-360001
CENTRAL EXCISE & CUSTOMS COMMISSIONERATE
CENTRAL EXCISE BHAVAN : RACE COURSE RING ROAD
RAJKOT 360 001
Phone – (0281) 2442030, 2441980, 2441982 Fax – (0281) 2443313, 2452967
Email: cexrajkoad1@sancharnet.in
By RPAD/HAND DELIVERY
F.No.
V.25/15-58/Adj/2008
ORDER IN ORIGINAL NO.
36/COMMR/2012
Date of order
Date of Issue
31.07.2012
08.08.2012
Ordered by
In the case of
वी प नाभन
V. Padmanabhan
Commissioner,
Customs & Central Excise,
Rajkot.
M/s. Sanghi Industries Limited, Cement
Division, Grinding Unit, Sanghipuram,
Kutch
V.Bhuj/AR-II/Commr/32/2008 dated:
28.05.2008
Show Cause Notice No. & Date
1.
जस य ( य ) को यह ित भेजी जाती है
,
उसे य गत योग के िलए
िनःशु क दान क जाती है।
This copy is granted free of charge for private use of the person(s) to whom it is sent.
2.
इस आदेश से असंतु कोई भी य इस आदेश क ाि से तीन माह के भीतर
सीमा शु क
,
उ पाद शु क एवं सेवाकर अपीलीय यायािधकरण
,
अहमदाबाद पीठ को इस
आदेश के व अपील कर सकता है। अपील सहायक र ज ार
,
सीमा शु क
,
उ पाद
शु क एवं सेवाकर अपीलीय यायािधकरण
,O-20,
मेघाणीनगर
,
यु मे टल हॉ पीटल
क पाउ ड
,
अहमदाबाद -380 016 को स बोिधत होनी चा हए।
Any person deeming himself aggrieved by this Order may appeal against this Order to the Customs, Excise and Service Tax Appellate
Tribunal, Ahmedabad Bench within three months from the date of its communication. The appeal must be addressed to the Assistant
Registrar, Customs, Excise and Service Tax Appellate Tribunal, O-20,
Meghani Nagar, Mental Hospital Compound, Ahmedabad-380 016.
3.
उ अपील ा प सं . इ .
ए .3 म दा खल क जानी चा हए। उसपर के य उ पद
शु क ( अपील ) िनयमावली
,
2001 के िनयम 3 के उप िनयम (2) म विन द य य
ारा ह ता र कए जाएंगे। उ अपील को चार ितय म दा खल कया जाए तथा जस
आदेश के व अपील क गई हो
,
उसक भी उतनी ह ितयाँ संल न क जाएँ ( उनम
से कम से कम एक ित मा णत होनी चा हए ) । अपील से स बंिधत सभी द तावेज भी
चार ितय म अ े षत कए जाने चा हए।
Page 1 of 15

The Appeal should be filed in form No. E.A.3. It shall be signed by the persons specified in sub-rule (2) of Rule 3 of the Central Excise
(Appeals) Rules, 2001. It shall be filed in quadruplicate and shall be accompanied by an equal number of copies of the order appealed against
(one of which at least shall be certified copy). All supporting documents of the appeal should be forwarded in quadruplicate.
4.
अपील जसम त य का ववरण एवं अपील के आधार शािमल ह
,
चार ितय म
दा खल क जाएगी तथा उसके साथ जस आदेश के व अपील क गई हो
,
उसक भी
उतनी ह ितयाँ संलगन क जाएंगी ( उनम से कम से कम एक मा णत ित होगी ) ।
The Appeal including the statement of facts and the grounds of appeal shall be filed in quadruplicate and shall be accompanied by an equal number of copies of the order appealed against (one of which at least shall be a certified copy.)
5. अपील का प अं ेजी अथवा ह द म होगा एवं इसे सं एवं कसी तक
अथवा ववरण के बना अपील के कारण के प शीष के अंतगत तैयार करना चा हए
एवं ऐसे कारण को मानुसार मां कत करना चा हए।
The form of appeal shall be in English or Hindi and should be set forth concisely and under distinct heads of the grounds of appeals without any argument or narrative and such grounds should be numbered consecutively.
