fraud. The Asstt. Commissioner also observed that input ouput norms adopted by the appellant on the basis of Exim Policy are not valid, as for the purpose of claiming input duty rebate under Rule 18, the appellant should have declared input duty ratio, offered the same for verification by the jurisdictional central excise officers, which was not done. On appeal being filed to the Commissioner (Appeals) against this order, the Commissioner (Appeals) vide order-in-original dated 8.12.2005 upheld the Asstt. Commissioners order. Against this order of the Commissioner (Appeals), this appeal has been filed.
2. Heard both the sides.
3. Shri Rajiv Tuli, Advocate, ld. Counsel for the appellant, pleaded that the appellant engaged in the manufacture of stainless steel utensils were exporting the same for several years without any objection of any nature whatsoever from the customs department as at no point of time, there was objection from the customs department in respect of the quality, quantity, description and specification of the export consignments, that the exports had been made under shipping bills which were supported by the documents such as export invoices, packing slips for shipment, and bill of lading issued by the Shipping Company, that the certificate issued by the shipping company and bank realization certificate issued by the bankers as evidence of export payments had also been furnished along with rebate claims, that when there is no doubt about the fact of export of the goods and the fact that the duty paid inputs have been used for manufacture of export goods, which during the period of dispute, were fully exempt from duty, there is no justification for rejection of the input duty rebate under Rule 18 of the Central Excise Rules, 2002, that except for the condition of clearance of export consignments under ARE-2 and of declaration of input output ratio and its verification, all other procedures and conditions, as laid down in the Notification no.41/2000-CE have been followed, that just because the input output ratio was not declared, the rebate claim cannot be rejected, as the appellant have claimed the rebate in terms of the standard input-output norms prescribed in the Exim Policy by DGFT in respect of stainless steel utensils, that when the procedure for claiming the rebate has been substantially followed, the rebate cannot be rejected merely for technicalities, that no rebate claim is time barred, that the Central Government (Revisionary Authority) in the case of CCE, Bhopal Vs. Government of India Ministry of Finance 2006 (205) ELT 1093 (GOI) has held that the substantive benefit of input duty rebate under Rule 18 of the Central Excise Rules, 2001 cannot be denied for procedural infractions including non-registration and non-filing of declarations, that even in the judgement of the Apex Court in the case of Mangalore Chemicals & Fertilizers Ltd. Vs. Dy. Commissioner - 1991 (55) ELT 437 (SC) relied upon by the original adjudicating authority, distinction has been made between the procedural conditions of a technical nature for an exemption notification and substantive conditions and it is only the non-observance of the substantive conditions, which can result in denial of the exemption and not the non-observance of the procedural conditions of technical nature and that in view of the above submissions, the impugned order is not correct.
4. Shri Ranjan Khanna, ld. Departmental Representative, defended the impugned order by reiterating the findings of the Commissioner (Appeals) and pleaded that in terms of the provisions of Rule 18 of the Central Excise Rules, 2002 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 would be subject to conditions or limitations, if any, and fulfillment of such procedure as prescribed in the notification, that this is a case of claim for rebate of central excise duty paid on the inputs used in the manufacture of the finished goods, which had been exported, that for rebate of excise duty paid on the inputs used in the manufacture/processing of export goods, the Central Government has prescribed the procedure and conditions under notification no.41/2001-CE (NT) dated 26.06.2001, that para-1 of this notification prescribes the conditions, subject to which, the input duty rebate would be admissible, that as per the conditions prescribed in this notification, the manufacturer shall file a declaration with the jurisdictional Asstt. Commissioner/Dy. Commissioner declaring the finished goods proposed to be manufactured/processed for export along with the rate of duty leviable, the manufacturing/ processing formula with particular reference to the quantity, or proportion in which the input materials are actually used, that input-output ratio so declared is required to be verified and approved by the jurisdictional Asstt. /Dy. Commissioner, that as per the conditions of the notification, the material for manufacturing of export goods is to be procured directly from the manufacturer or a registered dealer, that the export consignments are to be cleared under ARE-2 form, a part of which is to be filled in and signed by the jurisdictional Superintendent of Central Excise and Inspector, Central Excise and para-B of the ARE-2 is filled-in and signed by the Customs Officers at the port of export, wherein he certifies the date on which the goods were shipped/exported under his supervision, that in this case, the appellant was neither registered with the Central Excise Department nor had filed the required declaration declaring the input-output ratio, description of export products and the inputs, that in absence of the such declaration, there was no opportunity for the department to verify the input-output ratio, that for the purpose of export rebate under Rule 18, input-output ratio cannot be adopted from the standard input duty norms in the Exim Policy, that since the appellant never declared their activity of manufacture of the goods exported under rebate claims, it is not possible to verify as to whether the appellant procured the duty paid inputs directly from the manufacturer or registered dealer and it is an admitted position that the exports were not under ARE-2, that the conditions prescribed for rebate under Notification no.41/2008-CE(NT) cannot be said to be mere procedural conditions of technical nature the non-observance of which can be condoned, that the conditions prescribed have been made to prevent the mis-use of this facility and therefore, the same have to be treated as substantive conditions, the non-observance of which would result in denial of the benefit, that in this regard he relies upon the Apex Courts decision in the case of Indian Aluminium Company Vs. Thane Municipal Corpn, Ltd. reported in 1991 (55) ELT 454 (SC) and also the Apex Courts decision in the case of Eagle Flask Industries Ltd. Vs. CCE, Pune -2004 (171) ELT 296 (SC) and that in view of the above submissions, there is no infirmity in the impugned order.
