Customs, Excise and Gold Tribunal - Delhi
Continental Chemicals India Ltd. vs Cce on 18 December, 2002
Equivalent citations: 2003(85)ECC463
JUDGMENT V.K. Agrawal, Member (T)
1. In this appeal, filed by M/s. Continental Chemicals India Ltd., the issue involved is whether, they are eligible to avail the refund of duty paid on the inputs used in the manufacture of goods exported out of India.
2. Shri P.K. Mittal, learned Advocate, submitted that the appellants manufacture detergent powders and they exported 865.008 MTs of detergent powders to U.S.S.R. through M/s. U.K. Paints Industries during July-September 1989; that they had intimated to the Department, under their letter dated 15.12.1989 that they would not avail Modvat Credit of the duty paid on the inputs used in the manufacturing process and would apply for refund after the goods were exported under Rule 57F(3) of the Central Excise Rules, 1944 as they were, being an exporting unit, not in a position to utilise the Modvat Credit for clearance of goods for home consumption; that when they filed their refund claim, a show cause notice dated 28.7.90 was issued to them for disallowing the refund claim under Rule 57F(3) of the Central Excise Rules, 1944 as they had not taken the credit of duty in their RG 23A-Part-ll account and they did not have the required credit; that the Assistant Collector rejected their claim under Adjudication Order dated 9.1.92 which was remanded by the Commissioner (Appeals) under Order dated 31.8.92; that the Assistant Commissioner again rejected the refund claim under Adjudication Order dated 21.1.1994 which was upheld by the Commissioner (Appeals) under Order-in-Appeal No. 121 /CE/94 dated 28.7.94; that however, the Appellate Tribunal, vide Final Order No. A997/98/NB dated 28.11.1998 remanded the matter to the Adjudicating Authority for disposal of refund claim on the basis of earlier Order No. 280-281/92/NB dated 23.6.92; that the Deputy Commissioner had rejected their refund claim third time under Adjudication Order No. 49/99 dated 1.11.99 holding that since the goods were exported by M/s. U.K. Paints, the appellants were not independent exporter; that the Commissioner (Appeals) has rejected their appeal under the impugned order observing that they did not submit records to show that export goods contained imported components or goods purchased indigenously and so that correlation of inputs could be made to the exported goods.
3. The learned Advocate, further, submitted that the Appellate Tribunal had remanded the matter, vide Final Order dated 20.11.98 to establish that inputs imported under DEEC Scheme had not gone in the manufacture of final product for export and whether M/s. U.K. Paints Industries had not availed of the drawback or rebate in respect of the duty; that it stands accepted in the Adjudication Order dated 1.11.1999 that neither they nor U.K. Paints have claimed the benefit of drawback for the goods exported; that it is also in the Order that Rule 57F(3) did not provide for disallowing refund of credit if duty paid indigenous inputs are used in export goods; that the Tribunal had also noted that U.K. Paints had not claimed any drawback which was clear from the letter dated 1.10.92 written by the Collector of Customs, New Delhi to Assistant Collector of Central Excise, Noida. The learned Counsel emphasised that there is no dispute that indigenous material was purchased against duty paid gate passes and the U.K. Paints had not given any materials to them. He also relied upon the Board's Circular No. 220/54/96 CX, dated 4.6.96 wherein it has been clarified by the Board that "Cash refund of the unutlised Modvat credit is an incentive given to manufacturers and exporters and non-grant of such claim will affect the competitiveness of the Indian Industry in the international market." The Board, therefore, directed that the refund claims filed under Rule 57F should be decided expeditiously, whenever the manufacturer is not able to utilise 57A against the goods exported during the quarter/month to which the claim relates. Reliance has also been placed on the Circular No. 34/98-Cus., dated 19.5.1998 wherein it has been clarified that a self-declaration of the exporter regarding non-avail merit of Modvat may be accepted, Reliance has also been placed on the decision in the case of CC£, New Delhi v. Bhayana Electronics Industries (P) Ltd., 1994 (74) ELT 905 (T) wherein it has been held by the Tribunal that under proviso to Rule 57F(3), the refund is allowed to the manufacture if the final products are cleared for exports under bond and merely because merchant exporter exported the goods would not mean that goods in fact have not been exported and refund is admissible under Rule 57F(3).
4. Countering the arguments, Mrs. Charu Baranwal, learned SDR, submitted that the following conditions were necessary for grant of refund as observed by the Appellate Tribunal in Remand Order:
(a) Records showing use of imported inputs under DEEC by the merchant exporter or inputs purchased indigenously by the appellant.
(b) Correlation to the export of appellant who had purchased the inputs from the market.
