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2010 Supreme(Bom) 1131
High Court of Judicature at Bombay
V.C. DAGA & THE HONOURABLE MR. JUSTICE S.J. KATHAWALLA
Madhav Steel & Another
Versus
Union of India & Others
WRIT PETITION NO. 2706 OF 2006
Decided on: 10-08-2010
For the Petitioners:Anil Balani, Advocate. For the Respondents:P.S. Jetly, Advocate.
Procedural lapses can be condoned if exports have actually taken place, and the correlation between purchased and exported goods is established.
Headnote:
Central Excise Act - Rebate Claim - Section 35EE - Rule 18 of the Central Excise Rules, 2002 - The court discussed the provisions of Rule 18 of the Central Excise Rules, 2002 and the requirements for claiming rebate. It highlighted the importance of establishing the correlation between the goods purchased and exported, and emphasized that procedural lapses can be condoned if exports have actually taken place. The court also referenced relevant case law to support its decision.
Fact of the Case:
The Petitioners, a partnership firm, filed a petition to set aside an order rejecting their rebate claim for the export of Stainless Steel Sheets in Coils. The dispute arose from the failure to establish a direct correlation between the goods purchased and exported.
Finding of the Court:
The court found that the Petitioners had successfully established the correlation between the goods purchased and exported, and that the procedural lapses should be condoned as long as the exports had taken place.
Issues: The main issue was the failure to establish a direct correlation between the goods purchased and exported, leading to the rejection of the rebate claim.
Ratio Decidendi: The court held that the Petitioners had provided sufficient evidence to establish the correlation between the purchased and exported goods, and emphasized that procedural lapses can be condoned if exports have actually taken place.
Final Decision: The court quashed and set aside the order rejecting the rebate claim, directing the Respondents to pay the claimed amount to the Petitioners.
S.J. Kathawalla, J.
1. By this Petition, the Petitioners have prayed for setting aside the Order dated 29th May 2006 passed by the Respondent No.2 in Revision under Section 35EE of the Central Excise Act, 1944. The said Revision was preferred against the Order allowing the Appeal filed by the Deputy Commissioner of Central Excise and Customs (Respondent No.3) and consequently, rejecting the Petitioners’ rebate claim for Rs.9,87,777/-.
FACTS :
2. The Petitioner No.1 is a partnership firm of which the Petitioner No.2 is the partner. The Petitioners (dealer) are engaged in the business of trading in ferrous/ nonferrous metals. The Petitioners had purchased SS Sheets in Coil Form (Hot Rolled) (200) SC1 Grade, of various thickness (the said goods) involving 162.405 MTs under 11 invoices (Exhibits-B-1 to B-11 of the Petition) from M/s. Shah Alloys Limited (the manufacturer). The Petitioners thereafter under 7 invoices (Exhibits-C-1 to C-7 of the Petition) sold 151.500 MTs of the said goods to M/s. H.M. Traders, Mumbai (the exporter). The exporter exported the said 151.500 MTs of the said goods under 3 ARE-1s issued by the Petitioners (Exhibits-D1 to D3 of the Petition). The Petitioners also obtained the No Objection Certificate from the exporter for the purpose of claiming the rebate of central excise duty directly from the Central Excise Authorities.
3. The exporter exported the goods to M/s. Classico Trading at Sharjah UAE under the cover of shipping bill Nos. 897232 to 897234 all dated 29th March 2003 after due examination by the Central Excise and Customs Authorities. The exporter also realized the foreign exchange in full through the authorized dealer, who issued the bank realization Certificate No. 500 dated 12th June 2003.
4. The Petitioners filed three rebate claims totally amounting to Rs.9,87,777/-under Rule 18 of the Central Excise Rules, 2002 on export of 151.500 MTs of Stainless Steel Sheets in Coils (Hot Rolled).
5. The Respondent No.3 vide his Order dated 20th August 2004 rejected the Petitioners rebate claims on the ground that the procedure required under the Board’s Circular, has not been followed by the exporter and the goods originally procured by the Petitioners from M/s. Shah Alloys Limited, have not been exported.
6. Being aggrieved by the Order of the Respondent No.3, the Petitioners filed an Appeal before the Commissioner of Central Excise (Appeals), Mumbai-III. While allowing the Appeal of the Petitioners, the Commissioner of Central Excise (Appeals), vide his Order in Appeal dated 22nd December 2004 held as under :
“ i. The goods in question have been duly exported after physical examination by the Central Excise and Customs which is supported by the endorsements of the Central Excise and Customs Officials on the relevant export documents, viz. shipping bills, ARE-1s, etc,;
ii. The duty on the exported goods have been paid; and
iii. Sale proceeds of the exported goods from the overseas buyer have been duly received through banking channel. The lapse mentioned in the impugned order was condonable. The directives by the Government of India while deciding various appeals under Section 35EE of the Central Excise Act, 1944 and also by the Board in this context directing that, the rebate claim should not be rejected merely on the procedural and/or technical ground have to be followed. Therefore, the appellants are entitled for the rebate claims under Rule 18 ibid.”
7. However, the Revisional Authority (Respondent No.2) vide its impugned order dated 29th May 2006, set aside the Order dated 22nd December 2004 of the Commissioner of Central Excise (Appeals). As a result, the rebate claims stood rejected. The Revisional Authority after comparing the contents of the invoices of M/s. Shah Alloys Limited (manufacture) with two of the 7 invoices of the Petitioners has held that the description and the quantity of the goods cleared from the manufacturing place is different from the description and the quant
