OCTOBER 14, 2014

By G Sudhakar

NORMALLY all the departmental officers and the assesses as well are of the considered opinion that any refund/rebate can be claimed with in a period of one year from the relevant date in terms of Section 11B of Central Excise Act, 1944. In this regard I would like to make an attempt to examine as to whether the limitation of time is really applicable to the rebates under Rule 18 of CER, 2002. May be after reading this article there is every likelihood that readers might agree with my view that limitation of time is not applicable for rebates under rule 18.

To examine the issue in detail, rule 18 is extracted below -

RULE 18: Rebate of duty - Where any goods are exported, the Central Government may, by notification, grant rebate of duty paid on such excisable goods or duty paid on materials used in the manufacture or processing of such goods and the rebate shall be subject to such conditions or limitations, if any, and fulfilment of such procedure, as may be specified in the notification. 

Explanation. - "Export" includes goods shipped as provision or stores for use on board a ship proceeding to a foreign port or supplied to a foreign going aircraft.

From the wording of the rule it is clear that the rebate is admissible only if the conditions stipulated in the Notification are complied with.

A perusal of the Notification 19/2004-CE reveals that there is no stipulation of time limits for filing the claim of rebate. Even Rule 18 does not stipulate the time limit for claiming rebate of duty paid.

Earlier, rebate was allowed under Notification No. 41/94-CE(NT) dated 12.9.1994 issued under erstwhile Rule 12 of CER, 1944. Relevant clause (vii) is reproduced below:

vii) the claim or, as the case may be, supplementary claim, for rebate of duty is lodged with the Maritime Collector of Central Excise or the Collector of Central Excise having jurisdiction over the factory of manufacture or warehouse, as mentioned in the relevant export documents; together with the proof of due exportation within the time limit specified in section 11B of the Central Excises and Salt Act, 1944 (1 of 1944);

From the said clause it can be seen that the claim for rebate of duty has to be made within the time limit as specified under Section 11B of CEA, 1944, whereas no such condition has been prescribed in the present Notification No. 19/2004-CE(NT). The omission of the time limit apparently is a conscious omission inasmuch as all the other conditions prescribed in the Notification No.41/94-CE(NT) are retained in the Notification No. 19/2004 CE(NT). It is not in dispute that neither Notification No. 19/2004 CE(NT) nor Rule 18 have a condition with regard to limitation of time. It is relevant to note in this context that provisions of section 11B remain the same when both the Notifications 41/94 CE(NT) and 19/2004 CE(NT) were/are in operation. Even prior to Notification 41/94 CE, the time limitation for filing rebate claim was mandatory in terms of Notification No. 27/89-C.E., (NT) dated 9/6/89 which amended the Notification 197/62-CE.

As a corollary it can be deduced that what is not prescribed in the Notification or Rule 18 ibid cannot be imported for the purpose of disallowing the claim under Section 11B of the Act. In this regard the Hon'ble High Court of Madras in the case of Dorcas Market Makers Pvt Ltd. 2012-TIOL-108-HC-MAD-CX in para 8 has observed:

"8. A comparison of earlier Notification No. 41/94 dated 12-9-1994 and Notification No. 19/2004 dated 6-9-2004, shows that an apparent omission is the time limit in the later notification, viz., the omission of the time limit as per Section 11B of the Central Excise Act. It is only a conscious omission when all other conditions are retained in the Notification No. 19 of 2004. Once Rule 18 of the Central Excise Rules gives the power to the authorities to issue notification prescribing conditions, limitation and procedures, the same have to be followed. What is not prescribed in the notification cannot be imported into the said notification. No time limit has been prescribed in the relevant Notification No. 19 of 2004 dated 6-9-2004. When the statutory notification issued under Rule 18 does not prescribe any time limit, Section 11B is not applicable."

In this view of the matter the provisions of Section 11B are not applicable to the claim made under Rule 18 of Central Excise Rules, 2002 in terms of Notification No. 19/2004 CE(NT). The Apex Court in the case of Collector of Central Excise, Jaipur Vs Raghuvar India Ltd 2002-TIOL-711-SC-CX-LB (Vide Para 13) has held that the period of limitation has to be clearly stipulated and it is not for the courts to import any specific period of limitation by implication.

Even if a procedural condition of technical nature is not complied with, substantial benefits cannot be denied. Granting of rebate being an export incentive, the claimant cannot be deprived of the said benefits merely on the ground of non-observance of a procedural condition. The same view has been held by the Hon'ble Supreme Court in the case of Mangalore Chemicals & Fertilizers Ltd Vs Deputy Commissioner 2002-TIOL-234-SC-CX (vide Para 11). From this it is quite apparent that a liberal approach has to be accorded when the substantive condition namely the export of goods is not in dispute. The Government of India, Ministry of Finance in the Case of Modern Process Printers 2006 (204)ELT 632 (GOI) has held that rebate/drawback and other such export promotion schemes of the Government are incentive oriented beneficial schemes to earn more foreign exchange and that in case substantive fact of export having been made is not in doubt, technical lapses, if any, should be ignored in order not to defeat the very purpose of the schemes.

Notwithstanding the above, it is interesting to note that the hon'ble High Court of Bombay, in the case of Everest Flavours Ltd vs. Union of India 2012-TIOL-285-HC-MUM-CX has held altogether an opposite view holding that limitation of time is applicable for rebates under Rule 18 ibid.

Be that as it may, in terms of Chapter 8 of para 1.2 of CBEC Excise Manual, rebate on excisable goods exported or excisable materials used in the manufacture of goods exported are subject to the provisions of Section 11B ibid. Thus it appears that the intention of the Govt. as regards limitation of time is clear whereas the assessees are left with confusion in the backdrop of dissenting rulings by two different High Courts. It is, therefore, expedient that until and unless suitable amendment is made to Notification 19/2004-CE(NT) by inserting the condition of limitation of time in tandem with the earlier Notification 41/94-CE(NT), litigations are bound to surface.

(The author is a former Deputy Commissioner, CBEC.)