CASE STUDY
 

Prepared by: -CA Neetu Sukhwani &
Ankit Palgutta

Introduction:-
 
 

The assessee was issued with a Show cause notice alleging that they have filed application of refund     claim amounting to Rs. 219764/- for Central Excise Duty paid on exported goods under Rule 18 of Central Excise Rules, 2002. But the rebate was denied on the ground that non-compliance of legal provisions. Para 8.3 (iii) of Chapter 8 of Central Excise manual and conditions as specified under the Notification no. 19/2004-CE (NT) dated 06.09.2004 read with Notification no. 93/2004-Customs dated 10.09.2004 and as amended, were not fulfilled. Moreover, it was also alleged that the assessee was not entitled to file rebate claim along with claiming the benefit of Advance License Scheme. Thus, the whole of the claim of Rs. 219764/- was proposed to be rejected.  The adjudicating authority confirmed the rejection of rebate claim of Rs. 219764/- under section 11-B of the Central Excise Act, 1944. It is against the said order passed by the adjudicating authority that the assessee filed appeals to the Commissioner Appeals.
 

M/s. Bhansali Engineering  Polymers Ltd. v/s Deputy Commissioner, Central Excise Division, Jodhpur
 [Order-In-Appeal no. 55-56 (VC) CE/JPR-II/2013 dated: 24/05/2013]
 

Relevant Legal Provisions:-

 
Rule 18 of the Central Excise Rules, 2002.
Notification No. 19/2004-CE (NT) dated 06.09.2004.
Notification no. 93/2004-CUS dated 10.09.2009

Issue: - Whether rebate claim deniable on account of procedural lapses and simultaneous availment of Advance License Benefit?
 
Brief Facts:- The appellant, M/s Bhansali Engineering Polymers Ltd. is manufacturer of Styrene Acrylonitrile (SAN) Co-polymers and ABS Ter polymers falling under sub-heading No. 3903.20. The appellant has filed application for refund claim of Rs. 219764/- under Rule 18 of Central Excise Rules, 2002 in respect of Central Excise duty paid on the goods exported under the Notification no. 19/2004-CE dated 06.09.2004. On verification by the Deputy Commissioner, it was noticed that the refund claim was not in accordance with the procedure specified for the said purpose under Chapter 8, Condition no. 2(a), 3(a) (i) & 3(xi) of the Notification no. 19/2004-CE(NT) dated 06.09.2004. Therefore, the Department issued Show Cause Notice alleging that they have not followed proper procedure specified for the purpose of claiming refund under Rule 18 of Central Excise Rules, 2002. Apart from the above mentioned procedural lapses, allegation of simultaneous availment of rebate claim and the Advance License Scheme was also levelled against the assessee. It was proposed to deny the total of the refund claim of Rs, 219764/- . The adjudicating authority confirmed the rejection of refund claim. Aggrieved with the impugned order, the appellant preferred appeal before the Commissioner (Appeals).
 
Appellant’s Contentions:- The appellant made following submissions before the Commissioner (Appeals):-
 
1)           The appellant submit that the impugned Order in Original issued by the Adjudicating Officer is wholly and totally erroneous and is liable to be set aside.
 
Rebate claim is not time barred:-
 
2)           The appellant submit that the consignment in question was shipped on the board and left the custom frontiers from Mumbai on 7.4.2011. It is clear from seal affixed on the bill of lading attached with the rebate claim .  However, the related documents were misplaced due to which there was some delay in filing the rebate claim and the claim could be filed only on 9.4.2012. But it is worthwhile to mention here that the time limit of one year was ending on 7.4.2012 which was a Saturday which is holiday. The next day was Sunday which is also a holiday. However, the claim was filed on very next working day (i.e. on Monday, 9.4.2012) after two consecutive holidays. Thus, as such, there was no delay in filing the rebate claim due to the fact that the last date was falling on the holiday. The claim was filed on the very next working day, thus, it is well within time. As per General Clauses Act, if a particular act is to be done on a last date and this last date happens to be holiday then it shifts to next working date.
 
3)           Without prejudice to above, it is submitted that the impugned order is alleging the limitation on the basis of time limit prescribed under section 11B of the Central Excise Act, 1944. In this regard, it is submitted that the said time limit is being prescribed under section 11B of the Central Excise Act, 1944. On the other hand, the rebate claim is being filed under provisions of notification no. 19/2004-CE(NT) dated 6.9.2004 which does not prescribe any time limit to file the claim. As such, when the notification does not prescribe any time limit they cannot suo motu apply the time limit prescribed in the general provision. Thus, the rebate claim is not deniable by taking shed of limitation prescribed under section 11B. this view is supported by the recent decision given by hon’ble Madras high court in the following case:-
·                     Dorcas Market Makers Private Limited Vs CCE, Chennai [2012-TIOL-108-HC-MAD-CX]
             Central Excise- Rebate - limitation under Section 11B of the Central Excise Act, 1944, will not apply to rebate claim made under Central Excise Notification No. 19 of 2004 : What is not prescribed in the notification cannot be imported into the said notification. No time limit has been prescribed in the relevant notification No.19 of 2004 dated 6.9.2004. When the statutory notification issued under Rule 18 does not prescribe any time limit, section 11 B is not applicable, and based on which the benefit cannot be denied to the petitioner.
              Alternate Remedy : there is no necessity to send the petitioner to avail alternative remedy, as facts are before this Court. Moreover, the question of application of either statute or notification issued under rule is the only issue, which has been done by this court. Availability of alternative remedy is not an absolute bar for this Court to exercise Powers under Article 226. - Petition Allowed :MADRAS HIGH COURT.
Thus, the time limit of one year is not applicable in the instant case in the light of above decision.
 
