C.W.P No. 2235 of 2007 ::1:: IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision : September 11, 2008
1. C.W.P No.2235 of 2007
M/S Nahar Industrial Enterprises Ltd v The Union of India & another
2. CWP No. 3358 of 2007
M/S Vinayak Textile Mills vs The Union of India & others. ***
CORAM : HON'BLE MR.JUSTICE ADARSH KUMAR GOEL
HON'BLE MR.JUSTICE AJAY TEWARI
Present : Mr.Balbir Singh, Advocate
for the petitioner.
Mr.Kamal Sehgal, Advocate
for the respondents.
1. Whether Reporters of Local Newspapers may be allowed to see the judgment ?
2. To be referred to the Reporters or not ?
3. Whether the judgment should be reported in the Digest ? ***
AJAY TEWARI, J
This order shall dispose of CWP Nos.2235 and 3358 of 2007 as common questions of law and facts are involved therein. For the sake of convenience, facts are being extracted from CWP No.2235 of 2007. The petitioner is engaged in the manufacture and export of cotton yarn and woven fabrics, both for domestic market as well as for export and the excise duty leviable thereon was 16%. By a notification No.29/2004-CE, dated 9.7.2004 the petitioner was granted relief in the excise duty payable in so much as the same was limited to 4%. By another C.W.P No. 2235 of 2007 ::2:: notification of the same date bearing No.30/2004-CE, the petitioner was granted total exemption from payment of duty on the products manufactured by it, subject to the condition that no credit is taken on the inputs consumed in the manufacture of the final product. However, as regards the goods exported, the petitioner did not take benefit of the above mentioned exemption notifications and paid duty @ 16% through actual credit/deemed credit account. Rule 18 of the Central Excise Rules, 2002 empowers the government to grant rebate on exported goods and is quoted herein below :-
"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 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 specified in the notification.
Explanation.- "Export" includes goods shipped as provision or stores for use on board a ship proceeding to a foreign port or supplied to a foreign going aircraft." In compliance with the above rule, the Central Government issued a notification No.19/2004-CE (NT), dated 6.9.2004 as amended by notification No.28/2004-CE(NT), dated 21.10.2004 providing rebate of whole of excise duty paid on excisable goods while exported out of India. Under these notifications, the petitioner filed a rebate claim. By order dated 10.6.2005 the Assistant Commissioner allowed the petitioner a rebate of excise duty of Rs.7,00,161/- in cash (since the same was deposited by actual C.W.P No. 2235 of 2007 ::3:: credit) and with regard to the remaining amount of Rs.24,90,176/- which was debited by the petitioner from its cenvat credit of capital goods, the same was allowed to be re-credited to the petitioner in its cenvat account. Aggrieved by the partial sanction of rebate in cash, the petitioner filed an appeal before the Commissioner (Appeals) who allowed the same in view of the decision of CESTAT in the case of Bharat Chemicals v. CCE Thane reported as 2004(170) ELT 568, and on the strength of Circular No.687/3/2003-CX, dated 3.1.2003 which lays down as under :-
" xx xx xx
The matter has been examined by the Board. It is the view that there is no discretion with the sanctioning authority to give the refund of the duty paid on goods exported through credit accounts. It is therefore clarified that the duty paid through the actual credit or deemed credit account on the goods exported must be refunded in cash."
Aggrieved therefrom the respondents filed a revision before the Government averring that since the petitioner had taken benefits of the notifications No.29/2004-CE, dated 9.7.2004 and No.30/2004-CE, dated 9.7.2004 (supra) for the domestic market and had voluntarily paid excise duty at the higher rate of 16% for its exported goods, the original order of the Assistant Commissioner whereby cash rebate was granted in respect of duty deposited by actual credit while the remaining rebate was granted by way of credit to the cenvat account, was just, fair and proper. By the impugned order dated 21.11.2006 the Government accepted the revision, set C.W.P No. 2235 of 2007 ::4:: aside the appellate order and maintained the original order. Before us learned counsel for the petitioner has reiterated the above mentioned claim. He has relied upon the aforesaid circular and the judgments of the Hon'ble Supreme Court reported as Commissioner of Income Tax vs Mahendra Mills (2000)243 ITR 56(SC), C.C.E Chandigarh vs Smithkline Beecham Consumer Health Care Ltd 2003(151)ELT 5, Hico Products Ltd vs Collector of Central Excise 1994(71) ELT 339, Priya Blue Industries Ltd vs Commissioner of Customs (Preventive) 2004(172) ELT 145, and Collector of Central Excise, Kanpur vs Flock (India) Pvt Ltd 2000 (120) ELT 285. On the strength of these judgments he has argued that once it is admitted that the petitioner was entitled to the rebate of duty the said rebate was liable to be allowed as cash and it was not open to the respondents to refund some part of it by way of cenvat account. In reply, learned counsel for the respondents has defended the orders of the government and states that the present writ petition be dismissed.
