Commissioner of Customs and Central Excise vs Neel Pigments P. Ltd.

Akil Kureshi, J.—These petitions arise out of common background. They have been heard together and are being disposed of by this common order. The facts emerging from Special Civil Application No. 17208/2012 may be recorded. The respondents had filed different rebate claims, totalling to Rs. 12,17,814 in terms of rule 18 of the Central Excise Rules, 2002 and Notification No. 19/2004, dated September 6, 2004. The adjudicating authority processed such rebate claims and granted such claims as found allowable. The Department was aggrieved by such orders passed by the adjudicating authority and hence filed appeals before the Appellate Commissioner. The Appellate Commissioner by a common order dated November 12, 2010 rejected all the appeals. The Department filed a revision petition before the Government. The Government by the impugned order dated June 29, 2012 rejected the revision petition. Hence, this petition.

Having heard learned counsel Shri Oza for the petitioner and having perused the documents on record, we notice that the Department''s prime objection to the rebate claims was that the respondent-manufacturer had breached Condition 2(a) of the notification dated September 6, 2004. Such condition reads as under:

(a) that the excisable goods shall be exported after payment of duty, directly from a factory or warehouse, except as otherwise permitted by the Central Board of Excise and Customs by a general or special order.

It is the case of the Department that the goods were manufactured in Gujarat by the respondents. The same were supplied to a trader-exporter and were thereafter, exported from Maharashtra. In the process, the above-mentioned Condition 2(a) was breached. The counsel for the petitioner drew our attention to rule 18 of the Central Excise Rules, 2002 to contend that the rebate claim was available in terms of the said Rules upon fulfillment of the conditions of the notification issued by the Government and the procedure set out therein. When the essential requirement was not fulfilled, rebate claims should not have been granted.

The counsel drew our attention to the decision of the Division Bench of the Himachal Pradesh High Court in the case of CCE v. Indian Overseas Corporation reported in (2009) 234 ELT 405 (HP) wherein such condition is held to be an essential condition.

From the record, however, we find that all the authorities have consistently come to the conclusion that there was a direct co-relation with the goods manufactured by the respondent-manufacturer and those exported on the basis of which rebate claims were granted. The respondent before the revisional authority raised the following contentions:

8.1. The respondents have pleaded that the goods were undisputedly exported as has been duly certified by the customs authorities at the port from where the export have been carried out and all the valid and legal documents supporting the genuine claims were filed by them and the Assistant Commissioner of Central Excise has rightly sanctioned the rebate claim after due verification. As regards the State of origin being mentioned as ''Maharashtra'' instead of ''Gujarat'' they submitted that the explanation has already been furnished to the Assistant Commissioner before sanctioning the rebate claim. Further they added that the goods removed from the factory premises, the same goods in a same packing condition have been exported as evident from the description of goods, gross, net weight, quantity mentioned in the ARE-1 and shipping bill which are tallied. They argued that this is not the case of the Department that the merchant-exporter has changed the packing of the goods and the same goods in a same packing condition have not been exported as it is well established by the endorsement of customs officers. The Government observes that the contention of the respondent is not contested by the applicant-Department through any evidence of diversion of goods for home consumption. The Commissioner (Appeals) has also come to the conclusion that there was no evidence to counter the argument of the respondent.

8.2. The respondent further submitted that on account of minor technical infraction, the rebate cannot be denied. In this regard, it is observed that the goods cleared from the factory under various ARE-1s duly signed by the manufacturer and the exporter and duty payment verified by the Range Superintendent. The export was routed through merchant-exporter. The description, weight, number of packages, quantity and value of goods as given in the ARE-1 and the particulars given in the relevant shipping bill is tallying and not questioned by the Department. The customs officers have certified all the ARE-1s to the effect that the goods were exported as per the corresponding shipping bill numbers mentioned on the ARE-1s. The export of the said goods has taken place through the merchant-exporter and the procedural lapses are there, but substantial compliance of provision of law has been established since the ARE-1 form prepared at the factory on which goods are cleared for export contains the customs endorsement regarding the export the goods.

8.3. In view of this position, the co-relation of the goods cleared from the factory with the goods exported cannot be said to be not established. The check list verified by the Range Officer clearly state that the exported goods were of duty-paid nature as mentioned in sub-paragraph 8.4 of the CBEC''s Manual of Supplementary Instruction and the Assistant Commissioner of Central Excise has categorically stated in the orders-in-original that the rebate claims have been verified and found in order and all the documents required for the rebate claim has been submitted by the claimants. He also found that the description of goods, quantity, ARE-1 No., etc., tally with the shipping bills submitted and proof of export is available on the shipping bill and the ARE-1s which are duly certified by the Customs officers.

Such contention was largely accepted by the Government and while rejecting the revision petition of the Department, the following observations were made:

The Government has decided similar case, vide GOI Order Nos. 419 to 428/2011-CX, dated April 28, 2011 in the case of M/s. Neel Pigments Limited, Ankleshwar upholding the impugned orders-in-appeal whereunder rebate claims were held admissible under similar circumstance. In the said case the revision application filed by the Department against Orders-in-Appeal Nos. KS/185 to 194/SRT-11/2008, dated September 10, 2009 passed by the Commissioner of Central Excise (Appeals), Surat II was rejected and the orders-in-appeal were upheld. The ratio of the said GOI order is squarely applicable to these cases since the facts of the case are exactly identical. However, the Government is of the opinion that such procedural lapses cannot be allowed to be repeated time and again. In the case of further reoccurrence of non-compliance of the prescribed procedure are noticed the Department would be justified in viewing such matter as substantial non-compliance of the prescribed procedure which may result in rejection of the related rebate claim.

We may further notice that before the adjudicating authority the respondent had relied on the decision of the apex court in the case of Union of India (UOI) Vs. A.V. Narasimhalu, wherein it was observed that for refund of small amounts collected wrongly the administrative authority should not rely on technicalities. We also further notice that before the said authority, the respondent had given a clear undertaking that such instances would not repeat in future. The same was recorded in the following manner:

The claimant has given an undertaking dated September 10, 2009, inter alia, stating that there are no incidences of reoccurrences of noncompliance of the procedure prescribed under Notification No. 19/2004-CE(N.T.), dated September 6, 2004 after passing of the said Orders-in-Appeal Nos. KS/185 to 94/SRT-II/2009, dated August 31, 2009.

When the Revenue authorities as well as the revisional authority have concurrently come to the conclusion that there was direct co-relation of goods manufactured in the factory with the goods being exported and when such fact was established through reliable, undisputed and contemporaneous documentary evidence, we are not inclined to interfere in the writ jurisdiction under article 226 of the Constitution of India. The question whether such condition was essential and therefore, can be strictly viewed can be examined in an appropriate case in future. We say so because in the present group of cases the revisional authority, as noted above, confined this decision to the facts of the case and has in fact provided that such lapses cannot be allowed to be repeated time and again and in case of future reoccurrence of non-compliance of the prescribed procedure, the Department would be justified in viewing such matter as substantial noncompliance of the prescribed procedure resulting into rejection of the rebate claim. Therefore, keeping the central question of law sought to be raised by the Department open, these petitions are not entertained. Disposed of accordingly.