4)           It is further submitted that the impugned order is relying upon the decision of Collector Land Acquisition Anantanag & Ors. V/s Mst Katii & Others [1987 (28) ELT 185 (SC)]. In this regard, it is submitted that this is entirely different decision and it has been wrongly relied by the impugned order. This decision has been rendered by the hon’ble Supreme Court in relation to Condonation of delay in filing of appeal. This is not the case here, the instant case is about filing of rebate claim, not the appeal, as such, the above decision is not applicable here.
 
5)           Without prejudice to above, it is submitted that in this case of Collector of land Acquisition, hon’ble Supreme Court has laid down following principles for condoning the delay in filing the appeal:-
(i)          Ordinarily a litigant does not stand to benefit by lodging an appeal late.
(ii)    Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties.
(iii)   “Every day’s delay must be explained” does not mean that a pedantic approach should be made. Why not every hour’s delay, every second’s delay? The doctrine must be applied in a rational common sense pragmatic manner.
(iv)   When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
(v)   There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk.
(vi)   It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
Making a justice oriented approach from this perspective, delay in the institution of appeals must be condoned.
 
Thus, even if it is accepted for the sake of argument also, that this decision is applicable, then too, as per principles laid down by the hon’ble Supreme Court, the delay is condonable on the grounds that the appellant does not stand benefit by late filing the rebate claim. Further, the Condonation is being appreciated by hon’ble Supreme Court on the grounds that there is no malafide intention behind the late filing of appeal, rather there is a serious risk behind this. Thus, if the ratio of this decision is to be taken, it is in favour of the appellant as the hon’ble Supreme Court has simply held that the Condonation should be appreciated as the appellant is not benefitted by the late filing of appeal (in the instant case – rebate claim), rather he is put under serious risk of demand (in the instant case – risk of losing the rebate claim otherwise eligible). Thus, at the first sight, the decision is not applicable on the appellant as it is related to Condonation of delay in filing of appeal. The instant case is about the filing of rebate claim which was bit delayed, but not on account of malafide, it was simply due to the fact that firstly the documents were misplaced and then the last date was falling on the Saturday and the claim was filed on the very next working day which is a fact on record. Therefore, as such, there was no delay in filing the rebate claim. However, even if this decision is made applicable, the Condonation is required as there is no malafide intention attributable for delay in filing the rebate claim. Thus, the impugned order is required to be quashed and the rebate claim is allowable.
 
6)    Further, the impugned order is also relying upon the decision of M/s Kirloskar Pneumatics Company [1996 (84) ELT 401 (SC)] to hold that High Court under writ jurisdiction cannot direct the custom authorities to ignore time limit prescribed under section 27 of the Customs Act, 1962. In this regard, it is submitted that this decision is particularly related to Customs Act, 1964 and in the instant case, the issue is pertaining to rule 18 of the Central Excise Rules, 2002 read with notification no. 19/2004-C.E. (NT) dated 6.9.2004 under which the rebate claim is filed. Thus, decision rendered in context of Customs Act cannot be applied under provisions of Central Excise Act. Even if the applicability of this decision is accepted, then too, it will not yield fruits to the impugned order as in the instant case, as such, there is no delay as such. The last date had approached due to the fact that the documents had misplaced and even the last due dates were the Saturday-Sunday. But the rebate claim was filed on the very next working day, i.e., Monday which is undisputed fact. As such, this cannot be said that there was any delay; as such, the ratio of above decision cannot be applied in the instant case. Therefore, the impugned order should be set aside and the rebate claim should be allowed.
 
Finished goods Rebate claim allowed with Advance Authorization:-
 
7)           The appellant submit that the learned Adjudicating Authority has held in the impugned order that as per condition no. (v) of the Notification No. 93/2004-Customs dated 10.09.2004, the facility under Rule 18 or Sub-Rule (2) of Rules 19 of the Central Excise Rules, 2002 is not available to the licencee getting licence under Advance Licence Scheme. In this regard, the appellant submit that the exact language of the notification reads as follows:-
 
“(v) that the export obligation as specified in the said licence or authorisation (both in value and quantity terms) is discharged within the period specified in the said licence or authorisation or within such extended period as may be granted by the Licensing Authority or Regional Authority by exporting resultant products, manufactured in India which are specified in the said licence or 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 19 of the Central Excise Rules, 2002 has not been availed : 
 
Provided that an Advance Intermediate Licence holder shall discharge export obligation by supplying the resultant products to exporter in terms of Paragraph 4.1.3 (b) of the Foreign Trade Policy;
 
Thus, it is clear from the language that rebate of duty paid on material used in manufactured in final product will not be allowed. This is clear from the language itself that the input stage rebate under Rule 18 will not be allowed. It does not say anything about finished good stage benefit. These are two separate benefits available under Rule 18. Even there is separate notification under Rule 18 for input stage benefit and final product stage rebate. Notification number 21/2004-C.E. (N.T.) dated 6.9.2004 allows input stage rebate claim whereas notification number 19/2004-C.E.(N.T.) allows finished goods stage rebate claim. Thus, it is clear from separate notification also these are two separate benefits. Even the procedures prescribed under both the notifications are also totally different. Also, the separate forms are prescribed under the both. ARE-1 is used for finished goods rebate where as Form ARE-2 is used for input stage rebate. Thus, it is clear from the above that these are two separate procedures for input stage benefit and finished good stage benefit. When the appellant has exported the goods under ARE-1 then it clearly establishes that they intend to take the finished good stage benefit only. And notification 93/2004 cited supra intends to restrict only the input stage benefit and not the finished goods rebate. They have claimed the finished goods stage benefit and the same should be allowed to them. But the learned adjudication officer did not adhere to our submissions and hence such an erroneous order-in-original is liable to be set aside.
 