6. अिधिनयम क धारा 35 बी के उपब ध के अंतगत िनधा रत फ स जस थान
पर पीठ थत है
,
वहां के कसी भी रा ीयकृत बक क शाखा से यायािधकरण क पीठ
के सहायक र ज ार के नाम पर रेखां कत माँग ा ट के ज रए अदा क जाएगी तथा
यह माँग ा ट अपील के प के साथ संल न कया जाएगा।
The prescribed fee under the provisions of Section 35 B of the Act shall be paid through a crossed demand draft, in favour of the Assistant
Registrar of the Bench of the Tribunal, of a branch of any Nationalized
Bank located at the place where the Bench is situated and the demand draft shall be attached to the form of appeal.
7. यायालय शु क अिधिनयम
,
1970 क अनुसूची -1
,
मद 6 के अंतगत िनधा रत
कए अनुसार संल न कए गए आदेश क ित पर 5.00 पया का यायालय शु क
टकट लगा होना चा हए।
The copy of this order attached therein should bear a court fee stamp of Re. 1.00 as prescribed under Schedule 1, Item 6 of the Court
Fees Act, 1970.
8. अपील पर भी . 5.00 का यायालय शु क टकट लगा होना चा हए।
Appeal should also bear a court fee stamp of Rs. 5.00.
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F. No. V.25/15-58/Adj/2008
Order-in-0riginal No: 36/Commissioner/2012
BRIEF FACTS:
M/s. Sanghi Industries Ltd. (Grinding Unit), Sanghipuram,
(hereinafter referred to as “the noticee”) are engaged in the manufacture of Cement falling under chapter 25 of the First Schedule to Central
Excise Tariff Act, 1985 and are holding Central Excise Registration No.
AAECS5510QXM004. They are availing the facility of Cenvat Credit under Cenvat Credit Rules, 2004 and clearing the excisable goods at specific/tariff rate on ad valorem basis under self assessment. They are also exporting their finished goods under various schemes from time to time and claiming rebate of duty paid on goods exported.
2. The noticee submitted various Rebate claims as listed in the annexure to show cause notice which were sanctioned vide Rebate
Orders mentioned in the said annexure in terms of Rule 18 of Central
Excise Rules, read with Section 11B of Central Excise Act, 1944 and
Noti. No. 19/2004-CE (NT) dated 06.09.2004. However, during the audit it was noticed that the exports made were in discharge of the export obligation under Duty Free Import Authorization Scheme as per Noti. No.
40/2006 –Cus and also availing of Cenvat Credit facility under Cenvat
Credit Rules, 2004. Further, the Noticee had obtained licenses as shown in Shipping Bills from DGFT, under DFIA Scheme for duty free import and had imported the goods.
3. Whereas, Notification No. 40/2006-Cus. dtd. 01.05.2006 allows goods to be imported duty free against a Duty Free Import
Authorization (DFIA) issued in terms of Para 4.4.1 and 4.4.2 of the
Foreign Trade Policy (2004-2009), subject to the condition stipulated in Para (v) of the said notification which lays down as under :-
“that the export obligation as specified in the said authorization
(both value and quantity terms) is discharged within the period specified in the said authorization exporting resultant products, manufactured in India which are specified in the said authorization and in respect of which facility under Rule 18 (rebate of duty paid on materials used in the manufacture of resultant product) or sub-rule(2) of Rule 19 of the Central Excise Rules, 2002 or CENVAT credit under
CENVAT credit Rules 2004 in respect of materials imported/ procured against the said authorization has not been availed"
In the explanation to the said Notification, the definition of
“materials" is given as “raw materials, components, intermediates, consumables, catalysts and parts which are required for manufacture
of resultant product”.
