CX - Rebate - Assessee clearing goods for export & later paying duty with interest - rebate claim rejected on ground that goods ought to have been exported after payment of duty - Mandatory conditions for availing of rebate cannot be waived on any equitable consideration: HC
By TIOL News Service
NEW DELHI, MAY 26, 2014: THE assessee is engaged in the manufacture of automotive parts and avails CENVAT credit.
They cleared goods for export in the months of April to August, 2009. At the material time of exporting the goods, the excise duty on the said goods had not been paid. The duty on the said goods was deposited in December 2009 alongwith interest.
On 16.02.2010 the assessee filed an application seeking a rebate of Central Excise Duty for a sum of Rs.4,54,161/- under Rule 18 of the CER, 2002.
A SCN came to be issued proposing rejection of the rebate claim on the ground that duty on the goods exported was paid after the goods were exported.
The Assistant Commissioner rejected the rebate claim and this order was upheld by the Commissioner(A) as well as by the revisionary authority viz. Central Government.
So, the assessee is before the Delhi High Court.
The petitioner relied upon rule 8 of the CER, 2002 and submitted that sub-rule 3 provides for payment of interest in the event an assessee fails to pay the duty by the due date. Inasmuch as since the petitioner had paid the duty along with interest, albeit with delay, they should not be deprived of the benefit of rebate of duty under Rule 18 of CER, 2002.
The High Court extracted the contents of Rule 18 of CER, 2002 and observed that the rebate of duty that is contemplated is not unconditional and subject to such conditions or limitations as may be prescribed. Inasmuch in terms of notification 19/2004-CE(NT), the conditions and limitations have been laid down and clause 2(a) reads -
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(2) Conditions and limitations:-
(a) That the excisable goods shall be exported after payment of duty, directly from a factory or warehouse, except as otherwise permitted by the Central Board of Excise and Customs by a general or special order;
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The High Court observed -
"6. A bare reading of the aforesaid notification makes it amply clear that that one of the conditions for grant of rebate under Rule 18 of Central Excise Rules is that the excisable goods be exported after payment of duty.
7. In this case, it is admitted that the said condition has not been complied with…."
In response to the submission made by the petitioner that it would be highly inequitable, if the rebate is denied to the petitioner since, undisputedly, the Excise duty alongwith interest has been paid, the High Court observed that it is unable to accept the contention of the petitioner since the mandatory conditions for availing of the rebate cannot be waived on any equitable consideration.
The High Court also adverted to the apex court decisions in Novopan India Ltd. v. Collector of Central Excise and Customs: (2002-TIOL-89-SC-CX-LB), Hansraj Gordhandas v. H.H. Dave: (1969) 2 SCR 253 where the Supreme Court held that a person, invoking an exception or exemption provisions, to relieve him of tax liability must establish clearly that he is covered by the said provisions and, in case of doubt or ambiguity, the benefit of it must go to the State.
The High Court concluded thus -
"10. We also concur with the view that discharging the liability to pay Excise Duty in the manner as provided under Rule 8 of the Central Excise Rules cannot be construed as compliance of the conditions for availing rebate under Rule 18 of the said Rules. Sub rule (3) of Rule 8 of the Central Excise Rules only provides for payment of interest if Excise Duty is not deposited within the specified time, however, payment of interest on delayed payment after the goods have been cleared cannot be construed to mean that the condition of payment of duty prior to the export of goods has been complied."
The Writ Petition was dismissed.
(See 2014-TIOL-826-HC-DEL-CX)
