Andhra HC (Pre-Telangana)
M/S. Ravi Foods Pvt. Ltd., Unit-I, ... vs 1.Commissioner (Appeals), O/O. ... on 24 January, 2018
Equivalent citations: AIRONLINE 2018 HYD 111
Author: T.Rajani
Bench: T.Rajani
HONBLE SRI JUSTICE V.RAMASUBRAMANIAN AND HONBLE SMT. JUSTICE T.RAJANI
Writ Petition No.6448 of 2017
24-01-2018
M/s. Ravi Foods Pvt. Ltd., Unit-I, 7-4-112/1, Madhuban Colony Road, Kattedan, Hyderabad-77, Rep. by its Authorized Signato
1.Commissioner (Appeals), O/o. Commissioner of Customs & Central Excise (Appeals), 7th Floor, Kendriya Shulk Bhavan, Opp.
2. Commissioner, O/o. Commissioner of Customs, Excise & Service Tax, Hyderabad II Commissionerate, Basheerbagh, Hyderabad 3
Shamshabad Division, CLS Bldg., 4th Floor, Station Road, Abids, Hyderabad Respondents
Counsel for Petitioner: Mr. S.Niranjan Reddy,
Senior Counsel, representing
Mr. K.Siddharth Rao
Counsel for Respondents:Mr. B.Narasimha Sarma,
Standing Counsel
<Gist:
>Head Note:
? Cases referred:
1. 2009 (235) ELT 614
2. 2007 (218) ELT 174 (Raj.)
HONBLE SRI JUSTICE V.RAMASUBRAMANIAN
AND
HONBLE SMT. JUSTICE T.RAJANI
Writ Petition No.6448 of 2017
Order: (per V.Ramasubramanian, J.)
The petitioner has come up with the above writ petition
challenging an order passed on an appeal, reversing the order
of the Original Authority granting rebate on the duty of excise
paid on the biscuits exported by the petitioner.
2. Heard Mr. S.Niranjan Reddy, learned Senior Counsel
appearing for the petitioner and Mr. B.Narasimha Sarma,
learned Standing Counsel for the respondents.
3. The petitioner is engaged in the manufacture of food
products viz., biscuits and wafers, falling under Heading
No.19 and confectionery falling under Chapter No.17 of the
Schedule to the Central Excise Tariff Act, 1985. According to
the petitioner, they cleared the subject goods for both
domestic as well as export market. In respect of the goods
cleared for export, the petitioner makes payment of the duty
of excise on the transaction value as per Section 4 of the
Central Excise Act, 1944 and avails CENVAT Credit on the
inputs and input services. According to the petitioner, they
export biscuits through their merchant exporters with price
being the sole consideration and the orders are executed in
US $/other foreign exchange terms without any sale being
done in the Indian currency.
4. On 01-3-2007, the Central Government issued
Notification No.3/2007 in exercise of the powers conferred by
Section 5A(1) of the Central Excise Act, 1944. At Serial
No.18A of the said Notification, biscuits cleared in packaged
form with per kg. retail sale price equivalent not exceeding
INR 50, was indicated to attract nil rate of duty.
By a subsequent Notification bearing No.22/2007, dated
03-5-2007, a slight modification was made, to the previous
Notification, making INR 50 as INR 100. Another Notification
bearing No.12/2012, dated 17-3-2012, also contained
a similar prescription at Serial No.27 relating to biscuits
cleared in packaged form.
5. On 16-9-2015 and 20-10-2015, the 3rd respondent
passed Orders-in-Original bearing Nos.52, 53 and 60/2015-
16, sanctioning the rebate claim made by the petitioner in
respect of goods which were exported and in respect of which
the petitioner had paid duty of excise.
6. As against these orders, appeals were preferred
before the 1st respondent in Appeal Nos.03, 04 and 07/2016.
By a common order dated 24-01-2017, the 1st respondent
allowed the appeals, on the ground that the goods
manufactured by the petitioner were unconditionally
exempted from payment of duty and that therefore the duty
paid cannot be treated as duty paid under the Central Excise
Act, 1944 so as to enable the petitioner to claim rebate under
Rule 18 of the Central Excise Rules, 2002. Aggrieved by the
said common order, the petitioner has come up with the
above writ petition.