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F. No. V.25/15-58/Adj/2008
Order-in-0riginal No: 36/Commissioner/2012
4. Further Para 4.4.7 of Chapter 4 of Foreign Trade Policy 2004-
2009 reads as under:
“CENVAT Facility”:
"No Cenvat Credit shall be available for Inputs either Impo r ted o r proc ur ed ind ig eno usl y ag ains t the authorization"
5. Therefore in view of above, neither Cenvat Credit on input is available nor is rebate allowed on export under the DFIA Scheme. As
per "Explanation" at the end of Rule 3 of Cenvat Credit Rules, 2004
"Where the provisions of any other rule or Notification provide for grant of whole or part of exemption on condition of non availability of credit of inputs or capital goods or of Service Tax paid on input service, the provisions of such other notification shall prevail over the provisions of these Rules". This means that when the assessee is taking the benefit of Notification No. 40/2006-CUS. dated
01.05,06, he is not entitled to avail Cenvat of the concerned inputs.
6. Scrutiny of the said ARE-1 under which the export was carried out by the noticee, revealed that the noticee had certified on the face of the ARE-1 (Para 3) that they had availed Cenvat credit on the inputs used in the manufacture of the final products and that the said final products, would be exported under the DFIA scheme. It was further found that the noticee had paid Central Excise duty
(including Education Cess) through their common Cenvat account.
On scrutiny of the shipping bill it was found that the said goods were actually exported under DFIA scheme. The 'inputs' that were used in the manufacture of the said final products came within the definition of 'materials' prescribed under the DFIA scheme. Therefore it appeared that the duty paid by the noticee had been debited through the Cenvat credit availed on those inputs which were used in the manufacture of the final products and exported thereof.
7. As discussed above, Cenvat could not be availed on the inputs by the assessee. Thus, rebate of duty paid on such materials/inputs on which Cenvat credit has been availed and used in the manufacture of the resultant product was disallowed under
Notification No. 40/2006-CUS dated 01.05.2006 and under the DFIA
Scheme and the erroneously sanctioned rebate claim was needed to be recovered.
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F. No. V.25/15-58/Adj/2008
Order-in-0riginal No: 36/Commissioner/2012
8. Therefore, it appeared that neither Cenvat Credit of input was available nor rebate was allowed on goods exported in advance in discharge of export obligation under the aforesaid DFIA and before importation of the material specified therein. Thus the rebate claim amounting to Rs. 15,63,09,336/-, as listed in the annexure to the SCN, were not eligible for rebate in terms of the above said provisions.
Therefore the rebate claims were sanctioned erroneously and the same were required to be demanded and recovered in terms of Rule 18 of
Central Excise Rules, 2002 read Section 11B of CEA 1944 and Customs
Notification No: 40/2006 dated 01.04.2006.
9. Therefore, show cause notice No. V.Bhuj/AR-II/Commr./32/2008 dated 28.05.2008 was issued to M/s. Sanghi Industries Ltd. (Grinding
Unit ), Sanghipuram, requiring them to show cause, as to why the rebate claim amounting to Rs. 15,63,09,336/- erroneously sanctioned to them should not be demanded and recovered in terms of Rule 18 of Central
Excise Rules, 2002 read with Section 11B of CEA 1944 read with
Customs Notification No: 40/2006 dated 01.04.2006 along with applicable interest
DEFENCE AND PERSONAL HEARING:
10. The noticee submitted reply to the SCN vide letter received on
24.09.2008, wherein, it is inter alia, contended that:
(i) Rule 18 of the Central Excise Rules, 2002 grants rebate of duty paid on the goods or material used in the manufacture of goods exported. Conditions and procedures to claim rebate are prescribed under notification No. 19/2004-CE(NT) dated
06.09.2004. They have satisfied all the conditions set out in the said notification and presented their claim for rebate in a manner prescribed in the notification. There is no condition in the rebate notification that person who are exporting under
DFIA scheme will not be eligible to claim rebate. Once the conditions of rule 18 of the Central Excise Rules, 2002 read with notification No. 19/2004-CE dated 06.09.2004 stands complied with, the rebate claim cannot be rejected. Condition of the notification No. 40/2006 does not impugn directly or indirectly the provisions of rule 18 or the notification issued thereunder. Both are independent and mutually exclusive.