(c) Availment of drawback or rebate by the merchant exporter.
(d) Independent nature of the export of the appellant.
4.2. She mentioned that the Commissioner (Appeals) has given his specific findingsthat they "did not submit such records which may prove that exported goods contained imported inputs or purchased indigenously so that correlation of inputs to the exported goods could be made. On the other hand, goods had actually been exported by M/s. U.K, Paints Industries and not by the appellant. So Appellant cannot be regarded as Independent exporter." She, therefore, submitted that refund is not admissible to the appellants.
5. We have considered the submissions of both the sides. Proviso to Rule 57F(3) of the Central Excise Rules, 1944 provided at the-material time that the Modvat credit of the duty in respect of Inputs used in the final products cleared for export may be refunded to the manufacturer if the same cannot be used for clearing the final products for home consumption. The Appellate Tribunal has remanded the matter vide Final Order No. A/997-98/NB(DB) dated 20.11.98 to re-adjudicate the matter on the. basis of observation made by the Tribunal in the Appellants' own matter vide Final Order No. 280-281/92-NRB dated 23.6.92. The observation made in the said decision are as under:
"In the present case, the Assistant Collector had held that the export is under DEEC book and hence the refund claim is not admissible as M/s. U.K. Paint Industries had applied for and obtained advance licence for import of inputs without payment of any duties in regard to export of such goods. Now it has to be seen as to whether the refund now claimed is in respect of the inputs purchased from the market which has been utilised for the manufacture of final product, which has been exported or the refund claim is credit of duty in which the exporter has availed drawback under DEEC Scheme. In this case, undoubtedly, the export has been done through M/s. U.K, Paint Industries, who were holding advance licence for import of inputs without payment of any duties and the entries from the Customs Appraiser, Kandla port had shown that the importer had imported the inputs and these had been passed provisionally and the drawback and entered in the DEEC book. There is no dispute in this case that the goods had been manufactured by the appellants. It is therefore not clear as to whether the inputs imported under DEEC Scheme had also gone in the manufacture of final product for export and if so, then whether it can be correlated to the export of the appellants who had purchased the inputs from the market. This correlation does not seem to have been done by the authorities. However, the order grounds of rejection of refund of non-filing of RG 23A, Part-ll, does not appear to be sound as the appellants have explained that there is no home consumption and the entire Inputs have done in for manufacture of final product which had been exported. As can be seen there are two aspects of the matter in the present case. Therefore, the aspect of correlation of all inputs imported by M/s. U.K. Paint Industries to be exported under DEEC Scheme has got to be correlated with the inputs purchased by the appellants which has gone in for final products manufactured and exported through M/s. U.K. Paint Industries. It requires to be checked as to whether M/s. U.K. Paint Industries had availed of the drawback or the rebate. This is a question of fact and once it is established that M/s. U.K. Paint Industries had not availed of he drawback or the rebate in respect of such duty, then in that event the refund would be admissible under Rule 57F of Central Excise Rules, The provisions of Rule 57F(3) does not appear to give both the benefits of refund as well as benefit of drawback simultaneously, In case, M/s. U.K. Paint Industries have not utilised the drawback/rebate of duty and it can be shown that the appellants export is independent then in that event, the appellants claim cannot be denied."
6. The appellants nave claimed that the Assistant Collector, while adjudicating the matter vide Order dated 21.1.94, has recorded that the appellants had stated at the time of personal hearing that "they have neither imported any duty free imported replenishment material from M/s. U.K. Paint Industries, nor they have knowledge regarding the manner of disposal of the said material." He then gave his findings that "Hence it can be logically inferred that imported material under DEEC Scheme has not gone in the manufacture of the final product which has been exported which means that the imported material has been sold in the open market by M/s. U.K. Paint Industries, New Delhi. Hence the correlation of the imported inputs with indigenous imports purchased from the market and used in the exported items not be made." One fact which emerges is that the impugned goods manufactured and exported by the appellants were not made out of the imported materials. It is also admitted position that M/s. U.K. Paint had not claimed any drawback as was certified by Customs Authorities under letter dated 1.10.92. However, the fact to be ascertained is as to whether export of the goods effected through U.K. Paint has been made under DEEC Scheme. The Revenue is claiming that In such circumstances Modvat credit cannot be availed of. This aspect of the matter, has not been considered appropriately. We are, therefore, constrained to remand the matter to the Adjudicating Authority to decide the matter afresh on this aspect alone after a reasonable opportunity to the appellants. As the matter is pending since long, it will be appreciated if the matter is re-adjudicated at the earliest possible.
The appeal is thus allowed by way of remand.