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2011 Supreme(Guj) 213
2011 (2) GCD 1601 (Guj) (DB)
Hon’ble Mr. Justice Akil Kureshi &
Hon’ble Mr. Justice Sonia Gokani
Commissioner of Central Excise & Customs
Versus
D.P. Singh Office of Joint Secretary to The Government of & Anr.
Special Civil Application No. 16269 of 20101—Decided on 31/03/2011
Appearance :
SCA Nos. 16269, 16270, 16271, 16304 of 2010 :Mr. R.J. Oza, for the Petitioner No. 1.
Mr. Paresh M. Dave, for the Respondent No. 1.
SCA No. 814/2011 :
Mr. R.J. Oza, for the Petitioner No. 1.
Mr. P.R. Nanavati, for the Respondent No. 1.
Cases Referred :
Ajay Kumar & Co. vs. Commissioner of Customs, Amritsar, 2006 (205) ELT 747.
Point in Issue :
Whether in the facts of the case M/s. Roman Overseas is entitled to benefit of rebate claim.
Headnote:Head Note :
Central Excise Act, 1944 (Central Act 1 of 1944) — Sections 11-B and 35-EE — Central Excise Rules, 2002 — Rule 18 — Cenvat Credit Rules, 2004 — Rule 9(3) — M/s. Roman Overseas filed claim before department — On basis of Cenvat Credit passed to it by M/s. Unique Exports — But M/s. Unique Exports never paid duty — Sustainability of the claim of M/s. Roman Overseas — Finding of — From the material on record Court found that in so far M/s. Roman Overseas is concerned it had purchased goods after payment of duty to manufacturer — M/s. Roman Overseas was, therefore, within it’s rights to claim Cenvat Credit which was pass on to it by seller of the goods i.e. M/s. Unique Export — Fact however remains that such goods were not duty paid but claimant Roman Overseas was not part of any such fraud or had knowledge of the fact than duty was not paid — There is also no allegation that Roman Overseas had failed to take any precautions as required under the Rule — In the facts Roman Overseas can not be denied the benefit of rebate claim — On basis of the facts Court upheld the order of Commissioner (Appeals) as well as of Government that M/s. Roman Overseas is entitled to benefit of rebate claim.
Akil Kureshi, J.—These petitions filed by the Commissioner of Central Excise, Surat raise similar questions of law and facts. They are therefore, being heard together and disposed of by this common order. In all material aspects since facts are common, for the sake of convenience, we may note such facts as emerging from record of Special Civil Application No. 16269/2010.
2. Respondent M/s. Roman Overseas is an exporter. It had purchased certain materials for its manufacturing activity for the purpose of export from one M/s. Unique Exports. Necessary documents and invoices etc. were found to be in order at the relevant time when respondent M/s. Roman Overseas made such purchases. Significantly, such documents revealed that the goods supplied by M/s Unique Exports to M/s. Roman Overseas had suffered excise duty at the rates applicable. Upon eventual export of the goods manufactured by M/s. Roman Overseas with the use of inputs supplied by M/s. Unique Exports, M/s. Roman Overseas filed six rebate claims totalling to Rs. 17,00,163/- before the department for the duty paid on such goods in terms of Rule 18 of the Central Excise Rules, 2002.
2.1 While processing such rebate claims, the Range officer verified the genuineness of the duty payment particulars with respect to the goods supplied by M/s. Unique Exports. Upon such verification it was found that M/s. Unique Exports had purportedly purchased such goods from two agencies namely, M/s. Amar Enterprise and M/s. Harikrishna Enterprise. However, such agencies were found to be non-existent. It was thus noted that M/s. Unique Exports had falsely claimed cenvat credit on the basis of invoices issued by such non-existent firms. M/s. Unique Exports had since passed on such cenvat credit to M/s. Roman Overseas, department was of the opinion that M/s. Roman Overseas is not entitled to claim rebate since no duty was ever paid on the inputs received by M/s. Roman Overseas from M/s. Unique Exports.
2.2 On the basis of such facts, a show cause notice came to be issued against respondent M/s. Roman Overseas on 29.3.2005 by the Assistant Commissioner of Central Excise & Customs, Surat. In the notice, it was alleged that M/s. Unique Exports had taken cenvat credit on the basis of invoices issued by non-existent firm and passed on cenvat credit fraudulently to present respondent. It was thus stated that since no excise duty on inputs used for exports was actually paid, M/s. Roman Overseas was not entitled to claim any rebate for such exports. M/s. Roman Overseas was called upon to show cause why rebate claim of Rs. 17,00,163/- should not be rejected under Section 11B of Central Excise Act, 1944 read with Rule 18 of Central Excise Rules, 2002 read with Notification No. 41/2001.
2.3 Respondent herein M/s. Roman Overseas appeared before the authority, filed its objections, were also heard in person. By order dated 20.3.2006, however, the Assistant Commissioner, Central Excise, Surat ruled against respondent M/s. Roman Overseas, disallowed the rebate claimed primarily holding that :
“In the above case I find that when the manufacturer has availed the Cenvat credit on the basis of invoices issued by the non-existing units and passed on such Cenvat credit vide invoice No. 07 to 12 all dated 05.05.04 for claiming the Rebate claim. Therefore, the whole credit circulated by the non existing firm which have been declared bogus and the manufacturer of the goods have passed on such inadmissible Cenvat credit to the Exporter for availing the Rebate claim shall be inadmissible.”
In addition to above conclusions the Competent Authority also relied on Rule 9(3) of the Cenvat Credit Rules 2004 which requires the manufacturer or producer taking cenvat credit on inputs or capital goods to take all reasonable steps to verify that such goods or inputs are such on which appropriate duty of excise has been paid.
Before the competent authority, though respondent M/s. Roman Overseas denied any involvement in such fra