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F. No. V.25/15-58/Adj/2008
Order-in-0riginal No: 36/Commissioner/2012
(ii) If contention of the department is to be accepted, the department may deny the benefit of notification No. 40/2006-
Cus for violation of its condition. However, for violation of the conditions of the customs notification, rebate under excise cannot be rejected. They relied upon the following case laws:
(a) Steelco Gujarat Vs. CCE – 2000 (122) ELT 381 (T)
(b) Rikvin Floors Ind – 2002 (146) ELT 382 (T)
(c) Libra Polymers Pvt. Ltd. Vs. CCE – 2000 (126) ELT 735 (T)
(d) CCE Vs. Oswal Agro Mills LTd. – 1999 (112) ELT 326 (T)
(e) CCE Vs. Oswal Agro Mills Ltd. – 1997 (93) ELT 184 (T)
(f) Mardia Chemicals Ltd. Vs. CCE – 2006 (199) ELT 110 (T).
(g) Dome Bell Investment (P) Ltd. Vs. CCE – 1999 (34) ELT 194
(T)
(h) CCE Vs. Come Bell Investment (P) Ltd. – F.O. No.
79/2000/NB/(DB) dated 07.04.2000.
(i) CCE Vs. Aggarwal Rubber Products Ltd. – 1997 (22) RLT 928
(T)
(iii) They have not violated any condition of the notification No.
40/2006-Cus dated 01.05.2006 as contended by the department in the SCN. The restriction of not claiming rebate under rule 18 will apply only in respect of duty paid on materials used in the manufacture of exported product and not of duty paid on final product. They have claimed rebate in respect of excise duty paid on final product exported and not in respect of duty paid on inputs used in the manufacture of exported goods and therefore, they have not violated any of the condition of the notification No. 40/2006-Cus dated
01.05.2006.
(iv) The assumption of the department in the SCN that duty has been paid by them utilizing the cenvat credit availed on inputs which were imported against authorization and which had been used in export goods, is erroneous. The notification No.
40/2006-Cus permits an assessee to import goods against authorization after fulfilling export obligation which has been done in the present case. Therefore, there was no question of utilizing credit of duty paid on inputs imported against authorization since the same were imported without payment of applicable duty.
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F. No. V.25/15-58/Adj/2008
Order-in-0riginal No: 36/Commissioner/2012
(v) The exports in the present case were made during April-2007 to
September-2007. The SCN alleges that as per para 4.4.7 of
Foreign Trade Policy (2004-2009) [FTP] cenvat credit of input is not available. However, as per amended FTP, Cenvat credit is available. Therefore, the SCN is liable to be set aside.
(vi) The entire case of the department is on the ground that in view of DFIA scheme read with notification No. 40/2006-Cus dated
01.05.2006 they were not entitled to take credit on inputs used in the manufacture of goods exported under DFIA scheme and therefore the duty paid by them through ineligible cenvat credit cannot be refunded. The contention of the department to reject the rebate claim is not acceptable. The credit availed by them on various inputs used in the manufacture of cement on which duty was paid is correct in law. Further, there is no proceedings pending against them which disallow the credit in respect of inputs used in the manufacture of goods exported under DFIA scheme.
(vii) The issue in the present case is not related to eligibility of cenvat credit on inputs used in the manufacture of final products. Further the findings of the Assistant Commissioner in this regard has not been challenged by the department and hence they are eligible for rebate. Question as to whether they were eligible to take credit on inputs procured under
Authorization in terms of explanation to rule 3 is not the issue involved in the present case and therefore the same is not applicable to the facts of the present case.
11. Further reply to the SCN was submitted by the noticee vide letter dated 09.02.2009, wherein it was contended that as per Board’s circular
No. 423/56/98-CX dated 22.09.1998, recovery of erroneous refund/rebate, the SCN should precede the proceedings under section
35-E(2); that various OIOs sanctioning the rebate to them has not been reviewed by the Commissioner and hence the OIO hold good and therefore the SCN issued without reviewing the OIOs is without jurisdiction and hence not proper and legal; that as per certificate issued by divisional office dated 19.02.2008, they have procured the input under DFIA license No. 0810065489 and 0810064318 without availing any cenvat credit and also not exported the said inputs under claim of rebate and the certificate dated 19.12.2007 in respect of DFIA license No.
