(PER :
HONOURABLE MR.JUSTICE AKIL KURESHI) Heard learned counsel for the parties for final disposal of the petition.
Petitioner has challenged Order-in-Appeal dated 27.4.2011 passed by the Appellate Commissioner and one dated 18.5.2012 passed by the Government of India as a Revisional Authority.
3. Petition arises in the following factual background:-
3.1 The petitioner is engaged in manufacturing and exporting of goods. The petitioner has one such manufacturing unit situated in Kutch area. Such unit avails the benefit of Exemption Notification No.39/2001 dated 31.7.2001, which was issued by the Government of India in exercise of powers under Section 5A of the Central Excise Act, 1944 ( the Act for short) granting special benefits to units situated in Kutch district of the State of Gujarat in order to encourage setting up of manufacturing units in the district after earthquake of 26.1.2001, which devastated the said region.
3.2 To the goods manufactured by the petitioner, which were ultimately exported, the petitioner also availed of Exemption Notification No.19 of 2004 dated 6.9.2004. Such Notification was issued by the Government of India in exercise of powers under Rule 18 of the Central Excise Rules, 2002 ( the Rules for short). The Notification granted exemption in the form of a rebate of whole of the duty of excise falling under First Schedule to the Central Excise Tariff Act, 1985 when such goods are exported to countries other than Nepal and Bhutan. Availment of such exemption was subject to several conditions contained in the said Notification, to which we would refer to at a later stage.
3.3 The petitioner cleared its goods manufactured in the unit situated in Kutch region for export during the period between 24.8.2007 and 31.8.2007. Admittedly such goods though were cleared for export after following conditions mentioned in the Exemption Notification No.19/2004, the actual export took place on or around 23.9.2007. In the meantime, on 17.9.2007 the Government of India issued amendment Notification No.37/2007 amending the Notification No.19/2004 and added condition (h) in paragraph 2 of the said Notification. By virtue of such amendment, rebate was made inadmissible in case of exports of goods by the manufacturers availing benefits under various Notifications mentioned therein including the Kutch area Exemption Notification No.39/2001. Central controversy in the present petition is whether to the exports made by the petitioner, after such amendment was made, such condition could be applied even though the goods were cleared from the factory for export before such date.
To complete the sequence of events, upon finally exporting the goods, the petitioner filed two rebate claims for a sum of Rs.2,39,09,690/- with the Adjudicating Authority. The Adjudicating Authority, however, issued show cause notice dated 28.12.2007 calling upon the petitioner why such rebate claims should not be rejected. He relied upon a clarification issued by CBEC dated 8.12.2006 to contend that since the petitioner was already availing exemption under Kutch Area Exemption Notification, it was not entitled to rebate upon export. He was, prima facie, of the opinion that there can be no rebate of duty when duty had not been paid.
4. The petitioner replied to the said show cause notice under communication dated 21.1.2008 and opposed the proposal. The petitioner contended that its claim of exemption under Kutch Area Exemption Notification would not disentitle it from claiming rebate on the exported goods. The petitioner also contested the validity of the CBEC circular. Significantly, the petitioner itself brought up the issue of applicability of the amendment dated 17.9.2007 in the Notification No.19/2004. The petitioner s contention in this regard may be noted:-
4.9 We further submit that notification No.37/2007-CE(NT) dated 17-9-2007 was issued clarifying that rebate on exports not available when manufacturer availing area based exemption, amending the notification no.19/2004-CE(NT) dated 6-9-2004. The said Notification dated 17-9-2007, has clarified that the rebate shall not be admissible under this notification to the units availing benefits of notification 39/2001-CE dated 31-7-2007, pertaining to the noticee. Since this notification has expressly made the rebate inadmissible to the notice since 17-9-2007, it can be construed that the rebate claims cannot be made on any goods cleared for export on or after 17-9-2007, the date from which the notification is effective. The notification No.37/2007-CE(NT) dated 17-9-2007 has only prospective effect and cannot be implied retrospectively. Therefore, the noticee are eligible for the rebate on the goods cleared for export on or before 16-9-2007, under claim of rebate.