8)           In continuation, the appellant submit that the condition no. (v) of the Notification No. 93/2004-Cus provided that the benefit under Advance licence to import duty free raw material will not be available if rebate under Rule 18 of CER, 2002 is claimed at the input stage i.e. on the materials used in the manufacture of resultant product or in case of procurement of raw material at Nil rate of duty under Rule 19 (2).
 
It is submitted that the appellant in their reply had pointed put the fact that the said condition was amended. Before the amendment, the condition read no. (v) prescribed that benefit of Advance license will not be available if rebate under Rule 18 is claimed. Vide Corrigendum (Drawback/P. N. 2/2005 Dated. 17.05.2005) the words & figures “under rule 18” was corrected to read as “under rule 18 (rebate of duty paid on materials used in the manufacture of resultant product)”.
 
It is submitted that a perusal of the condition (v) after amendment clearly provided that the benefit under Advance License scheme will not be available if rebate is claimed at the input stage i.e. on the materials used in the manufacture of resultant product. It is submitted that nowhere in the condition no. (v) it was specified that in case rebate is claimed on the finished goods the benefit of Advance License scheme will not be available.
 
Thus, in case the benefit for raw material or input stage benefit was claimed by the assessee, then in that case the benefit of importing duty free raw material under the Advance Licence was not allowed as this will amount to double benefit. However, in the case of the appellant, they have not claimed the input stage rebate claim under Rule 18 of the CER, 2002 but had claimed rebate of duty paid on the finished goods which were exported. The appellant had claimed finished goods stage benefit, therefore, the appellant have not violated the condition no. (v) of the Notification No. 93/2004-Cus. Therefore, the appellant were entitled to claim both the benefit for input stage i.e. duty free import under Advance licence as well as rebate of duty paid at the time of export of final product of the appellant.
 
9)           It is also submitted that the appellant had in their reply to the show cause notice contended that they had claimed the rebate of duty under Rule 18 of the CER, 2002 for which the procedure prescribed under Notification No. 19/2004-CE(NT) dated 06.09.2004. Therefore, it was required to be ascertained that whether the appellant were fulfilling the conditions of these Central Excise provisions or not. However, the learned Adjudicating Authority has relied upon the condition no. (v) of the custom Notification No. 93/2004-Cus which provides exemption from customs duties on inputs imported under Advance License Scheme which is entirely covered under Custom Notification as well as  under Foreign Trade Policy. Therefore, for a condition prescribed under Custom Notification No. 93/2004-Cus, the benefit of rebate could not be denied under Central Excise Notification No. 19/2004-CE(NT). As such, the action should have been undertaken for recovery of Custom duty exempted under Advance licence by invoking the provisions of Customs Act. But instead, the impugned order has rejected the rebate claim governed by the provisions of Central Excise Act, 1994 which is totally erroneous. Therefore, the rebate claim should not have been denied to the appellant. They are alleging the contravention of a custom notification then provisions of Custom Act can be invoked. But the Custom as well as DGFT authority has not objected the same. They have signed ARE-1 and shipping bills. This shows that it is clearly permissible. Hence the demand should be given to disallow the benefit of advance licence by custom authorities. On the contrary they are issuing demand for Central excise authorities and that too benefit of rebate is being disallowed. There is no condition in Rule 18 as well as notification that rebate will not be allowed if advance licence is applied. Hence the complete demand is not sustainable in eyes of law. But the impugned order-in-original has disallowed the rebate claim. Such an order is not legally sustainable in eyes of law.
 
10)        It is submitted that in support of above contention of disallowance of rebate under Central Excise provisions is not sustainable but the action should have been taken under Custom Act, the appellant had placed reliance on the judgment given in the following judgments wherein for contravention of the drawback rules, it was held that action is required to be initiated under the provisions of Customs and Central Excise Duties Drawback Rules, 1995, denial of rebate claim is not justified in such circumstances. The case laws relied upon are reproduced hereunder:-
 
-                   In Re: Munot Textiles [2007(207) E.L.T. 298(G.O.I.)]:-
 
Rebate not deniable to the manufacturer on the ground that merchant-exporter has claimed and obtained duties drawback- Both applicant manufacturer and merchant-exporter given declaration on the relevant AR-4s that no duty drawback has been claimed - Contravention of Duties Drawback Rules taken place by claiming drawback by merchant-exporter - Action against defaulter could have been taken under the Customs and Central Excise Duties Drawback Rules, 1995 - Applicant having fulfilled all the conditions and limitations laid down under Notification No. 40/2001-C.E. (N.T.), rebate not deniable - Rule 18 of Central Excise Rules, 2002.
 