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F. No. V.25/15-58/Adj/2008
Order-in-0riginal No: 36/Commissioner/2012
0810063651 states that they have not imported/procured any material against said license, hence availment of cenvat does not arise; that clause (ii) of the notification No. 40/2006-Cus does not debar export of final product out of ready stock or manufactured from input procured indigenously with payment of duty, which is cenvated; that the authorization provides for replenishment of input already used for the manufacture of the resultant/final product exported; that what is restricted by the said notification under rule 18 is rebate of duty paid on material used in the manufacture of resultant product and they have not claimed the said rebate but they have claimed only the rebate of duty paid on final product exported, which is in accordance with rule 18 and notification issued thereunder; that the Tribunal in the case reported at
2009-TIOL-150-CESTAT-Bang, held that there is no bar in claiming rebate of duty paid on final products exported under DFIA and availment of cenvat credit on input procured indigenously which are not against
DFIA; that even though the decision of tribunal pertains to stay application, the same covers in all four the present matter since dispute raised in the SCN is similar/identical.
12. The noticee, vide letter dated 12.03.2009 further submitted that vide notification No. 17/2009-Cus dated 19.01.2009, clause (v) of the notification No. 40/2006-Cus dated 01.05.2006 was deleted and vide
Board’s circular No. 11/2009 dated 25.02.2009, it was clarified that the effect of the amended notification is for past period; that they had imported the entitled input under the DFIA scheme subsequent to discharge of export obligation and utilized the same for manufacture of dutiable goods and they had not manufactured any exempted goods nor goods chargeable to nil rate of duty therefore under the amended notification dated 19.01.2009, they have fulfilled the conditions prescribed therein and hence the SCN is devoid of merit and requires to be dropped; that the ground of the SCN is identical as was raised before
Commissioner (Appeal-Ahd) in the case of M/s. J. Dyechem Ind. Ltd., which has been dismissed by the Commissioner (A); that the revision application filed by the department against the OIA stand dismissed by the Revisionary Authority, upholding the decision of the Commissioner
(A) vide Order No. 01-03/2009 dated 16.01.2009; that the recovery of erroneous refund/rebate should be done simultaneously issuing show cause notice under section 11A within time limit prescribed therein and reviewing the OIO granting rebate within the time limit provided under section 35 E(2) of the Central Excise Act, 1944, which gets support from the case laws of Sree Digvijay Cement Co. Ltd. Vs. Collector – 1991 (52)
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F. No. V.25/15-58/Adj/2008
Order-in-0riginal No: 36/Commissioner/2012
ELT 631 (Tribunal) and James Robinson India P. Ltd. Vs. CCE, Vapi –
2009 (234) ELT 297 (Tri-Ahmd).
13. Personal hearing in the matter was held on 15.02.2012, which was attended by the representatives of the noticee. They made written submission and reiterated the same. In particular, they mentioned that the issue involved is availment of Cenvat credit taken on inputs used in manufacture of goods exported under DFIA scheme for which they had also filed rebate claim. They submitted that the issue has already been decided in their favour by the Revisionary Authority, i.e., Joint Secretary to Government of India, Ministry of Finance, Department of Revenue, vide order dated 29.12.2009. They also mentioned that this particular case pertains to the period June, 2007 to December 2007 when the
Foreign Trade Policy itself had been amended with effect from April 2007, which categorically provided that Cenvat credit on the inputs shall be available in case of export under DFIA.
DISCUSSION AND FINDINGS:
14. I have carefully gone through the entire case records, SCN issued, defence put forth by the noticee in writing as well as contentions raised during personal hearing. I find that the limited issue to be decided in the present case is – whether the rebate sanctioned to the noticee was erroneous or otherwise, in the backdrop of the fact that the exports made by the noticee were under DFIA scheme and availing cenvat credit on inputs.
15. It is undisputed fact that so far as the rebate sanction orders covered under present proceedings are concerned, the exports were made under DFIA (Duty Free Import Authorisation) scheme. This scheme was governed by Chapter 4 of the Foreign Trade Policy 2004-2009, at the material time. In order to give effect of the scheme, notification No.