7. As against the impugned order, the petitioner has
an alternative remedy of revision under Section 35EE of the
Act. But according to the petitioner, the revision is to an
officer of the level of Joint Secretary to Government. Since the
1st respondent viz., the Commissioner (Appeals) is also of the
same rank as Joint Secretary to Government, the petitioner
has chosen to bypass the alternative remedy of revision and
come up before this Court by way of writ petition.
8. There is no dispute about the fact that the order of
the 1st respondent is not amenable to the jurisdiction of the
CESTAT under Section 35B. By virtue of Clause (b) of the
proviso to Section 35B(1), no appeal shall lie to the Appellate
Tribunal, as against an order relating to a rebate of duty of
excise. Therefore, a revision to the Central Government alone
will lie under Section 35EE(1). The grievance of the petitioner
was that at the time when they came up with the writ
petition, the person holding office as Joint Secretary was of
the same rank as the 1st respondent (Appellate Authority) and
that therefore they could not file a revision.
9. But at the time of arguments, the learned Standing
Counsel for the Department produced a copy of Office Order
bearing No.202/2017, dated 20-7-2017, by which the
Government nominated officers of the rank of Principal
Commissioners and ex-officio Additional Secretaries to
Government of India as the Revisional Authorities. Therefore,
it was contended by the learned Standing Counsel for the
Department that the difficulty expressed by the petitioner
stood removed.
10. But we do not think that we will drive the petitioner
to avail the alternative remedy of revision at this stage, merely
on account of a subsequent development. At the time when
the petitioner filed the writ petition in February 2017, they
were actually disabled from filing a revision. Merely because
the Government nominated officers of superior rank
subsequently (in July, 2017), the petitioner cannot be driven
to seek remedy before the Revisional Authority.
11. That takes us to the merits of the case.
12. The case of the petitioner is that they paid excise
duty on goods cleared for the domestic market where per kg.
retail sale price was more than INR 100 and that they paid
excise duty on goods cleared for export on the basis of
transaction value in terms of Section 4. Therefore, the
petitioner availed rebate of duty.
13. But the stand of the Department is that the
petitioner was not liable to discharge excise duty on the goods
exported in view of the absolute exemption from payment of
duty under Notification No.12/2012, dated 17-3-2012 and
that therefore the amount paid could not have been treated as
duty paid, so as to enable them to claim rebate.
14. The Appellate Commissioner agreed with the
Department and held that under Section 5A(1A) of the Central
Excise Act, 1944, no option is available to any person to pay
duty, when goods are exempted from payment of the whole of
the duty unconditionally. The Commissioner (Appeals) held
that in terms of the prescription contained in the 3rd column
as against Serial No.27 of the Notification No.12/2012, the
exemption granted to biscuits was absolute and that therefore
in view of the decision of the Government of India dated
14-12-2013 passed in Revision No.128-130/2013, biscuits
manufactured and cleared for export without declaring any
retail sale price were out of Section 4A of the Central Excise
Act, 1944. Accordingly, the Appellate Commissioner set aside
the order of rebate, holding that the goods manufactured were
unconditionally exempt from payment of duty under the
Notification and that in terms of Section 5A(1A) of the Central
Excise Act, 1944, the petitioner did not have the option to pay
duty.
15. Assailing the order of the Appellate Authority, it is
contended by Mr. S.Niranjan Reddy, learned Senior Counsel
for the petitioner, that the exemption granted under
Notification No.12/2012 was not absolute and unconditional;
that the 2nd respondent has already held that the petitioner is
entitled to avail CENVAT Credit on goods cleared for export,
valued in terms of Section 4 of the Central Excise Act, 1944
and that the Appellate Authority failed to follow an order of
the CESTAT as well as his own order in another appeal.
16. We have carefully considered the above
submissions.
17. The first question that arises for consideration is as
to whether the exemption granted under Notification
No.12/2012, was absolute and unconditional. If it is so then
the order of the Appellate Commissioner is right. If not, it is
incorrect.
18. The relevant portion of Notification No.12/2012
relating to Serial No.27, reads as follows:
No.
Chapter or
heading or
sub-heading
or tariff item
of the First
Schedule
Description of excisable goods
Rate
Condition
No.