-                   Commissioner of C. EX., Gurgaon vs. Simplex Pharma Pvt. Ltd. [2008 (229) E.L.T. 504 (P & H)]:
 
Refund – Rebate of duty of excise on goods exported or on excisable material used in manufacture of goods which are exported are eligible for refund and such refund includes rebate of duty as well as duty of excise on excisable material and refund of such rebate of duty is payable in cash to appellant if such amount is relatable to rebate of duty of excise on excisable goods exported out of India or excisable material used in manufacture of goods which is exported out of India - Section 11B of Central Excise Act, 1944. [para 10]
 
Therefore, the rejection of rebate claim (governed by the provisions of Central Excise Act, 1944) for non fulfillment of conditions prescribed under Advance Authorisation Scheme of the Foreign Trade Policy and Customs notification was not justified and such an order is not tenable and is liable to be quashed.
 
11)        Appellant further submit that the condition no. (v) of the Notification No. 93/2004-Cus is plain and unambiguous. It is specifically stated therein that the rebate of input stage duties is not allowed along with benefit under Advance Licence. But the impugned order has suo motto included the finished goods stage duty in the provision which is simply meant for input stage duties. By doing so, it has taken out a meaning not intended by the law makers which is not justified. It is further held by the highest court of India in the case of Truetuf Safety Glass Industries vs Commissioner of Sales Tax,  UP [2007 (215) ELT 14 (SC)] that it is a settled principle of law that the Court cannot read anything into a statutory provision which is plain and unambiguous. Similar decision has been given in the case of TATA CONSULTANCY SERVICES VersusSTATE OF ANDHRA PRADESH [2004 (178) E.L.T. 22 (S.C.)] by holding the view that Courts should not be over zealous in searching ambiguities or obscurities in words which are plain. Thus, the learned Assistant Commissioner, by wrongly interpreting a clear and unambiguous provision, has violated the principle laid down by the Court of last resort. Such an interpretation contrary to the principle of literal construction is not justified and is liable to be quashed. The impugned order should be set aside and the appeal should be allowed.
 
12)        The appellant further submit that the learned Deputy Commissioner has taken the view that the word ‘rebate of duty’ includes both input stage and finished goods stage. In this regard, it is submitted that it has been held by the hon’ble Supreme Court in the case of ISPAT INDUSTRIES LTD. Versus COMMISSIONER OF CUSTOMS, MUMBAI [2006 (202) E.L.T. 561 (S.C.)]that where two interpretations of a rule are possible, the one which upholds its validity should be preferred irrespective of the one which invalidates it. In the instant case, if the interpretation taken by the learned Assistant Commissioner is accepted even for the sake of argument, then too it would render the framing of two concepts of rebate useless. If the learned Assistant Commissioner says that rebate claim mentioned in Notification No. 93/2004-Cus includes both input stage and finished goods stage, then there was no need to prescribe the two concepts of rebate and two separate procedures for claiming them. Thus, the interpretation taken by the respected Assistant Commissioner is not sustainable in the light of above Supreme Court decision.
 
13)        It is further submitted that the learned Deputy Commissioner has not considered the judgment relied upon by the appellant wherein the Hon’ble CESTAT has allowed the rebate claim under scheme DFIA in case APTAR BEAUTY & HOME INDIA PVT. LIMITED [2011(267)ELT-401 (G.O.I) read as under :
 
“Rebate- Exports under DFIA Scheme- Rebate claim denied as applicant violated Condition-V of Notification No. 40/2006-Cus., governing DFIA Scheme- Condition –V of Notification ibid debars exporter to claim rebate on materials used in manufacture of export goods- Assessee claiming rebate of duty paid on finished goods- Cenvat credit available on duty paid inputs procured without any authorization- Notification No. 17/2009-Cus., dated 19.02.2009 omitted amending condition –V ibid thereby not debarring assessee from rebate claim- Finance (No.2) Act, 2009 amending Notification No. 40/2006-Cus. retrospectively so as to allow facility of rebate in respect of locally procured materials- Rebate of duty paid on final products exported under DFIA Scheme admissible- Rule 18 of Central Excise Rules, 2002. “
 
In the above referred case, the assessee had availed the benefit of DFIA scheme. DFIA is allowed as a input stage benefit, i.e., it is issued for setting off the duties payable on the import of raw material used for manufacture of export goods. Thus, it is an input stage benefit. Besides availing the DFIA, the assessee had claimed the rebate claim in respect of the duties paid at the time of removing the goods for export. Thus, they had claimed the finished goods stage. This was objected by the adjudicating authority by holding the view that the allowing the rebate claim along-with advance authorization would tantamount to double benefit. But this contention of department was rejected and the issue was settled in favour of the assessee by holding the view that rebate of duty paid on material used in manufacture of export goods is not allowed along-with DFIA. Since the assessee has claimed the rebate of duty paid on the finished goods and there is no bar in doing so; the rebate of duty paid on the finished goods is allowed. Hence, it is held that the rebate of duty paid on material used in manufacture of export goods and rebate of duty paid on the finished goods exported are two separate things. When the restriction is specifically regarding the rebate of duty paid on the material used in the manufacture of the export goods, it cannot be extended for the duty paid on the finished goods. As such, in absence of specific restriction on finished goods stage rebate vis a vis DFIA, the rebate of finished goods stage was allowed.
 
Further, relevant notification number of DFIA scheme under above case is 40/2006-custom dated 1.5.2006. In the aforesaid case, the department alleged the contravention of Clause (iiib) of aforesaid notification. This clause (iiib) of notification 40/ 2006-customs dated 1.5.2006 clearly read as follow:-
 
“that in respect of imports made after discharge of export obligation in full, and if the facility under Rule 18(rebate of duty paid on material used in manufacture of resultant product) or sub-rule 2 of Rule 19 of Central Excise Rules, 2002 or CENVAT credit under CENVAT Credit Rules, 2004 has not been availed----------“
 
Thus, it is clearly the same clause as mentioned in notification 93/2004 in our case. But the learned authority, while referring the identically worded clause of aforesaid notification, has allowed the finished good stage rebate claim under Rule 18.
 
