A division bench of the Madras High Court has quashed a single judge decision wherein the rebate of duty paid out of credit availed on capital goods was denied to the exporter on the ground the a higher rate of drawback was also availed, it will amount to double benefit and remanded the matter for fresh consideration.
The appellant is a manufacturer of synthetic and blended textile yarn made of duty paid raw material viz., polyester staple fiber or polyester viscose staple fibre. According to the appellant, as per the Government schemes, a manufacturer can either export the finished product without payment of duty, or if he exports the same on payment of duty, he can claim rebate or refund of the duty paid on the finished goods exported.
the appellant has neither availed the benefit of Cenvat credit nor the benefit of rebate of duty paid on the materials used in the manufacture of export products.
As per Rule 18 of the Central Excise Rules, 2002 r/w Notification 19/2004-CE(N.T.), dated 06.09.2004, the appellant filed three rebate claims dated 01.08.2012 in respect of the duty paid on the exported finished goods and sought for the benefit of All Industry rate of Drawback, in order to claim rebate of the duty paid on the finished goods exported by it. The department rejected all the three rebate claims on the ground that the appellant had utilised Cenvat credit and availed the benefit of higher rate of drawback. As per the department, the appellant cannot avail of both Cenvat credit facility and higher rate of drawback simultaneously in terms with the above notification.
The appellants approached the Single bench of the High Court wherein the Court directed the appellants to file statutory appeal. Aggrieved with the order, the appellants approached the division bench.
The appellants contended that while drawback is sanctioned by the customs authority in accordance with the Drawback Rules, rebate is sanctioned by the Central Excise Authority in accordance with CER, 2002 and hence, there is no denial of rebate on the ground that the appellants have not satisfied the conditions as specified under Rule 18 of CER, 2002 or Notification 19/2004-CE. It is further submitted that the appellants availed rebate of duty paid on finished goods that are exported and paid the duty on finished goods using the CENVAT credit availed on capital goods. On the other hand, drawback @ 9.5% availed by the appellants pertain to the duty paid on procurement of inputs/ input services, on which no CENVAT credit was availed. Therefore, there is no double-benefit availed by the appellants.
A division bench of Justice R. Mahadevan and Justice J. Sathyanarayana Prasad “taking note of the factual dispute arisen with regard to the availment of Cenvat Credit by the appellants, this court is of the view that it would be proper to remit the matter to the authority concerned to redo the entire process by considering Paras 6 and 15 (i) and (ii) of the Notification No.68/2011-Cus. (N.T.) dated 22.09.2011 as well as Rule 2(a) and its proviso, after hearing all the parties concerned and thereafter, decide the issue on merits. The appellants are directed to file their submissions along with documentary evidence, within a period of three weeks from the date of receipt of a copy of this judgment and on such submission, the authority concerned shall consider it and pass orders, within a period of four weeks thereafter.”
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