27
19053100 or
19059020
Biscuits cleared in packaged form,
with per kg. retail sale price
equivalent not exceeding Rs.100.
Explanation 1.-For the purposes of
this entry, retail sale price means
the maximum price at which the
excisable goods in packaged form
may be sold to the ultimate
consumer and includes all taxes,
local or otherwise, freight, transport
charges, commission payable to
dealers, and all charges towards
advertisement, delivery, packing,
forwarding and the like, as the case
may be, and the price is sole
consideration for such sale.
Explanation 2.-For the purposes of
this entry, per kg. retail sale price
equivalent shall be calculated in the
following manner, namely :- If the
package contains X gm of biscuits
and the declared retail sale price on
it is Rs.Y, then, the per kg. retail sale
price equivalent = (Y*1000)/X
Illustration.- If the package contains
50 gm of biscuits and the declared
retail sale price on it is Rs.2, then,
per kg. retail sale price equivalent =
Rs.(2*1000)/50 = Rs.40
Nil
19. It can be seen from column No.3 of the table
extracted above that what are exempt are those biscuits
cleared in packaged form with per kg. retail sale price
equivalent not exceeding to Rs.100/-. There are two
explanations provided in column No.3. The first explanation
defines what is retail sale price. The second explanation
provides the method of calculation of per kg. retail sale price
equivalent.
20. The Commissioner (Appeals) proceeded on the basis
that even admittedly, the value of the subjected goods was
less than Rs.100/- per kg. both when they were removed
domestically and when they were exported. Therefore, the
Commissioner (Appeals) came to the conclusion that the
exemption was absolute.
21. At this juncture, it is to be noted that in terms of
Section 5A(1A) of the Central Excise Act, 1944, if the
exemption granted under Section 5A(1) is absolute, the
manufacturer of such goods shall not pay duty of excise.
This is why the Department has taken a stand that the
petitioner ought not to have paid excise duty, when the
exemption granted under Notification No.12/2012 was
absolute.
22. To come to the conclusion that the exemption was
absolute, the Commissioner (Appeals) pointed out that there
was no necessity for the packages to bear the retail sale price.
23. But we fail to understand the logic behind such
a conclusion reached by the Commissioner (Appeals). First of
all, the exemption Notification was not a blanket exemption.
It was an exemption available to the goods of a particular
description, subject to their satisfying two conditions viz.,
(a) that they are cleared in packaged form and (b) that their
per kg. retail sale price equivalent does not exceed Rs.100/-.
Even the definition of the expression retail sale price is
indicated in Explanation 1 and the method of calculation of
per kg. retail sale price equivalent is given in Explanation 2.
Therefore, the availability of the exemption depended upon all
these factors. Hence, it cannot be concluded that the
exemption was absolute and unconditional. By holding the
exemption to be absolute and unconditional, the
Commissioner (Appeals) committed a grave error.
24. The availing of CENVAT Credit by the petitioner,
was considered by the Commissioner (Appeals) to be
irrelevant. But such an opinion goes contrary to the decision
of a Division Bench of the Bombay High Court in Repro India
Ltd. v. Union of India , wherein the High Court of Bombay
pointed out that the failure to fulfill export obligations, may
result in other consequences and that therefore the grant of
CENVAT Credit is a matter of relevance.
25. In Commissioner v. Suncity Aloys Pvt. Ltd. ,
a Division Bench of the Rajasthan High Court was concerned
with a claim for rebate of duty, on the goods exported by the
assessee. The Revenue raised a similar contention as they
have raised now to the effect that the goods were exempt from
payment of duty and that therefore the amount paid by the
assessee cannot be treated as duty paid so as to enable the
manufacturer to claim rebate. But the said contention of the
Revenue was repelled by the Rajasthan High Court on the
ground that even in cases where the manufacturer pays duty
which is not leviable, he may be entitled to claim refund of
the same. Therefore, the Department may not be right in
retaining the duty paid by the petitioner.
26. In view of the above, the writ petition is allowed and
the impugned order of the Commissioner (Appeals) is set
aside. The miscellaneous petitions, if any, pending in this writ
petition shall stand closed. No costs.
___________________________
V.RAMASUBRAMANIAN, J.
____________ T.RAJANI, J. 24th January, 2018.