5. Counsel for the petitioner submitted that the Adjudicating Authority did not pass final order in view of the petitioner s challenge to the CBEC circular dated 8.12.2006, which was pending before this Court. He pointed out that this Court by judgment in the case of Welspun Gujarat Stahl Rohren Ltd. vs. Union of India reported in 2010 (254) E.L.T 551 (Guj.) struck down the circular. Such decision has also been upheld by the Supreme Court. Thereupon, the Adjudicating Authority proceeded to examine the petitioner s refund claims. By an order dated 3.12.2010, the Adjudicating Authority granted the rebate and passed the following order:-
13.(i) I hereby sanction the rebate of Rs.2,25,35,758/-(Rupees two crore twenty five lakhs thirty five thousand seven fifty eight only) in cash to M/s. Welspun Corp. Limited (earlier known as M/s. Welspun Gujarat Stahl Rohren Lted.) Vill:Varsamedi, Taluka Anjar (Kutch), Gujarat under Section 11B of the Central Excise Act, 1944 read with Rule 18 of the Central Excise Rules, 2002.
I also allow M/s.
Welspun Corp. Limited, Vill: Varsamedi, Taluka Anjar (Kutch), Gujarat to take a credit of Rs.13,73,922/-)Rupees thirteen lakhs seventy three thousand nine hundred twenty two only) in their PLA account.
Against such order of the Adjudicating Authority, Department preferred appeal before the Appellate Commissioner. It is undisputed that in such appeal, the Department pressed in service the amended Notification dated 17.9.2007 and strongly urged that by virtue of such amendment in the Notification No.19/2004, rebate claims were not maintainable.
7. The Appellate Authority, by order dated 27.4.2011, partly allowed Department s appeal. To the extent that the goods, which were actually exported prior to 17.9.2007 amendment, rebate claims were held eligible. For those exports effected after the said date, the claims were rejected. The Appellate Authority passed following order:-
18. In view of the above facts, discussions and findings, I pass the following order:
(i) I set aside the impugned order so far as it relates to allowing claim of rebate filed by the respondent in respect of export of the goods after the crucial date i.e. 17.09.2007.
I hereby upheld the impugned order so far as it relates to sanction of rebate claim for the goods exported on or before 16.09.2007, subject to verification by the Lower Authority. In case the goods are found to be exported prior to 17.09.2007, the lower authority should calculate the admissible rebate amount within fifteen days from the receipt of this order. In case the whole export is on or after 17.09.2007, the whole impugned order is set aside.
18. The appeal is decided in above terms.
8. Aggrieved by such order of the Appellate Commissioner, the petitioner preferred revision petition before the Government of India. The Government of India rejected the Revision Petition by an order dated 18.5.2012. In such order, it was observed, inter alia, as under:-
7. Applicant has mainly pleaded that goods were cleared for export from the factory under Central Excise invoices dated 24.08.07 to 31.08.07 along with ARE-I 171 to 178 all dated 24.08.07 to 31.08.07 by complying all the conditions and provisions of the notification prevalent at that time, and right to rebate vested in exporter once the goods are cleared from factory for export, that the Not. No.37/07-CE(NT) dated 17.09.07 cannot be made applicable to said exports, as the said notification does not have a retrospective effect, that relevant date prescribed under explanation to section 11B of Central Excise Act, 1944 is for computation of time limit for filing refund claim and it does not affect their eligibility to refund claim.
8. Government notes that the governing statutory provisions for grant of rebate of duty paid on exported goods are contained in Rule 18 of the Central Excise Rules, 2002 which read as under:-
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 and limitation, if any, and fulfillment of such procedure, as may be specified in the notification.