40/2006-Cus dated 01.05.2006 was issued prescribing terms and conditions for duty free import under the DFIA scheme. The condition, which is the subject matter of present proceedings, is clause (v), which reads as:
(v) that the export obligation as specified in the said authorisation (both in value and quantity terms) is discharged within the period specified in the said authorisation or within such extended period as may be granted by the Regional Authority by exporting resultant products, manufactured in
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F. No. V.25/15-58/Adj/2008
Order-in-0riginal No: 36/Commissioner/2012
India which are specified in the said authorisation and in respect of which facility under rule 18 (rebate of duty paid on materials used in the manufacture of resultant product) or sub-rule (2) of rule 19 of the
Central Excise Rules, 2002 or CENVAT credit under CENVAT Credit
Rules, 2004 in respect of materials imported/procured against the
said authorisation has not been availed:
It is seen that for availment of benefit of notification No. 40/2006-
Cus dated 01.05.2006, the following are prescribed under clause (v):
(a) Non availment of rebate of duty paid on materials used in the manufacture of resultant product;
(b) Non availment of sub-rule (2) of rule 19 of the Central Excise
Rules, 2002; and
(c) Non availment of cenvat credit of duty paid on raw material imported against authorisation.
It is apparent that the last condition was in consonance with Para
4.4.7 of the FTP, as it existed at the time of issue of the notification, that is, non availment of cenvat credit on inputs imported against authorisation, used for manufacture of final product which is exported under the authorisation.
16. Based on the above conditions prescribed under clause (v) of notification No. 40/2006-Cus, the SCN alleges that since the noticee availed Cenvat credit of duty paid on raw material and made payment of duty on final product therefrom, the rebate was not admissible to the noticee and therefore it is proposed to recover the rebate already granted.
However, the noticee contended that:
(a) Para 4.4.7 of the FTP was amended with effect from April-2007 to read as Cenvat credit would be admissible on the inputs used in manufacture of final products exported under DFIA scheme;
(b) Notification No. 40/2006-Cus dated 01.05.2006 was amended retrospectively vide notification No. 17/2009-Cus dated
19.02.2009 and clause (v) was deleted by the amendment.
(c) As per the new terms and conditions prescribed under amending notification 17/2009-Cus dated 19.02.2009, read with Board’s circular No. 11/2009-Cus dated 25.02.2009, they have fulfilled all the conditions and hence rebate was sanctioned to them correctly.
(d) In similar cases, Hon. Revisionary Authority has granted rebate.
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F. No. V.25/15-58/Adj/2008
Order-in-0riginal No: 36/Commissioner/2012
It is true that relevant para of the FTP was amended with effect from April-2007 but at the same time, vide Para 4.4.2, it was prescribed that where cenvat credit facility on inputs used in the manufacture of goods exported under DFIA scheme has been availed, even after completion of export obligation, the imported goods shall be utilized in the manufacture of dutiable goods whether within the same factory or outside. Circular No. 11/2009-Cus dated 25.02.2009 elaborates the changes. The said circular also mentions that clause (v) of notification
No. 40/2006-Cus dated 01.05.2006 was deleted and hence a manufacturer exporter can avail credit of duty paid on inputs used in manufacture of final products which are exported under DFIA scheme.
The relevant portion of the circular No. 11/2009-Cus dated 25.02.2009 reads as:
6. The DOC/DGFT therefore modified the provisions of the
DFIA Scheme in FTP 2007 and 2008. Para 4.4.2 of the FTP-2008 now states that where Cenvat credit facility on inputs used in the manufacture of goods exported under the DFIA scheme has been availed, even after completion of EO, the imported goods shall be utilized in the manufacture of dutiable goods whether within the same factory or outside (by a supporting manufacturer). Further,
Para 4.4.6 of the FTP and 4.72 of the Hand Book of Procedures
(HBP) Vol. I also state that, in case where EO has been fulfilled after availment of cenvat credit facility on the inputs, transferability of
DFIA or transfer of imported/domestically procured inputs against the Authorization shall be subject to payment of applicable additional duty of customs (in case of imports)/excise duty (in case of domestically procured goods). However, in cases where the
Cenvat facility has not been availed, exemption from additional duty of customs/excise duty would be available even after endorsement of transferability on DFIA.
