Yamaha’s Rebate Claim u/r 18 for NCCD on Exported Goods Must be Re-Examined: Bombay HC Orders Fresh Consideration [Read Order]
The Court observed that the revenue failed to examine crucial issues relating to rebate admissibility for exported goods.
The Bombay High Court held that the rejection of the assessee’s rebate claim under Rule 18 of the Central Excise Rules, 2002 was unsustainable as the authority had failed to consider crucial statutory issues, including the effect of SVLDRS, the applicability of Section 142(4) of the Central Goods and Services Tax Act, 2017, and the issue of parity in export taxation. The Court therefore remanded the matter for fresh adjudication.
India Yamaha Motor Private Limited, the appellant, manufactures motorcycles and scooters were subject to Basic Excise Duty (BED) under Section 3 of the Central Excise Act, 1944, and National Calamity Contingent Duty (NCCD) under Section 136 of the Finance Act, 2001.
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During March 2016 to June 2017, due to an admitted oversight, the appellant utilised CENVAT credit of BED towards payment of both BED and NCCD, contrary to the fifth proviso inserted in Rule 3(4) of the Cenvat Credit Rules, 2004 by Notification No. 13/2016-CE(NT).
A show cause notice demanding ₹22.31 crores was issued. The appellant paid the amount in cash under protest in June 2018. After adjudication, the department confirmed the demand along with interest and penalty. Separately, the appellant filed 63 rebate claims under Rule 18 of the Central Excise Rules, 2002 read with Notification No. 19/2004-CE(NT), seeking rebate for duty paid on exported goods. While rebate of BED was granted, the rebate claim of ₹3,26,17,188 relating to NCCD was rejected.
Appeals before the Commissioner (Appeals) and subsequently before the revisional authority were also rejected, leading to the writ petition before the High Court.
Advocate V. Sridharan, appearing for the appellant, submitted that no interest was payable on alleged delayed payment of NCCD because the Finance Act, 2001 contained no provision for levy of interest for the relevant period, and the 2021 amendment introducing such liability had no retrospective operation. He argued that export procedures under Rule 18 (payment followed by rebate) and exports under bond must be treated at parity since both render exports duty-neutral; therefore, rebate could not be denied despite the method chosen.
Additionally, submitted that the rebate claim was independent of the amount paid during adjudication or the subsequent settlement under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 under the Finance (No. 2) Act, 2019. Further, contended that the writ petition concerned only the rebate of Rs. 3.26 crore relatable to exported goods, and not the entire refund of Rs. 22.31 crore rejected by CESTAT.
Appearing for the revenue, Karan Adik contended that the levy of interest on NCCD was mandatory by virtue of Section 136 of the Finance Act, 2001 which applied the machinery provisions of the Central Excise Act, 1944, including interest. He submitted that the settlement under the Sabka Vishwas (Legacy Dispute Resolution) Scheme barred any further claim relating to the same duty liability. According to the revenue, the rebate claim overlapped with the refund sought before CESTAT, and the dismissal of that appeal on unjust enrichment grounds prevented any further relief.
The Bench of Justice M.S. Sonak and Justice Advait M. Sethna held that the revisional order suffered from non-consideration of critical issues. The Court observed that the revisional authority had not examined Rule 18 of the Central Excise Rules, 2002 or Notification No. 19/2004-CE(NT), nor had it addressed the appellant’s argument that export under rebate and export under bond must receive identical tax treatment.
The Court held that the authority failed to establish any nexus between alleged non-payment of interest and the denial of rebate on exported goods. The Court found that the revisional authority did not analyse the applicability of Section 142(4) of the Central Goods and Services Tax Act, 2017, Section 130(1) of the Finance (No. 2) Act, 2019, or Section 136 of the Finance Act, 2001.
Further, the effect of the settlement under the Sabka Vishwas (Legacy Dispute Resolution) Scheme on the rebate claim had not been examined. Since grounds such as unjust enrichment and overlap were never part of the revisional order, they could not be introduced for the first time at the writ stage.
In light of these deficiencies, the High Court set aside the revisional order and remanded the matter to the Principal Commissioner for a fresh decision. The Court directed that the matter be decided within six months of receipt of the authenticated order.
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