The above statute very clearly stipulates that where any goods are exported, the Central Government may by notification grant rebate of duty paid on such excisable goods subject to condition and limitation and fulfillment of procedure as prescribed in the notification. So the fundamental condition for grant of rebate is that duty paid goods are exported out of India subject to compliance of condition or limitation and procedure prescribed in the notification. The Not.No.19/04-CE(NT) dated 6.9.04 issued under Rule 18 ibid prescribes the condition/ limitation and procedure to be complied with for becoming entitled for the grant of rebate claims. The said notification was amended vide Not.No.37/07-CE(NT) dated 17.09.07 and condition 2(h) was added in the said notification. The said condition 2(h) is as under:-
(h) that in case of export of goods which are manufactured by a manufacturer availing the notifications of the Government of India in the Ministry of Finance (Department of Revenue) No.32/99-Central Excise, dated 8th July, 1999 [G.S.R.508(E), dated the 8th July, 1999] or No.33/99-Central Excise, dated 8th July, 1999[G.S.R.509(E), dated the 8th July, 1999] or No.39/99-Central Excise, dated the 31st July, 2001 [G.S.R.565(E), dated the 31st July, 2001] or notification of the Government of India in the erstwhile Ministry of Finance and Company Affairs (Department of Revenue) No.56/2002-Central Excise, dated the 14th November, 2002 [GSR 765(E), dated the 14th November, 2002] or notification of the Government of India in the Ministry of Finance (Department of Revenue) No.56/2003-Central Excise, dated 25th June, 2003 [G.S.R.513(E) dated 25th June, 2003] or 71/2003- Central Excise dated the 9th September, 2003] [G.S.R.717(E) dated the 9th September, 2003] or No.20/2007-Central Excise, dated the 25th April, 2007 [G.S.R.307(E), dated the 25th April, 2007], the rebate shall not be admissible under this notification.
The condition 2(h) envisaged that in case of export of goods which are manufactured by manufacturer availing specified notifications granting area based exemption, the rebate shall not be admissible under this notification. In the instant case the manufacture exporter applicant has exported the goods manufactured by availing such Not.No.39/2001-CE dated 31.7.2001.
Government notes that the rebate become admissible when duty paid goods are exported and condition or limitation of said notification are complied with. The entitlement of rebate benefit arises as soon as goods are exported. So the conditions or limitations as prescribed in notification must be satisfied on the date when export takes place. If the argument of the applicant that rebate claim has accrued on the date of clearance for export from factory, is to be accepted then another argument that rebate becomes admissible as soon goods are manufactured for export can also be raised. Government finds that as per rule 18 read with Not. No.19/04-CE(NT) the entitlement of rebate claim takes place on the export of goods and therefore it cannot be related to clearance of goods from factory.
9. Against such orders passed by the Appellate Commissioner and the Revisional Authority, the petitioner has preferred this petition.
10. Learned counsel Mr. Modh for the petitioner raised following two contentions:-
11.1 First contention was that the amendment dated 17.9.2007 in the Notification No.19/2004 would not apply to the petitioner in the facts of the present case. His contention was that once the goods were cleared for export from the factory of the petitioner, right to claim rebate accrued. Such accrued right cannot be affected by any subsequent change in the Exemption scheme. In essence, therefore, his contention was that the amendment Notification dated 17.9.2007 would not adversely affect the petitioner s claim of rebate on goods manufactured and cleared from the factory for export before such date.
11.2 In support of his contentions, counsel relied on following decisions:
1) On the decision of the Calcutta High Court in the case of Rasoi Limited vs. Union of India reported in 2004(176) E.L.T. 101(Cal.) On the decision of the Division Bench of this Court in the case of Dipak Vegetable Oil Industries Ltd. vs. Union of India reported in 1991(52) E.L.T. 222 (Guj.) Counsel s second contention was that the show cause notice only stated that the rebate claim was not maintainable because the petitioner, availing benefit of Kutch Area Exemption Notification, would not be entitled to rebate since, by virtue of the clarification issued by CBEC, such goods cannot be stated to be duty paid. He submitted that such Notification came to be quashed by the decision of the Division Bench of this Court in the case of Welspun Gujarat Stahl Rohren Ltd and another vs. Union of India and others (supra). The Appellate Authority and the Revisional Authority therefore committed a serious error in relying on the amendment in Exemption Notification No.19/2004 to deny the petitioner s rebate claim, which was never part of the show cause notice. He, therefore, contended that the authorities travelled beyond the show cause notice.