7. To put the matter beyond doubt, it has been decided to amend Notification No. 40/06-Cus., dated 1-5-2006 vide Notification
No. 17/09-Cus., dated 19-2-2009 to incorporate the features of FTP
2007 and 2008. The salient features of the amending notification are as under:-
(a) The restriction imposed vide condition No. (v) of the notification
No. 40/06-Cus. has been deleted; thus the ‘said facilities’ can now be availed by the exporter. However, in respect of imports made after
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F. No. V.25/15-58/Adj/2008
Order-in-0riginal No: 36/Commissioner/2012 the discharge of export obligation in full, if the ‘said facilities’ have been availed, then, -
(i) the importer at the time of clearance of the imported materials shall execute a bond that he shall use the imported materials in his factory or in the factory of his supporting manufacturer for the manufacture of dutiable goods. Further, he shall submit a certificate from the jurisdictional Central Excise officer within 6 months from the date of clearance of the said materials, that the imported materials have been so used. It may be noted that in case this condition is violated, then the importer would be required to pay all duties of customs which have been exempted under Notification No. 40/06-
Cus., dated 1-5-2006. These duties are duties of Customs leviable as specified in the First Schedule to the Customs Tariff Act, 1975, the additional duty, safeguard duty and anti-dumping duty specified under Sections 3, 8 and 9A of the said Customs Tariff Act respectively and cess as applicable. The term ‘dutiable goods’ has been defined in the explanation to the notification and would mean all excisable goods which are not exempt from Central Excise duty and which are not chargeable to ‘nil’ rate of central excise duty;
(ii) if the materials are imported against an authorisation transferred by the Regional Authority, or the imported materials are transferred with the permission of Regional Authority, then the importer has to pay an amount equal to the additional duty of customs. In case, the duty is not paid then interest @ 15% from the date of clearance of the said materials till the date of payment has to be paid;
(iii) the importer also has an option to pay additional duty of customs on the imported materials and clear his goods without furnishing any bond as specified in condition No. (iiia) of the Notification number
17/09-Cus., dated 19-2-2009. This additional duty of customs so paid shall be eligible for availing CENVAT Credit under CENVAT
Credit Rules, 2004.
It is clear from the circular No. 11/2009-Cus dated 25.02.2009 that due to retrospective amendment in notification No. 40/2006-Cus and amendment in the FTP that there was no bar for taking and utilizing the cenvat credit on the material procured and used for manufacture of goods exported under DFIA scheme – post export.
Though the amending notification No. 17/2009-Cus, ibid, does not specifically say that the amendment is with retrospective effect, clause
93 of the Finance Act, 2009 provides for retrospective amendment of notification No. 40/2006-Cus.
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F. No. V.25/15-58/Adj/2008
Order-in-0riginal No: 36/Commissioner/2012
17. As discussed, the notification No. 40/2006-Cus was amended and in place of conditions mentioned under clause (v), new conditions were imposed. The noticee has contended that they have fulfilled those conditions also. They have also produced certificates from jurisdictional
Range Office to show that they have fulfilled the conditions, authorisation-wise. However, the certificates produced by the noticee stated that they have not utilized the cenvat credit on inputs procured under DFIA licenses and used for manufacture of goods exported under
DFIA scheme but it does not state that the new set of conditions imposed vide notification No. 17/2009-Cus were satisfied. Therefore, the jurisdictional Deputy Commissioner was also requested to verify as to whether the noticee has fulfilled the new sets of conditions and vide letter F. No. CEX/GIM/ADJ/2009-10 dated 04.12.2009, the verification report was submitted by the Deputy Commissioner, Central Excise
Division, Gandhidham. The required questionnaire alongwith photocopies of all the relevant documents were submitted by the Deputy
Commissioner. However, there was no certification that the new sets of conditions were fulfilled by the noticee. Therefore, jurisdictional Range
Superintendent was against asked to verify the details of usage of goods imported under DFIA scheme by the noticee. The Range Superintendent, vide letter F. No. AR-II/Bhuj/SCN/32/Rebate/2008 dated 07.03.2012 stated that the goods imported by the noticee were utilised for further manufacture of dutiable goods and not for any exempted goods or goods attracting nil rate of duty. Therefore, it is clear that so far as availment of credit on inputs used in manufacture of final products exported under
DFIA scheme is concerned, the noticee has correctly availed the credit in view of change in FTP as well as deletion of condition in notification No.