Accordingly, the appellant in their reply had submitted that in their case also they had claimed the finished goods stage rebate just like M/s Aptar Beauty and Home India Pvt. Ltd. In the case of Aptar, the input stage benefit was DFIA and in their case it is Advance licence. However, it is clear from this case that the claiming of input stage benefit once and finished goods stage benefit only once does not tantamount to double benefit. Thus, the same analogy was applicable in their case also as the appellant have claimed both the benefits only once. The input stage benefit (i.e. Advance licence) is already allowed to them and now the finished goods stage benefit (i.e. rebate filed under Notification No. 19/2004-C.E.(N.T.) Dated 06-09-2004) should also be allowed in the light of aforesaid decision. However, the learned Assistant Commissioner has not considered the judgment and impugned order has not given any reasons for rejecting the same. Even the language in both the notifications is same and hence the interpretation of both the notifications cannot be different. Such an order amount to non-speaking order and is liable to be set aside as it violates the principles of natural justice. It has been held by hon’ble Supreme Court in the case of Commissioner of Central Excise, Bangalore versus Srikumar Agencies [2008 (232) E.L.T. 577 (S.C.)] that an order passed without considering the submissions of the appellant is a non speaking order and a non speaking order is not legally viable in the eyes of law. Therefore, the impugned order is not sustainable and is liable to be set aside.
 
14)         The appellant further submit that if the spirit of department allegation is taken that custom notification does not allow the export under Rule 18 and Rule 19. But there are only two available Central Excise procedures to export the finished goods. If these are not availed then export cannot take place. Hence the analogy drawn in impugned order as well as allegation of department is not legally sustainable. The only logical as well as legal conclusion can be drawn is that it is related to input stage benefit only. Hence the finished good stage benefit should be allowed.
 
15)         The appellant further submit that notification 93/2004-customs says that the benefit under Rule 19(2) of Central Excise Rules, 2002 should not be availed. The relevant Rule 19(2) reads as follows:-
 
“any material may be removed without payment of duty from the factory of the producer or the manufacturer or the warehouse or other premises, for use in manufacture or processing of goods which are exported, as may be approved by the commissioner”.
 
But Rule 19(1) reads as follows:-
 
“Any excisable goods may be exported without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, as may be approved by the commissioner”.
 
Thus, from above, it is clear that there are two separate clauses for finished goods benefit and input stage benefit under rule 19. Rule 19(1) allows finished good stage benefit and Rule 19(2) allow the input stage benefit. The inputs are procured duty free under rule 19(2) and used in export goods and are exported under ARE-2 application. But the notification specifically says 19(2) i.e. input stage benefits. But there is no such separate clause under rule 18. Hence it is qualified by words “material used in manufacture of resultant export good”. This clearly shows that it is input stage benefit.
Furthermore, it cannot happen that the input stage benefit is denied under rule 19 but the finished good stage benefit is denied under rule 18. These both provisions are complementary to each other. Even the procedure under both the rules for the input stage benefit / finished good stage benefit is same. Hence, it clearly implies that the input stage benefit is being denied. But the learned authority has failed to accept the same. Hence the impugned order-in-original is liable to be set aside.
 
16)         The appellant further submit that in the impugned order, the learned Deputy Commissioner has given a finding that the claimant has not filed the rebate claims under Rule 18 or Sub-rule (2) of Rule 19 of the Central Excise Rules, 2002, which shows that the claimant is well aware of the fact that they are not supposed to file these rebate claims under Rule 18 or Sub-Rule (2) of Rule 19 of the Central Excise Rules, 2002, as they are getting benefits of Advance Authorisation Licence Scheme governed under Notification No. 93/2004-Customs dated 10.09.2004. In this regard, the appellant submit that the above finding is not sustainable as it is clear from the rebate claims filed by them that the same have been filed by the appellants under Rule 18 of the Central Excise Rules, 2002. It is submitted that the appellants had paid duty at the time of export of goods and as the goods have been exported, they have filed rebate claim under Rule 18 only. They have failed to understand the version of learned adjudication officer. They have paid the duty on clearance of final product from our factory and rebate of the same is being claimed. This is allowed under rule 18 only. There is no other provision available in statue which allows the rebate claim of duty paid on final export goods. This is Rule 18 only. Thus, the contention of learned Adjudicating Authority is totally erroneous and they have filed the rebate claim in same format in which filed for earlier period also. Hence the allegation is totally unsustainable and liable to be set aside.
 