After giving our anxious consideration to the entire matter, we are of the opinion that this writ petition must fail. It would be noticed that there is no dispute regarding entitlement of the petitioner for refund, it is only the mode thereof which is the matter of contention. While the petitioner asserts that it is entitled to claim the entire refund in cash, it is the case of the respondents that the petitioner is entitled to cash refund only of the portion deposited by it by actual credit and for the remaining portion, refund by way of credit is appropriate. The first reliance of the petitioner is on the above quoted circular No.687. A reading of the same makes it clear that it did not deal with the distinction between the duty paid and duty C.W.P No. 2235 of 2007 ::5:: payable. In our opinion, the said circular only laid down that the duty paid and payable would be refundable in cash. In the present case, as noticed above, the petitioner paid lesser duty on the domestic product and higher duty on the export product which was admittedly not payable. This circular can, thus, be of no avail to the petitioner.
The case of Commissioner of Income Tax vs Mahendra Mills (supra) would also not be applicable to the present case, since in that case it was laid down that if an assessee does not wish to avail the benefit of depreciation, the same cannot be forced upon him. In the present case the dispute is not that the petitioner does not wish to avail a particular benefit but that it wishes to avail the benefit only in a particular manner. In C.C.E Chandigarh vs Smithkline Beecham Consumer Health Care Ltd (supra) it was held that a benefit available to the assessee to claim could not be thrust upon him against his wishes. The said case dealt with the distinction of short levy and lesser collection of duty because of adjustment and in that context it was held that Section 11A of the Central Excise Act, 1944- which dealt with recovery of duties not levied or not paid or short levied or short paid or erroneously refunded- would not be applicable. In our opinion, the said judgment has no application to the present case.
In the case of Hico Products Ltd vs Collector of Central Excise (supra), the dispute was whether the products of the appellant fell within item 15A or 68 of the Central Excise Tariff. In the said case, the Hon'ble Supreme Court noticed as follows :-
"....... Such exemption by means of notification issued under Rule 8 does not take away the levy or have the C.W.P No. 2235 of 2007 ::6:: effect of erasing levy of duty. The object of the exemption notification is to forgo due duty and confer certain benefits upon the manufacturer or the buyer, or the consumer through the manufacturer, as the case may be. ...."
Counsel for the petitioner asserts on the strength of the above that the petitioner was, thus, justified in paying excise duty @ 16% and then seeking refund thereof under the exemption notifications. In our opinion, the principle sought to be extracted by the petitioner from the above lines is far fetched. As mentioned above, the dispute in the present case is only with regard to the mode of refund and the above quoted extract does not lead to the conclusion that the petitioner was bound to pay excise duty at the higher rate without reference to notifications No.29 and 30 (supra) and that thereafter it was entitled to claim rebate under notifications No.19 and 28 (supra) and that regardless of the mode of payment of the said higher excise duty it would be entitled to refund thereof in cash. In the case of Priya Blue Industries Ltd vs Commissioner of Customs (Preventive) (supra), the assessed duty was paid under protest and subsequently a claim for refund was filed, which was rejected on the ground that since no appeal was filed against the order of assessment and the assessment order became final, the claim for refund could not be filed since a refund claim is not an appeal against the order of assessment. On the strength of this, learned counsel for the petitioner has sought to argue that its action of paying higher duty was reflected in the assessment order and, thus, in the absence of any appeal against the said assessment order, no fault could be found with the action of deposit of 16% duty by the petitioner. In C.W.P No. 2235 of 2007 ::7:: our view the said case has no applicability to the present controversy because the context is entirely different, since in the present case there was no occasion for the Assessing Officer to force the petitioner to take benefit of the exemption notifications at the stage of assessment as held in the case of Smithkline Beecham Consumer Health Care Ltd (supra). To the same effect is the judgment in the case of Collector of Central Excise, Kanpur vs Flock (India) Pvt Ltd (supra). In this view of the matter, we find no infirmity in the impugned order and consequently dismiss the writ petitions with no order as to costs. ( AJAY TEWARI )
( ADARSH KUMAR GOEL )
September 11, 2008