Whether rebate claim can be denied for clearance of goods to SEZ due to non-filing of bill of export?

PJ/Case law/2013-14/1866

Case:- IN RE : CCE, JAIPUR VS SHREE PARVATI METAL PVT. LTD

Citation:-2013 (290) E.L.T. 638 (G.O.I.)

Issue:-Whether rebate claim can be denied for clearance of goods to SEZ due to non-filing of bill of export?

Brief facts:- This revision application is filed by the applicant Commissioner of Central Excise, Jaipur-I against the Order-in-Appeal No. 169(DK)CE/JPR-I/1C), dated 31-3-2010 passed by Commissioner of Customs, Central Excise (Appeals), Jaipur-I, passed by Commissioner of Customs, Central Excise & Service Tax (Appeals), Surat-II with respect to Order-in-Original No. 555/2009-10 (Refd), dated 19-1-2009 passed by the Assistant Commissioner Central Excise, Division, Bhiwadi.

Brief facts of the case are that the respondent M/s. Shree Parvati Metal Pvt. Ltd., Bhiwadi engaged in the manufacture of Hydraulic Press Machines falling under Chapter 84 of the Schedule to the Central Excise Tariff Act, 1985 and filed a claim for rebate of Rs. 19,776/- on 25-6-2009 under Rule 18 of Central Excise Rules, 2002 on the ground that they had supplied goods to M/s. Clear Plus India Pvt. Ltd. C-129 Plot Nos. 27 to 29 and 40 to 41 SEZ Noida (UP) hence the duty paid by them is refundable under clause (a) of sub-section 2 of Section 11B of Central Excise Act, 1944. As per sub-rule (3) of Rule 30 of Special Economic Zone Rules, 2006 and Board’s Circular No. 29/2006-Cus., dated 27-12-2006, in cases where export entitlements are to be availed, the movement of goods from the place of manufacture to the SEZ shall be on the basis of ARE-1 and Bill of Export.

During the scrutiny of the documents submitted with the rebate claim, it was observed that the assessee had not filed Bill of Export with the claim. Since the claim of rebate is an export entitlement, therefore, Bill of Export was required to be filed alongwith the claim. As such the claim appeared not admissible to the assessee. Therefore, a show cause notice was issued to the assessee for rejection of the rebate claim of Rs. 19,776/-. The adjudicating authority vide impugned order-in-original rejected the said rebate claim.

Being aggrieved with the impugned order-in-original, the assessee filed an appeal before Commissioner (Appeals) Customs & Central Excise, Jaipur-I who observed that meaning of “Export Entitlement” appears to be a claim of drawback or DEPB. Since in this case the claim of rebate on export of duty paid goods is not an export entitlement, hence in terms of Rule 30 of SEZ Rules, 2006, the assessee has supplied the goods in SEZ only against ARE-1 and as such no Bill of Export was required to be made by them. Accordingly, the Commissioner (Appeals) set aside the impugned order-in-original and allowed the appeal with consequential benefit.

Being aggrieved by the impugned order-in-appeal, the applicant Commissioner filed this revision application under Section 35EE of Central Excise Act, 1944 before Central Government on the following grounds:
The Board, vide Circular No. 29/2006-Cus., dated 27-12-2006 also provides that the movement of goods from the place of manufacture to the SEZ shall be –

(i) on the basis of ARE-1 (in cases where export entitlements are not availed);
(ii) on the basis of ARE-1 and Bill of Export (in cases where export entitlements are availed).

In view of above provisions of sub-rule (3) of Rule 30 of Special Economic Zone Rules, 2006 and Board’s Circular No. 29/2006-Cus., dated 27-12-2006, in cases where export entitlements are to be availed, the movement of goods from the place of manufacture to the SEZ shall be on the basis of ARE-1 and Bill of Export. Since the claim of rebate of duty is also export entitlement, the assessee was required to submit Bill of Export alongwith the Rebate claim. Hence, the assessee appears not eligible for rebate in the instant case.

Personal hearing scheduled in this case on 27-6-2012 was attended by Shri S.S. Jangir, Authorised representative on behalf of the respondent who reiterated the findings of impugned order-in-appeal. Nobody attended hearing on behalf of applicant department.

Reasoning of Judgement:-Government has carefully gone through the relevant case records and perused the impugned order-in-original and order-in-appeal.

Government observes that the respondent supplied the goods to units located in Special Economic Zone and filed rebate claims under Rule 18 of Central Excise Rules, 2002. The rebate claims were rejected by the original authority on the ground that rebate being an export entitlement, the respondent was required to file Bill of export, which they failed to do. Commissioner (Appeals) decided the cases in the favour of respondents.

Government observers that in terms of para (5) of Board’s Circular No. 29/2006-Cus., dated 27-12-2006, the supply from DTA to SEZ shall be eligible for claim of rebate under Rule 18 of Central Excise Rules, 2002 subject to fulfillment of conditions laid thereon. Government further observes that the Rule 30 of SEZ Rules, 2006 prescribes for the procedure for procurements from the Domestic Tariff Area. As per sub-rule (1) of the said Rule 30 of SEZ Rules, 2006, DTA may supply the goods to SEZ, as in the case of exports, either under Bond or as duty paid goods under claim of rebate on the cover of ARE-1.
Rule 30(3)(4) stipulates as under :-

“(3) The goods procured by the unit or Developer under claim of export entitlements shall be allowed admission into the special Economic Zone on the basis of ARE-I and the Bill of Export filed by the supplier or on his behalf by the unit or Developer and which is assessed by the Authorised Officer before arrival of goods.

(4) A copy of ARE-I and/or copy of Bill of Export as the case may be with an endorsement by the authorised officer that goods have been admitted in full into the Special Economic Zone shall be forwarded to the Central Excise office having jurisdiction over the Domestic Tariff area supplier within 45 days failing which the Central Excise officer will raise the demand of duty against the DTA supplier.”

Government notes that in this case goods are exported/cleared to SEZ, on payment of duty under rebate claims in terms of Rule 18 of Central Excise Rules, 2002. The said clearance are in fact made under claim of export entitlement i.e. rebate claim of duty paid on exported goods. As such, DTA supplier is required to clear the goods to SEZ on the basis of ARE-I and Bill of Export.

Government notes that in this case Customs Officer at SEZ has certified on the ARE-1 that goods have been admitted in full in the SEZ. Therefore receipt of goods in SEZ is not dispute. The fundamental condition for granting rebate of duty paid on exported goods is that duty paid goods are exported. The said fact is not in dispute in this case. The substantial benefit of rebate claims cannot be denied for only lapse of not filing Bill of Export which is a procedural lapse of technical nature as held by Hon’ble Supreme Court judgment in the case of UOI v. Suksha International & Nutan Gems - 1989 (39)E.L.T.503 (S.C.) and in the case of Mangalore Chemicals and Fertilizers Ltd. v. DCCE - 1991 (55)E.L.T.437 (S.C.).Therefore, Government holds that rebate claim is rightly held admissible in this case by Commissioner (Appeals). The impugned Order-in-Appeal is upheld to this extent. However applicant cannot be allowed to continue repeating the said lapse and keep on claiming rebate of duty paid on exported goods. If the said lapse is repeated the benefit of rebate under Rule 18 of Central Excise Rules, 2002 will be liable to be rejected.

Decision:-The revision application rejected.

Comment:- The analogy that is drawn from this case is thatthe rebate claim cannot be denied on the clearance of the goods to SEZ due to the fact that there was lapse of filing of bill of export when there was no doubt as regards clearance of such goods to the SEZ and the substantial conditions have been fulfilled.

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PJ/Case law/2013-14/1866

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