17)         In continuation to above, it is submitted that recently hon’ble Karnataka High Court has allowed the rebate of duty paid on export goods alongwith advance license. This was the case of JUBILANT ORGANOSYS LTD. V/S ASSTT. COMMR. OF C.EX., MYSORE-III [2012 (276) E.L.T. 335 (KAR.)] which has been discussed as follows:-
·        The petitioner assessee was engaged in manufacture of bulk drugs which was cleared domestically as well as exported.
·        They have obtained the advance license for procuring the duty free inputs required in the manufacture of bulk drugs.
·        The petitioner was clearing the export goods on payment of Central Excise Duty for which rebate claim was filed under rule 18 of the Central Excise Rules, 2002.
·        The rebate claim was denied on the grounds that they have availed benefit of notification no. 43/2002-Cus dated 19-4-2002 in respect of the inputs imported under the advance license.
·        It was allegation of the department that there was condition no. (v) of the said notification which allowed advance license only if the rebate under rule 18 was not claimed.
·        It was submitted by the petitioner that the said notification was corrected by the corrigendum wherein the words “under rule 18” were substituted by“under rule 18 (rebate of duty paid on material used in the manufacture of resultant product)”.
·        The issue to be decided by hon’ble High Court was whether the corrigendum which substituted the word rebate by rebate of duty ;paid on material used in the manufacture of resultant product was retrospective or not.
·        The hon’ble high court decided that the corrigendum is always retrospective in nature and is deemed to be effective from the date of original notification. THUS, HON’BLE HIGH COURT ALLOWED THE FACILITY OF ADVANCE LICENCE ALONGWITH REBATE OF DUTY PAID ON EXPORT GOODS.
The analysis of above case makes it clear that the petitioner assessee was availing the advance licence (in form of input stage benefit) and rebate of duty paid on export goods (in form of finished goods stage benefit). The issue in that case was that the department stuck to the words “rebate under rule 18” and on the other hand the said words were already corrected by a corrigendum and read as “rebate of inputs used in manufacture of resultant products”. In other words, there was mistake in initial drafting of notification which was subsequently rectified. The hon’ble High Court upheld the subsequent rectification and allowed the rebate of finished goods stage alongwith advance licence. This is exactly the case of appellant and as such by extending its ratio the benefit of rebate should be allowed to them by quashing the impugned order in original.
 
18)         In continuation to above, it is submitted that the above discussed decision of Hon’ble High Court in the case of M/s Jubilant Organosys Ltd. is the landmark judgment which is to be discussed and distinguished while deciding the even issues. This decision was duly submitted in the written reply by the appellant but this has not been discussed and distinguished while passing the impugned order. Not only this squarely applicable decision, all the other decisions also, which were cited in the written reply and reproduced hereabove are not at all discussed. Thus, the impugned order has turned out to be a non speaking order which is not sustainable in the light of decision of hon’ble Supreme Court in the following cases:-
-                   State of Himachal Pradesh Vs Sardara Singh [2008-TIOL-160-SC-NDPS]:-
Even High Courts are required to pass speaking reasoned orders - The "inscrutable face of a sphinx" is ordinarily incongruous with a judicial or quasi-judicial performance. The manner in which appeal against acquittal has been dealt with by the High Court leaves much to be desired. Reasons introduce clarity in an order. On plainest consideration of justice, the High Court ought to have set forth its reasons, howsoever brief, in its order indicative of an application of its mind, all the more when its order is amenable to further avenue of challenge. The absence of reasons has rendered the High Court order not sustainable. The requirement of indicating reasons in such cases has been judicially recognized as imperative. Judicial discipline to abide by declaration of law by this Court, cannot be forsaken, under any pretext by any authority or Court, be it even the Highest Court in a State, oblivious to Article 141 of the Constitution of India. Reasons are live links between the mind of the decision taker to the controversy in question and the decision or conclusion arrived at. Reasons substitute subjectivity by objectivity. The emphasis on recording reasons is that if the decision reveals the "inscrutable face of the sphinx", it can, by its silence, render it virtually impossible for the Courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system, reasons at least sufficient to indicate an application of mind to the matter before Court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made, in other words, a speaking out. The "inscrutable face of a sphinx" is ordinarily incongruous with a judicial or quasi-judicial performance.: SUPREME COURT;
-                   Commissioner of Central Excise, Bangalore versus Srikumar Agencies [2008 (232) E.L.T. 577 (S.C.)]:-
“Appellate Tribunal’s order - Non-speaking order - Facts not analysed in detail in impugned order by Tribunal - Disposal of appeals by mere reference to decisions not proper way to deal with appeals - Applicability of decision cited by Revenue not considered - Appeals involving different goods - CESTAT ought to have examined cases individually and articles involved - Manner of disposal not proper - Impugned order set aside - Question referred to Larger Bench of Supreme Court not answered as matter remitted to CESTAT for fresh decision by appropriate Bench - Section 35C of Central Excise Act, 1944. - By clubbing all the cases together and without analyzing the special features of each case disposing of the appeals in the manner done was not proper. [para 6]”
 
Thus, in the light of above decisions, the mere reference of decisions is not the proper way to decide the issue. Every case cited by the appellant should be discussed and distinguished. Further, if the decisions cited by the appellant are not discussed, the reasons are must to be given for non acceptance of these submissions whether technical or legal. Without reasons, the order is not sustainable. In the instant case also, the squarely applicable decision of the high court alongwith other similarly placed decisions that were cited in the written reply by the appellant have not been discussed and distinguished. Also, no reason has been assigned as to why these decisions have not been accepted. All these facts make the impugned order as a non speaking and non reasoned order which is not sustainable in the light of above decision. Thus, the impugned order is liable to be set aside allowing the rebate claim of the appellant.
 
Reasoning of the Commissioner (Appeals):-
 
After carefully going through the case records and submissions made by the appellant, the Commissioner Appeals observed that the following issues were to be decided and were put before it:
 
·        Non following the procedural requirements prescribed under Para 8.2 and 8.3 (iii) of Chapter 8 of CBEC Manual of Central Excise which prescribes conditions for grant of rebate as specified in Notification No. 19/2005-CE (NT) dated 06.09.2004.
 