5. We have considered the submissions from both the sides and perused the records.
6. During the period of dispute, the appellant had manufactured stainless steel utensils from duty paid stainless steel flats. Stainless steel utensils, during the period of dispute, were fully exempt from duty and for this reason, the appellant were not registered with Central Excise Registration. Rule 18 of the Central Excise Rules provides for rebate of central excise duty paid on the materials used in manufacture or processing of the finished goods exported out of India subject to the conditions to be specified and procedure followed as notified by the Government. The Notification No.41/2001-CE (NT) dated 26.06.2001 issued under Rule 18 of the Central Excise Rules, 2001 prescribes the necessary conditions for the purpose of input duty ratio and also the procedure to be followed in this regard. The conditions relevant for this case as mentioned in the notification are
(a) Filing of the declaration filing of the declaration to the jurisdictional Asstt. Commissioner/Dy. Commissioner by the manufacturer describing the export products and also the materials actually used for manufacture of the export products along with the proportion in each materials/inputs are actually used for manufacture of the finished products, finished goods to be exported,
(b) Verification of the Input output Ratio by the jurisdictional Asstt./Dy. Commissioner as declared in the above mentioned declarations and if approved, granting the necessary permission,
(c) Procuring the duty paid inputs to be used for manufacture of exported goods directly from the registered factory in which the goods are produced accompanied by an invoice or procuring such input materials from a registered dealers, and
(d) Clearing the export consignment under ARE-2 and their export by following the procedure under notification no.41/2001-CT(NT) dated 26.06.2001.
The Notification no.42/2001-CE dated 26.06.2001 prescribes the detailed procedure for export of the goods under claim for rebate.
7. In this case, admittedly, neither the necessary declaration describing the export product and the materials to be used with input-output ratio was made to the jurisdictional Asstt./Dy. Commissioner and, therefore, the jurisdictional Central Excise Authorities had not opportunity to verify the input output ratio. Besides this, it is not possible to verify as to whether the appellant procured the inputs directly from a manufacturer or from a dealer registered. Even the clearance of the export consignments was admittedly, not under ARE-2 and therefore, there is no question of procedure as prescribed under Notification No.42/2001-CE being followed. The various conditions prescribed under Notification no.41/2002 read with Notification no.42/2001-CE (NT) dated 26.06.2001 are meant to prevent the mis-use of this facility and, therefore, these conditions and procedure cannot be said merely of technical nature, the non-observance of which could be condoned. As regards the appellants plea that standard input-output ratio for stainless steel utensils prescribed in the Exim Policy could be adopted for the purpose of rebate under Rule 18 of the Rules, this plea cannot be accepted, as the condition for rebate as prescribed in the Notification no.41/2001-CE(NT) requires input-output ratio to be declared to the jurisdictional central excise authorities and its verification, which has not been done in this case. In fact, if the appellants plea is accepted, the Notifications nos.41/2001-CE (NT) dated 26.06.2001 read with Notification no.42/2001-CE (NT) dated 26.06.2001 would become redundant, while the very purpose of this notification is to avoid administrative inconvenience and prevent the mis-use of this facility by the assessee. We, therefore, hold that the judgements of the Apex Court in the case of Indian Aluminium Company (supra) and Eagle Flask Industries Ltd. (supra) are squarely applicable to the facts of this case and as such, non-observance of the conditions prescribed in the notifications mentioned above, would result in denial of the rebate. We, therefore, do not find any infirmity in the impugned order. The appeal is dismissed.
[Order pronounced on 26.12.2014].
( Archana Wadhwa ) Member (Judicial) (Rakesh Kumar ) Member (Technical) ckp