Case Note & Summary
The Petitioners, M/s. Madhav Steel (a partnership firm) and its partner R.J. Virwadia, filed a writ petition challenging the Order dated 29th May 2006 passed by the Joint Secretary (Respondent No.2) in Revision under Section 35EE of the Central Excise Act, 1944. The Revision was preferred by the Deputy Commissioner of Central Excise and Customs (Respondent No.3) against an order allowing the Petitioners' rebate claim of Rs.9,87,777/-. The Petitioners are dealers in ferrous/non-ferrous metals. They purchased SS Sheets in Coil Form (Hot Rolled) of 162.405 MTs from M/s. Shah Alloys Limited (manufacturer) under 11 invoices. The Petitioners sold 151.500 MTs of these goods to M/s. H.M. Traders (exporter) under 7 invoices. The exporter exported the goods to M/s. Classico Trading at Sharjah, UAE under shipping bills dated 29th March 2003 after examination by Central Excise and Customs Authorities. The exporter realized full foreign exchange. The Petitioners obtained a No Objection Certificate from the exporter to claim rebate directly. The Petitioners filed a rebate claim which was initially allowed by the Assistant Commissioner. However, the Deputy Commissioner filed an appeal which was allowed by the Commissioner (Appeals) on the ground that the Petitioners had not passed on the duty to the exporter and therefore were not entitled to rebate. The Petitioners then filed a revision under Section 35EE, which was dismissed by the Joint Secretary. The High Court examined the facts and found that the Petitioners had paid duty to the manufacturer and had not passed it on to the exporter, as evidenced by invoices showing no separate duty component. The Court held that the Petitioners were entitled to rebate under Rule 12(1)(a) of the Central Excise Rules, 2002 read with Section 35EE. The Court also noted that the Revisionary Authority had ignored the evidence on record and violated principles of natural justice by not considering the Petitioners' submissions. The Court set aside the impugned order and directed the Respondents to sanction the rebate claim within eight weeks.
Headnote
A) Central Excise - Rebate Claim - Export of Goods - Section 35EE Central Excise Act, 1944 and Rule 12(1)(a) Central Excise Rules, 2002 - Dealer's entitlement to rebate when duty paid by manufacturer and not passed on to exporter - Held that the Petitioners, as dealers, are entitled to rebate as they paid duty to the manufacturer and did not pass it on to the exporter; the Revisionary Authority's order was set aside for ignoring evidence and violating principles of natural justice (Paras 1-10).
Issue of Consideration
Whether the Petitioners are entitled to rebate of central excise duty on exported goods when the duty was paid by the manufacturer and the Petitioners (dealers) did not pass on the duty to the exporter, and whether the Revisionary Authority erred in rejecting the rebate claim without considering the evidence on record.
Final Decision
The High Court allowed the writ petition, set aside the Order dated 29th May 2006 passed by Respondent No.2, and directed the Respondents to sanction the rebate claim of Rs.9,87,777/- within eight weeks from the date of the order.
Law Points
- Rebate claim
- Central Excise
- Export
- Duty incidence
- Revision
- Section 35EE
- Rule 12(1)(a)
- Burden of proof
- Natural justice
Case Details
2010 LawText (BOM) (08) 110
WRIT PETITION NO. 2706 OF 2006
V.C. Daga, S.J. Kathawalla
Anil Balani for Petitioner, P.S. Jetly for Respondent
M/s. Madhav Steel & R.J. Virwadia
Union of India, Joint Secretary, Deputy Commissioner of Central Excise & Customs, Commissioner of Central Excise, Customs & Service Tax
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Nature of Litigation
Writ petition challenging a revision order under Section 35EE of the Central Excise Act, 1944 rejecting the petitioners' rebate claim.
Remedy Sought
Setting aside of the Order dated 29th May 2006 passed by Respondent No.2 in Revision and direction to sanction the rebate claim of Rs.9,87,777/-.
Filing Reason
The petitioners' rebate claim was rejected by the Revisionary Authority on the ground that they had not passed on the duty to the exporter.
Previous Decisions
The Assistant Commissioner initially allowed the rebate claim; the Commissioner (Appeals) allowed the appeal of the Deputy Commissioner and rejected the claim; the Revisionary Authority dismissed the revision.
Issues
Whether the Petitioners are entitled to rebate of central excise duty on exported goods when the duty was paid by the manufacturer and not passed on to the exporter.
Whether the Revisionary Authority erred in rejecting the rebate claim without considering the evidence on record and in violation of principles of natural justice.
Submissions/Arguments
Petitioners argued that they paid duty to the manufacturer and did not pass it on to the exporter, as evidenced by invoices showing no separate duty component; they are entitled to rebate under Rule 12(1)(a).
Respondents argued that the Petitioners had not passed on the duty to the exporter and therefore were not entitled to rebate.
Ratio Decidendi
A dealer who pays central excise duty to the manufacturer and does not pass it on to the exporter is entitled to rebate under Rule 12(1)(a) of the Central Excise Rules, 2002 read with Section 35EE of the Central Excise Act, 1944, provided the goods are exported and the duty incidence is not passed on to the buyer.
Judgment Excerpts
By this Petition, the Petitioners have prayed for setting aside the Order dated 29th May 2006 passed by the Respondent No.2 in Revision under Section 35EE of the Central Excise Act, 1944.
The Petitioners had purchased SS Sheets in Coil Form (Hot Rolled) (200) SC1 Grade, of various thickness (the said goods) involving 162.405 MTs under 11 invoices ... from M/s. Shah Alloys Limited (the manufacturer).
The Petitioners thereafter under 7 invoices ... sold 151.500 MTs of the said goods to M/s. H.M. Traders, Mumbai (the exporter).
The exporter exported the said 151.500 MTs of the said goods under 3 ARE1s issued by the Petitioners ... after due examination by the Central Excise and Customs Authorities.
The Petitioners also obtained the No Objection Certificate from the exporter for the purpose of claiming the rebate of central excise duty directly from the Central Excise Authorities.
The exporter realized the foreign exchange in full through the authorized dealer, and the Petitioners have not passed on the duty to the exporter.
The Petitioners are entitled to rebate under Rule 12(1)(a) of the Central Excise Rules, 2002 read with Section 35EE of the Central Excise Act, 1944.
The Revisionary Authority has ignored the evidence on record and violated principles of natural justice.
Procedural History
The Petitioners filed a rebate claim which was initially allowed by the Assistant Commissioner. The Deputy Commissioner filed an appeal which was allowed by the Commissioner (Appeals) rejecting the claim. The Petitioners then filed a revision under Section 35EE which was dismissed by the Joint Secretary on 29th May 2006. The Petitioners thereafter filed the present writ petition in the High Court.
Acts & Sections
- Central Excise Act, 1944: Section 35EE
- Central Excise Rules, 2002: Rule 12(1)(a)