·        Non following of the conditions No. 2(a), 3(a)(i) & 3(xi) of the Notification No. 19/2004-CE (NT) dated 06.09.2004.
 
·        Non certification of Para 3 of ARE-1 indicating as to under which scheme goods were exported, and
 
·        Invoices no. as mentioned in the Shipping Bill were other than the invoices mentioned in ARE-1.
 
·        Admissibility of rebate claim under Rule 18 read with Notification no. 19/2005-CE (NT) dated 06.09.2004 together with benefit under Advance License under Notification No. 93/2004-Cus dated 10.09.2004.
 

Before taking up the merit of the case, the first part of the impugned order was taken in which it has been alleged that the appellants did not follow the procedural requirements prescribed under Par 8.3 (iii) of Chapter 8 of CBEC Manual of Central Excise which prescribes conditions for such grant of rebate as specified in Notification No. 19/2004-Central Excise (NT) dated 06.9.2004. Para 8.3 reads." The following documents shall be required for filing claim of rebate:-
 
(i)-------
(ii)………….
(iii) invoice issued under rule 11

It was found that the invoices issued under Rule 11 of Central Excise Rules, 2002 have not been submitted, whereas it has been recorded by the adjudicating authority that commercial invoices were submitted along with the rebate. In this context it was observed that two types of invoices are prepared by the exporters, one, for the purposes of clearance of the goods from the factory for exports as prescribed under Rule 11 of Central Excise Rules, 2002, and secondly. the invoices which are prepared for importers of the goods in convertible foreign currency for the purpose of payments to be received from the foreign buyers. The allegation is that the invoices submitted by the appellants along with rebate were not the ones prescribed under Rule 11 of Central Excise Rule. 2002 but other ones, which were meant for their overseas buyers. Besides there is no allegation that the invoices under Rule 11 of Central Excise Rules, 2002 were not prepared or that the goods were not cleared on the prescribed invoices. Besides, invoices issued under Rule 11 have already received mention under Col. No. 10 of the ARE-Is, which clearly implies that these invoices were also prepared at the time of clearance of the goods for the purpose of payment of Central Excise duty. As such, it is found that non submission of invoices under Rule 11 was a procedural lapse which could have removed by simply asking the appellants to submit the requisite invoices as prescribed in this behalf. This cannot be an excuse to reject the rebate claim of the appellants.
Next allegation was that the appellants did not follow the Conditions No. 2(a), 3(a) (it3(xi) of the Notification No. 19/2004-CE. (NT) dated 06.9.2004.  The learned Commissioner Appeals have examined these conditions one by one and observe that condition number 2(a) prescribed that "the excisable shall be exported after payment of duty, directly from a factory or warehouse except as otherwise permitted by the CBEC by a general or special order"; it was observed that on examination of the export documents it is clear that the goods had directly been exported from the factory of manufacture, hence there is no discrepancy noticed in this regard. Therefore the allegation in the notice that this condition was not followed is baseless and the same turn down being ultra vires.
As regards the Condition No. 3(a) (i) of the Notification No. 19/2004-C.E.(NT) dated 06.9.2004, which reads as "the manufacturer-exporter registered under the Central Excise Rules, 2002 and merchant exporters who procure and export the goods directly from the factory or warehouse can exercise the option of exporting the goods directly from the factory or warehouse can exercise the option of exporting the goods sealed at the place of dispatch by a Central Excise Officer or under self sealing:^” On a plain reading of this option it is abundantly visible that this is an option and not compulsion for the exporters. Here in this case the appellants cleared the goods meant for export in trucks and got its examination at Mundra Port which is clearly visible from overleaf certification by the customs officials. Besides the track of documents that followed after clearance of the goods from the factory is clearly correlated from one another which establishes that the goods which were cleared from the factory were same which were exported. Since the goods cleared from the factory got sealed at the port, this condition was not required in this case therefore, this cannot be an excuse to reject the refund claim.