13. On the other hand, learned counsel Mr. Oza for the Department opposed the petition contending that right to claim rebate would arise upon actual exports. In the present case, the exports were made after 17.9.2007. To such exports, the amended Notification would apply. Since the petitioner did not fulfill condition (h) of paragraph 2 inserted by amendment dated 17.9.2007, the rebate claims were rightly rejected. In this context he relied on the decision of the Apex Court in the case Union of India vs. Rajindra Dyeing and Printing Mills Ltd.
reported in 2005(180) E.L.T. 433(S.C.). He further contended that the show cause notice was eloquent and referred to the petitioner s right to claim rebate on the basis of the Exemption Notification No.19/2004. The Appellate and the Revisional Authorities, therefore, cannot be said to have travelled beyond the scope of the show cause notice.
14. Learned counsel Mr. Champaneri, representing the Government of India reiterated such contentions.
15. Having thus heard learned counsel for the parties, we may proceed on facts which are virtually undisputed. To recapitulate such facts, the petitioner claimed benefit under Exemption Notification No.39/2001 granting such benefits to the manufacturing units located in Kutch district. To the goods, manufactured in such unit, which were exported, the petitioner also claimed benefit under Exemption Notification No.19/2004. Such exemption grants rebate of the excise duty falling under the First Schedule to the Central Excise Tariff Act, 1985. Such exemption is subject to certain conditions and limitations. Condition (h) in paragraph 2 was inserted by amendment Notification No.37/2007 dated 17.9.2007. The petitioner made exports of goods after 17.9.2007 but claimed rebate on the ground that such goods were cleared from the factory premises for export before 17.9.2009. Short question, therefore, is whether to such export, the amended notification can be applied.
16. Exemption Notification No.19/2004 has been issued under the powers conferred under Rule 18 of the Rules. The said Rule provides that where any goods are exported, Central Government may, by notification grant rebate of duty paid on such excisable goods or duty paid on material used in the manufacture or processing of such goods and the rebate shall be subject to such conditions or limitations, if any, and fulfillment of such procedure, as may be prescribed in the notification. Thus, the rebate of duty is envisaged upon the exports of goods. Under such circumstances, the Central Government may grant rebate of duty paid by issuing appropriate Notification. Such claim of rebate, however, would be subject to conditions or limitations that may be contained in the Notification and also upon fulfillment of the procedure, as may be specified. It, thus, immediately becomes clear that a claim of rebate of duty would be related to export of goods. Actual export of goods therefore would be a pre-condition for claiming rebate.
17. In addition to actual export of goods, the claimant would also have to fulfill the conditions and submit to limitations contained in the Notification as also the procedure prescribed for claiming the rebate. The Exemption Notification No.19/2004 contained conditions and limitations for claim of rebate in paragraph 2 thereof. Prior to 17.9.2007 conditions relevant for our purpose read as under:-
(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;
(b) the excisable goods shall be exported within six months from the date on which they were cleared for export from the factory of manufacture or warehouse or within such extended period as the Commissioner of Central Excise may bin any particular case allow;
xxx xxx xxx
(d) the rebate claim by filing electronic declaration shall be allowed from such place of export and such date, as may be specified by the Board in this behalf;
18. Paragraph 3 of the said Notification No.19 of 2004 lays down procedure for claim of rebate and inter alia, provides as under:-
(b) Presentation of claim for rebate to Central Excise:-
(i) Claim of the rebate of duty paid on all excisable goods shall be lodged along with original copy of the application to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise having jurisdiction over the factory of manufacture or warehouse or, as the case may be, the Maritime Commissioner;
(ii) The Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise having jurisdiction over the factory of manufacture or warehouse or, as the case may be, Meritime Commissioner of Central Excise shall compare the duplicate copy of application received from the officer of customs with the original copy received from the exporter and with the triplicate copy received from the Central Excise Officer and if satisfied that the claim is in order, he shall sanction the rebate either in whole or in part.