40/2006-Cus.
18. So far as question of rebate is concerned, it appears that what was restricted in notification No. 40/2006-Cus (before amendment) was input stage rebate and not the rebate on terminal stage excise duty. The contention of the noticee is found to be correct in this regard. Further, in case of M/s. J. Dyechem Industries, Ahmedabad, the Revisionary
Authority has held that the restriction on availment of credit is only for the inputs procured under the authorisation scheme and would not be applicable to inputs procured in normal course and also that rebate of duty paid on final product is admissible even if the export is made under
DFIA Scheme.
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F. No. V.25/15-58/Adj/2008
Order-in-0riginal No: 36/Commissioner/2012
19. I find that the Revisionary Authority has, in the case of noticee itself (for earlier period) held that in case of export under DFIA scheme, the noticee was eligible for rebate of duty paid on final products exported, vide Order No. 502/2009 dated 29.12.2009. The order of Revisionary
Authority is based on the amendments made in notification No.
40/2006-Cus dated 01.05.2006 and Board’s circular No. 11/2009-Cus dated 25.02.2009. Relevant portion of the order reads as:
10. It is also observed that in Para 9 of the Circular No. 11/09-Cus dated 25.02.09 CBEC has directed the field formations to take action to safeguard revenue as suggested in sub paras a, b, c and d of the said para, in respect of past cases of duty free imports for the period 1.5.06 to 18.2.09. The said circular also nowhere speaks about any restriction on availment of rebate of duty paid on such resultant products exported under DFIA scheme while availing
Cenvat Credit on input procured in normal course and not against any Authorisation.
12. Govt. further observes that CESTAT, Banglore vide their final order No. 118-120/2009 dated 19.12.2008 in Appeal Nos. 381, 402 and 529/08 in the case of M/s. T T P Technologies and others s.
CCE Banglore (reported in 2009 (092) RLT 0757 (CESTAT-Banglore) has held that as in these cases the applicant has not procured the inputs against the authorization but have obtained in the normal course on payment of duty, hence the condition (v) of the said notification has not been violated. The rebate of duty under Rule 18 of the Central Excise Rules, 2002 on the finished goods is permissible and allowed the appeals with consequential relief.
15. In view of the above discussions, Government holds that rebate of duty paid on finished products is admissible under rule 18 of
Central Excise Rules, 2002 read with notification No. 19/2004-
CE(NT) dated 6.9.2004. Therefore the impugned order-in-appeal is set aside and revision application succeeds in terms of above.
Since the Order is accepted and attained finality, the issue in present proceedings being identical, it is held that the noticee was correctly granted rebate of duty paid on goods exported under DFIA scheme and hence the proceedings initiated under the SCN is required to be dropped.
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F. No. V.25/15-58/Adj/2008
Order-in-0riginal No: 36/Commissioner/2012
20. In regard to other case laws cited by the noticee, I find that since in noticee’s own case, the Revisionary Authority has held in favour of the noticee above the proceedings are required to be dropped, I don’t deem it necessary to look into the merits and applicability of those case laws.
21. Accordingly, I pass the following order:
ORDER
I drop the proceedings initiated under show cause notice No.
V.Bhuj/AR-II/Commr./32/2008 dated 28.05.2008.
F.No.:V.25/15-58/ADJ/2008
BY RPAD/HAND DELIVERY TO:
(V. Padmanabhan)
Commissioner
M/s. Sanghi Industries Ltd.
Cement Division,
Grinding Unit,
P.O. Sanghipuram,
Taluka: Abdasa,
Dist: Kutch – 370 511
Copy to:
1.
The Chief Commissioner, Central Excise, Ahmedabad, along with a copy of show cause notice.
2.
The Assistant Commissioner, Central Excise Division
Gandhidham.
3.
The Assistant Commissioner (Audit), Central Excise and Customs,
Rajkot.
4.
The Superintendent of Central Excise, AR-II, Bhuj
5.
Guard File
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