As regards the condition No. 3(xi) of the Notification No. 19/2004-Central Excise (NT) dated 06.9.2004, which prescribes terms and conditions in respect of self sealing of the consignments meant for export. In this context, it is seen that all the impugned consignments cleared for exportation were got examined at the Port of exportation, which clearly implies that there was no intention of the appellants to export the goods under self sealing procedure. As a matter of facts the goods were cleared from the factory for exportation and got it examined and sealed at the port of exportation, therefore, this condition is not relevant in this case.
As regards non certification at Para 3 of ARE-1 is indicating as to under which scheme goods were exported, it was found that the goods are being exported on payment of duty on finished goods and a rebate of duty paid on the finished goods is being sought. Thus it is very clear that the goods are being exported under Rule 18 of the Central Excise Rules, 2002.
As regards the discrepancies noticed in respect of the invoice numbers as mentioned in theShipping Bill are other than the Invoices mentioned in ARE-1, in this context it was found that this is merely due to the preparation of invoices one under Rule 11 of Central Excise Rules, 2002 and another invoices prepared for overseas buyers which can be correlated at the time of sanctioning the refund. As such the invoices mentioned in the ARE- 1 are the invoices prepared under Rule 11 of the Central Excise Rules, 2002, and the invoices mentioned in the SBs are the commercial invoices prepared for the overseas buyers of the same consignments. Therefore this cannot be termed as discrepancy and cannot be a reason to reject the refund claims.
In this regard, it was also found that there are plethora of judgments where Hon'ble Courts and Tribunals have ruled that any rebate on the exported goods cannot be denied merely on the grounds of technical or procedural lapses inadvertently committed by the exporters, where substantial conditions of exportation of the goods and remittance of the export proceeds have been established. The decision given in the case of Tablets India Ltd. Vs Joint Secretary MOF [2010-TIOL-652-HC-Mad-CX] was relied upon and found identical to the issue pertaining in the present appeal.
Now before taking up the admissibility of the impugned rebate claim on merit, it would
be better to look into the legal aspect of the impugned rebate, which are 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 or limitations, if any. and fulfillment of such procedure, as may be specified in the notification.
The Government of India issued the Notification No. 19/2004-CE(NT) date 6.9.2004 as amended) under Rule 18 of the Central Excise Rules. 2002 and laid down procedures and limitations, under which the impugned goods were exported and claim of the duty paid on the exported goods were filed.
Besides the appellant were also a holder of Advance Licence under the Advance Authorization Scheme contained in Chapter 4 of Foreign Trade Policy 2009-14 and imported duty free raw materials under Notification No. 93/2004-Cus dated 10.9.2004 and exported. resultant goods under Notification No. 19/2004-CE(NT) date 6.9.2004 (as amended). on payment of duty. and tiled impugned refunds of the duty paid on the goods exported. Condition No. (v) of the Notification No. 93/2004-Cus date 10.9.2004, together with its corrigendum dated 17.5.2005. which is the core issue of these appeals, reads as under:
"Condition (v) that the export obligation as specified in the said licence (both in value and in quantity terms) is discharged within the period specified in the said licence or within such extended period as may be granted by the Licensing Authority by exporting resultant products manufactured in India which are specified in the said licence and in respect of which facility under Rule 18 (rebate duty paid on the materials used in the manufacture the resultant product) or sub-rue (2) of Rule 19 of the Central Excise Rules. 2012 has not been availed^”
Now it is observed that in the impugned Orders, it has been admitted that the appellants are holder of Advance Licence and, the goods imported duty free, have been used in the production of the goods exported. It has also not been disputed that the goods were exported under Rule 18 of Central Excise Rules, 2002 on payment of duty following the procedure laid down under Notification No. 19/2004-CE(NT) date 6.9.2004 (as amended), further minor procedural lapses noticed, were also condoned in the impugned orders.
The core issue on which the said refunds were rejected is that as per condition no. (v) of the Notification No. 93/2004Cus dated 10.9.2009, the licensee while availing facility under this notification would not avail any facility under Rule 18 or sub-rule (2) of Rule 19 of the Central Excise Rules, 2002, and since the instant refund claims were filed under Rule 18 of the Central Excise Rules, 2002 following the procedure laid down under Notification No. 19/2004 CE(NT) dated 6.9.2004(as amended). Therefore, the appellants were not entitled for the refund of the duty paid on the goods exported.
In this context, it is observed that under Rule 18 of the Central Excise Rules, 2002, two types of rebate on the goods exported thereunder have been stipulated, in the first part it entitles the rebate of duty paid on the goods exported, following the procedure laid down under Notification No. 19/2004 CE(NT) dated 6.9.2004(as amended) and under the second part it entitles the rebate of duty paid on materials used in the manufacture or processing of such goods exported following the procedure laid down under Notification No. 21/2004-CE(NT) dated 6.9.2004 (as amended). Further condition no (v) of the Notification No. 93/2004-Cus dated 10.9.2009 read with its corrigendum dated 17.5.2005 makes it clear that it only debars the availment of rebate in respect of the duty paid on materials used in the manufacture of the goods exported under the second part of Rule 18 following the procedure laid down under Notification No. 21/2004-CE(NT) dated 6.9.2004 (as amended). Whereas, in the instant case. since the appellants have paid the duty on the goods exported, under Rule 18 of the Central Excise Rules. 2002 following procedure laid down under Notification No. 19/2004 CE(NT) dated 6.9.2004(as amended), and not in the second part thereof, hence they were entitled to the refund claim under Rule 18 of the Central Excise Rules. 2002 following procedure laid down under Notification No. 19/2004-CE(NT) dated 6.9.2004 (as amended) alone, with the facility of Notification No. 93/ 2004-Cus dated 10.9.2004.

The Commissioner Appeals have also examined the case of Jubilant Organosys Ltd. vs. CCE Maysore-III reported in 2012 (276) ELI 335 (Kar)relied upon by the appellants and found the same are identical to the instant one wherein the Hon’ble High Court even extended the benefit of rebate of the duty paid on the goods exported under Rule 18 while availing the benefit under Notification No. 43/2002- Cus for importation of the duty free raw materials in view of amendment to condition no. v of the notification retrospectively.
In view of the above, the appeal is allowed subject to following other procedures and conditions laid down in this regard.
 
 
Decision:- The appeal was allowed with consequential relief.
 
Conclusion:- The crux of this case is that procedural lapses cannot come in the way of rightly admissible rebate claim of the assessee. In the instant case also the rebate claim of the assessee was being rejected on the grounds such as non submission of invoices under Rule 11, not following conditions of the Notification regarding self sealing etc. and all these allegations were found to be baseless as substantial condition that goods have been exported and the duty has been paid was not disputed. Further, the another major ground for rejection was simultaneous availment of the Advance License Scheme and the rebate claim for finished goods. However, on analysing the provisions and the decision given in various cases, it was agreed that there is no bar in availing one input stage benefit i.e., Advance License and the other finished goods stage benefit of rebate claim.
 
 

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