19. From the above provisions, it can be gathered that the exporter would be entitled to file the rebate claim only upon export of goods. Clearance of such goods from the factory for export directly is just one of the conditions subject to which such refund/rebate claim could be granted. Fulfillment of such condition,however, cannot be equated with the right to claim rebate. Such right is hedged by requirement of fulfilling of conditions and limitations contained in the Exemption Notification and all the requirements of fulfilling the procedure. Mere fulfillment of such conditions and limitations and following the procedure would not give right to a person to claim rebate in absence of the fundamental requirement of export of goods. The rebate claim arises out of the export of goods. The conditions, limitations and the procedural requirements are additional requirements to be fulfilled by an exporter in order to seek actual rebate.
20. Above observations gather support from Rule 18 of the Rules, which permits Central Government, by issuing Notification, to grant rebate of excise duty upon the export of goods. Exemption Notification No.19/2004, as noted above, has been issued in exercise of powers conferred under the said Rule 18.
21. This also gets support from Section 11B of the Act, which pertains to claim for refund of duty. Sub-Section(1) thereof enables any person claiming refund of any excise duty and interest to make an application for refund in this regard to the prescribed authority within a period of 1 year from the relevant date. Term relevant date has been defined in Explanation below clause (B) to Section 11B. Sub-clause (a) thereof, provides as under:-
(B) relevant date means,-
(a) in the case of goods exported out of India where a refund of excise duty paid is available in respect of the goods themselves or, as the case may be, the excisable materials used in the manufacture of such goods,-
(i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India, or
(ii) if the goods are exported by land, the date on which such goods pass the frontier, or
(iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India;
22. Thus, starting point of computation of time limit of one year available to a claimant of rebate upon export of goods is the time when, as contained in sub-clause (i),(ii) and (iii), the goods are actually exported. In this context, we may refer to the decision of the Apex Court in the case of Union of India vs. Rajindra Dyeing and Printing Mills Ltd.(supra).
In such case, the exporter had despatched the goods through ship for export. Due to the accident to the ship within the territorial waters of India, the ships sank and goods were destroyed. The exporter claimed duty drawback on the ground that the goods were actually exported. The Supreme Court, basing reliance on the concept of movement of goods outside the territorial waters of India to complete the export, held that the claim of duty draw-back was not valid. It was observed as under:-
4. Learned counsel for the appellants contends that, in the instant case, there was no export as contemplated by the said Rules inasmuch as the said cargo had not been taken out of India to a place out of India; in fact, the vessel had sunk and the said cargo was destroyed within the territorial waters of India. Our attention was drawn to the judgment of this Court in Collector of Customs, Calcutta v. Sun Industries, 1988 (35) E.L.T.
241. This was a case where goods had been loaded on to a vessel in India and the vessel had sunk after it moved out of the territorial waters. This Court said:
When the ship got clearance and moved out of the territorial waters, the export was complete.... But the expression taking out to a place outside India would also mean a place in high seas. It is beyond the territorial waters of India. High seas would also mean a place outside India, if it is beyond the territorial waters of India. Therefore, the goods were taken out to the high seas outside territorial waters of India, they will come within the ambit of expression taking out to a place outside India . Indubitably the goods had been taken out of India.
5. The emphasis in the judgment afore-mentioned is on the movement of the goods outside the territorial waters of India. It is then that an export may be said to have taken place. In the instant case, the said cargo was destroyed when the vessel sunk within the territorial waters of India. There was, therefore, no export of the said cargo. Accordingly, no duty drawback was available in respect of the said cargo.
