Case Note & Summary
The Commissioner of Central Excise, Raigad filed a writ petition challenging an order of the Joint Secretary to the Government of India dated 4 June 2010, which allowed the revision application of M/s. Micro Inks Ltd. (the assessee) and held that the assessee was entitled to rebate of duty paid on export of inputs/capital goods by reversing the amount equal to the Cenvat credit taken on those goods. The assessee, a manufacturer of printing ink, had purchased inputs/capital goods from domestic suppliers, availed Cenvat credit, and later exported those goods on payment of duty by reversing the credit under Rule 3(4) of the Cenvat Credit Rules, 2002. The assessee then claimed rebate under Rule 18 of the Central Excise Rules, 2002. The adjudicating authority rejected the claim, and the Commissioner (Appeals) upheld that rejection. On revision, the Joint Secretary allowed the claim, treating the assessee as a deemed manufacturer. The Revenue challenged this order. The court considered whether rebate under Rule 18 is available when duty is paid by reversing Cenvat credit. The Revenue argued that notifications and circulars restrict rebate to duty paid in cash or through PLA, not by credit reversal. The court agreed, holding that reversal of credit does not constitute 'payment of duty' for rebate purposes, and the assessee cannot be treated as a deemed manufacturer for exported inputs/capital goods. The court allowed the petition, setting aside the Joint Secretary's order and restoring the Commissioner (Appeals)'s order rejecting the rebate claim.
Headnote
A) Central Excise - Rebate on Exports - Rule 18 of Central Excise Rules, 2002 - Cenvat Credit Rules, 2002 - The issue was whether rebate under Rule 18 is available when duty is paid by reversing Cenvat credit under Rule 3(4) of Cenvat Credit Rules, 2002. The court held that such reversal does not constitute 'payment of duty' for rebate purposes, as rebate is intended for duty paid in cash or through PLA, not by credit reversal. The assessee cannot be treated as a deemed manufacturer for exported inputs/capital goods. (Paras 2-5)
Issue of Consideration
Whether an assessee who reverses Cenvat credit on inputs/capital goods and exports them on payment of duty by such reversal is entitled to rebate of duty under Rule 18 of the Central Excise Rules, 2002.
Final Decision
The court allowed the petition, set aside the order of the Joint Secretary dated 4 June 2010, and restored the order of the Commissioner of Central Excise (Appeals) dated 30 April 2008 rejecting the rebate claim.
Law Points
- Rebate under Rule 18 of Central Excise Rules
- 2002 is not available when duty is paid by reversing Cenvat credit
- as it is not 'duty paid' within the meaning of the rule
- Deemed manufacturer concept does not apply to exports of inputs/capital goods under Rule 3(4) of Cenvat Credit Rules
- 2002
- Notification No. 41/1994
- Circular No. 294/1997
- and Notification No. 19/2004 restrict rebate to duty paid in cash or through PLA
- not by credit reversal.
