Banswara Syntex Ltd. vs Union of India

This writ petition is directed against order dated 27-2-2004 passed by the Joint Secretary, Government of India, whereby, the application filed by the petitioner u/s 35EE of the Central Excise Act, 1944 (''the Act'') has been rejected while upholding the order-in-appeal dated 5-9-2003 passed by the Commissioner (Appeals-II), Customs & Central Excise, Jaipur [''Commissioner (Appeals-II)''] and the order-in-original dated 16-5-2001 passed by the Assistant Commissioner, Central Excise & Customs Division, Chittorgarh (''Commissioner''), who rejected the rebate claim made by the petitioner. The brief facts of the case are that the petitioner exported a quantity of 26,059.30 sq. metres of processed man-made fabrics to Aden, Yemen and submitted rebate claim of Rs. 49,044/- before the Commissioner under Rule 12(1)(a) of the Central Excise Rules, 1944 (''the Rules'') in respect of central excise duty paid in cash under compound levy scheme. The Commissioner issued show cause notice dated 31-3-2001 calling upon the petitioner to show cause as to why the rebate claim be not rejected on the grounds indicated in the show cause notice, which, inter alia, related to the fact that the goods were not cleared from the factory premises for the purpose of export; form AR-4 was not prepared; clearances for export had not been supervised by the jurisdictional Central Excise Office and that the claim was time-barred.

The petitioner submitted its reply to the show cause notice explaining that the goods were initially cleared from the factory for home consumption and, therefore, AR-4 was not prepared, however, the petitioner had filed all other prescribed documents and, therefore, the fact of export is proved and that the claim should not be rejected on account of procedural lapses.

The adjudicating authority i.e. the Commissioner came to the conclusion that the Circular relied upon by the petitioner was not applicable and in terms of the applicable Notification being No. 31/98-C.E. (N.T.), dated 24-8-1998 the excisable goods are required to be exported directly from the factory or a warehouse in accordance with the procedure set up in Chapter IX of the Rules and as the petitioner has neither fulfilled the conditions laid down by virtue of Notification No. 31/98-C.E. (N.T.) nor has followed the procedure prescribed under Board''s Circular dated 30-1-1997, the rebate claim was liable to be rejected. However, in view of its finding on merits, the issue relating to limitation was not decided.

On appeal being filed by the petitioner, the Commissioner (Appeals-II) came to the conclusion that by not preparing AR-4 or by getting the export clearances supervised by Central Excise Office and by not following the procedure laid down in Notification No. 31/98-C.E. (N.T.), the petitioner has failed to establish the co-relation between the exported goods and duty paid goods and, therefore, the rebate claim was correctly denied to it.

Feeling aggrieved by the orders passed by the Commissioner and the Commissioner (Appeals-II), the petitioner preferred a revision petition before the Central Government and the revisional authority by its order dated 27-2-2004 held thus:-

..........It is admitted fact that the applicants neither exported the impugned goods directly from their factory or a warehouse in accordance with the procedures set out in Chapter IX of the Central Excise Rules, 1944. It is also fact that the applicant did not follow the procedure as laid down under Noftn. 31/98-C.E. (N.T.), dated 24-8-1998 for claiming rebate of duty on exportation of the goods out of India. The applicants have cited several judgments/orders passed by the Hon''ble Courts/Tribunal/Quasi Judicial authorities wherein it has been decided that the substantial benefit of rebate should not be denied on account of procedural lapses. Govt. has carefully gone through the cited judgments/orders and would observe that there is no convincing evidence on record which help to correlate the goods cleared from the factory of the applicants and the goods exported by the applicant vide the said shipping bill/Bill of lading. Govt. would further observe that, the procedure laid down under Noftn. 31/98-C.E. (N.T.), dated 24-8-1998 is mandatory requirement to prove that the excisable goods cleared from the factory of the applicants is duty paid and has been exported. Even though, apart from the liberal construction of Rule 12 itself, many judicial pronouncements also suggest a liberal approach to be taken with regard to producers when exports are not in doubt, the fact remains that when some such procedures are themselves necessary to establish the identity and correlation between the duty paid goods manufactured and subsequently exported, they cannot be ignored and put on a back burner to give effect to the substantive portion of a beneficial legislation. Such mandatory procedures form the main bulwark to safeguard that erroneous claims are not rebated in the garb of real ones. Govt. therefore, is of considered opinion that the cited judgment/orders are not relevant in the case of applicants as it is not evidenced proved beyond doubt that the goods which was cleared from the manufacturing Unit of the applicants for home consumption, have actually been exported. In these facts and circumstances Govt. find no infirmity in the impugned Order-in-Appeal. Govt. therefore, would agree with the findings and orders passed by the Commissioner (Appeals).

Consequently, the revision petition was also dismissed.

It was contended by learned counsel for the petitioner that there was no dispute that the duty paid goods were exported by the petitioner and, therefore, the petitioner was entitled to claim rebate, however, the Commissioner, appellate and revisional authorities have all in the name of non-compliance of provisions of the Notification have wrongly denied the claim of rebate. The Notification dated 30-1-1997 clearly provides that AR-4 need not be insisted where goods are clearly identifiable and co-relatable with the goods cleared from factory on payment of duty. It was, therefore, prayed that the orders passed by three authorities below deserve to be set aside and claim of the petitioner for rebate be allowed.

On the other hand, learned counsel for the respondents submits that the Notification dated 30-1-1997 was merely meant for providing relaxation in case of past cases only and the same did not provide for any practice to be adopted, whereby, AR-4 was not required to be insisted upon. It was submitted that the finding of the Commissioner (Appeals-II) and the revisional authority that the petitioner has failed to establish the co-relation between the exported goods and the duty paid goods is essentially a finding of fact and, therefore, the same cannot be interfered under extraordinary jurisdiction of this Court.

We have considered the rival submissions made by the parties.

All the three authorities below have concurrently found that the petitioner has failed to establish co-relation between the duty paid goods and the exported goods.

The notification dated 30-1-1997 relied on by the petitioner provides as under:-

It has, therefore, been decided that the cases where exporters submit the proof that goods have actually been exported to the satisfaction of the rebate sanctioning authority, and that where goods are clearly identifiable and co-relatable with the goods cleared from factory on payment of duty, the condition of exports being made directly from the factory/warehouse should be deemed to have been waived. Other technical deviations not having revenue implications, may also be condoned.

The requirement of proof that goods have actually been exported to the satisfaction of the rebate sanctioning authority and where goods are clearly identifiable and co relatable with the goods cleared from factory on payment of duty only the condition of exports being made directly from the factory/warehouse should be deemed to have been waived.

As noticed hereinbefore, the three authorities below have concurrently held against the petitioner on the said issue, which finding is essentially a finding of fact, which cannot be ordinarily interfered while exercising extraordinary jurisdiction under Articles 226 and 227 of the Constitution of India.

The petitioner has failed to point out any perversity in the findings recorded by the three authorities below so as to require any interference by this Court. Consequently, there is no substance in the writ petition and the same is, therefore, dismissed. No costs.