Benefit of rebate cannot be denied if there is no fraud, collusion, or wilful mis-statement or suppression of facts in duty payment

ORDER :

S.N. Variava, J. - 1.This appeal by the assessee is against an order of the High Court dated 17th July, 2000.

2. Briefly stated the facts are as follows:-

The appellants bought 100% cotton fabrics from one M/s Gopi Synthetics and then exported the said fabrics. The appellants claimed rebate under Notification No. 29/96 -CE (NT) dated 3rd September, 1996 on the footing that duty had been paid by the manufacturer i.e. M/s. Gopi Synthetics. This rebate was denied on the ground that duty had been short paid by M/s. Gopi Synthetics inasmuch as they had availed of 60% deemed Modvat credit whereas they were only entitled to avail credit @ 50%. For this short payment of duty, a show cause notice was issued to M/s. Gopi Synthetics. After receipt of the show cause notice M/s Gopi Synthetics paid up the 10% duty which had been short paid. They then appealed against penalty which had been levied on them. The Commissioner (Appeals) waived penalty on the ground that short payment was not by reason of any fraud, collusion or any wilful mis-statement or suppression of facts. The appeal filed by the Department against that order was dismissed on the ground of non-compliance with statutory provisions. Thus, the order of Commissioner (Appeals) in the case of M/s Gopi Synthetics has attained finality. In their case it has been held that short payment was not due to any fraud, collusion or any wilful mis-statement or suppression of facts.

3. The only ground on which the appellants have been denied rebate is that M/s Gopi Synthetics (the manufacturer) had short paid duty. Even though M/s Gopi Synthetics has since paid the duty and it has been finally held that there was no fraud, collusion or any wilful mis-statement or suppression of facts, rebate is being denied to the appellants. This is being done on the specious plea that it was the duty of the appellants, before he exported the goods, to see that the correct amount of duty had been paid. We are unable to accept this submission. Benefit of rebate is not to be denied because there is short payment. Benefit can be denied only if there is short payment by reason of fraud, collusion or any wilful mis-statement or suppression of facts. Once it has been held that there was no fraud, collusion or any wilful mis- statement or suppression of facts on the part of the party who was to pay the duty then the exporter cannot be denied rebate.

4. In this view of the matter, we are unable to sustain the impugned judgment of the High Court or of the order passed by Joint Secretary to the Government of India in the revision application. The appeal is accordingly allowed. It is held that the appellants will be entitled to rebate under the Notification. There will be no order as to costs.