23. We are of opinion that the claim for rebate under Exemption Notification No.19/2004 would accrue upon actual export of goods. Mere clearance of the goods for export from the factory premises would not be sufficient. Fulfillment of such a condition is necessary but not sufficient for exporter to claim rebate. Therefore, on all the exports made by the petitioner after 17.9.2007, the petitioner had no accrued right to claim rebate on the basis of unamended notification on the basis of clearance of goods from the factory. Mere fact that such goods were cleared from the factory premises for export before such date, would not give rise to an indefeasible claim of rebate. When by amendment in the Exemption Notification No.19/2004 an additional clause (h) to paragraph 2 was added and an additional condition was introduced, such amended notification would apply to all exports made after 17.9.2007. Such condition reads as under:
(h) that in case of export of goods which are manufactured by a manufacturer availing the notifications of the Government of India in the Ministry of Finance (Department of Revenue) No.32/99-Central Excise, dated 8th July, 1999 [G.S.R.508(E), dated the 8th July, 1999] or No.33/99-Central Excise, dated 8th July, 1999[G.S.R.509(E), dated the 8th July, 1999] or No.39/99-Central Excise, dated the 31st July, 2001 [G.S.R.565(E), dated the 31st July, 2001] or notification of the Government of India in the erstwhile Ministry of Finance and Company Affairs (Department of Revenue) No.56/2002-Central Excise, dated the 14th November, 2002 [GSR 765(E), dated the 14th November, 2002] or notification of the Government of India in the Ministry of Finance (Department of Revenue) No.56/2003-Central Excise, dated 25th June, 2003 [G.S.R.513(E) dated 25th June, 2003] or 71/2003- Central Excise dated the 9th September, 2003] [G.S.R.717(E) dated the 9th September, 2003] or No.20/2007-Central Excise, dated the 25th April, 2007 [G.S.R.307(E), dated the 25th April, 2007], the rebate shall not be admissible under this notification.
24. It is undisputed that the petitioner is covered by such condition since the petitioner claims benefit of Exemption Notification No.39 of 2001. In that view of the matter, in our opinion, the Appellate as well as Revisional Authorities committed no error.
25. We are unable to accept the contention of the petitioner that such authorities travelled beyond the scope of the show cause notice. The show cause notice was issued for rejecting the rebate claim on the ground that since the petitioner was availing benefit of Kutch Area Exemption Notification, it would not be entitled to rebate. It is true that reference to this objection was in relation to the clarification issued by CBEC in this respect. However, the petitioner itself was acutely conscious of the amendment in the Notification No.19 of 2004. It was precisely for this reason that at the very outset, in the reply to the show cause notice itself, the petitioner raised the contention that such amendment would not apply to the exports, which may have been made after 17.9.2007 but clearance of which was made from the factory for export before such date. Thus the issue whether such amendment would apply in above set of facts was very much at large before the Adjudicating Authority. In any case, the question is application of a condition in the Notification. No disputed facts arise in the process. It is not even the case of the petitioner that any disputed facts are involved for examining this legal issue. Notifications are in the nature of delegated legislation. The question, therefore, is Rule amended or unamended, should apply to admitted set of facts, is pure question of law. Had the petitioner been denied the fair opportunity to raise any contention factually or legally, the grievance of breach of natural justice would have been valid. In the present case, the petitioner s contention that such amended notification would not be applicable was very much before the very first authority and was examined by the higher authorities with the assistance of the petitioner.
26. In case of Rasoi Limited vs. Union of India (supra), learned Single Judge of Calcutta High Court examined the situation where an assessee had accumulated certain unused Cenvat Credit. Subsequently, the entire scheme was abolished. It was in this background held that the accumulated unused credit can be utilized for duty payment of the subsequent period despite the abolition of the scheme because a vested right had accrued to the assessee and the same cannot be denied merely by omission of the Rules to provide the same. Very similar issue was considered by the Division Bench of this Court in the case of Dipak Vegetable Oil Industries Ltd. vs. Union of India (supra).
27. Both these judgments proceed on entirely different set of facts and statutory provisions applicable and would, therefore, have no applicability to the present case.
28. In the result, we find no merits in the petition and the same is dismissed. Notice discharged.
(AKIL KURESHI, J.) (MS SONIA GOKANI, J.) SUDHIR Page 22 of 22