COMMISSIONER OF CENTRAL EXCISE Vs. MEERA & COMPANY
LAWS(CE)-2015-2-42
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on February 11,2015

Appellant
VERSUS
Respondents

JUDGEMENT

Rakesh Kumar, J. - (1.)THE respondent are manufacturer of DG sets chargeable to Central Excise duty in their manufacturing unit located at Bari Brahmana, Jammu, which is an area specified under Notification No. 56/2002 -C.E. The respondent are availing of this exemption. During the period from August, 2007 to January, 2008 they supplied DG sets by availing duty exemption under Notification No. 56/2002 -C.E. to M/s. Reliance Telecom Infrastructure Limited against invalidated EPCG licences. In respect of supplies to M/s. Reliance Telecom Infrastructure Limited, the respondent availed of the exemption Notification No. 56/2002 -C.E. and accordingly in respect of clearances during each month, the duty was paid through PLA after exhausting the Cenvat credit available at the end of the month and the duty so paid through PLA was refunded to them. However, by treating their supplies to M/s. Reliance Telecom Infrastructure Limited against invalidated EPCG licences as deemed export, they also applied to the DGFT for refund of terminal excise duty (TED) in terms of the provisions of para 8.2 of the Foreign Trade Policy. For the period from August 2007 to January 2008 they received the TED refund of about Rs. 7 crores. There is no dispute that as per the policy of the DGFT, TED refund would not be admissible if the goods supplied by a domestic supplier as deemed export are exempted goods and that in this case the DGFT have initiated proceedings for imposition of penalty and the total penalty of Rs. 11 crores has been imposed.
1.1 The Department, however, also initiated proceedings for denial of the benefit of exemption Notification No. 56/2002 -C.E. on the ground that they have taken total benefit in form of TED refund from the office of the DGFT. It is on this basis that a show cause notice dated 20th December, 2010 was issued to the respondent for recovery of allegedly wrongly availed exemption of Rs. 5,83,44,810/ - during period from August, 2007 to January, 2008 along with interest thereon under Section 11AB and also for imposition of penalty under Section 11AC. This show cause notice was adjudicated by the Commissioner vide Order -in -Original dated 2 -6 -2011 by which he dropped the proceedings. Against this order of the Commissioner, Appeal No. E/2441/2010 has been filed by the Revenue.

1.2 The Jurisdictional Deputy Commissioner by five separate orders had sanctioned total refund claim under Notification No. 56/2002 -C.E. of an amount of Rs. 5,83,24,810/ -. These orders were reviewed by the Commissioner and review appeals were filed to the Commissioner (Appeals). The Commissioner (Appeals) by common Order -in -Appeal, dismissed the Revenue's appeals vide Order -in -Appeal dated 10 -10 -2012. Against this order of the Commissioner (Appeals), the Revenue has filed Appeal No. E/55280/2013.

Heard both the sides.

(2.)SHRI R.K. Grover, learned DR, assailed the impugned order by reiterating the grounds of appeal in the Revenue's appeal and pleaded that when it is established fact that the respondent had supplied the goods to M/s. Reliance Telecom Infrastructure Limited against invalidated EPCG licence and by treating those supplies as deemed export have claimed refund of the excise duty from the DGFT, they cannot claim exemption of the same excise duty under Notification No. 56/2002 -CE., that permitting the exemption under Notification No. 56/2002 -C.E. and also claim by them of the Central Excise duty refund from the DGFT by treating their supplies to M/s. Reliance Telecom Infrastructure Limited against Invalidated EPCG licence as deemed export amounts to double benefit and the Commissioner and the Commissioner (Appeals) have, therefore, wrongly upheld the permitting of exemption under Notification No. 56/2002 -C.E. and hence, the impugned orders are not correct.
Shri R.K. Hasija, Advocate, the learned Counsel for the respondent, pleaded that the respondent are located in the area specified under Notification No. 56/2002 -C.E. and are manufacturing the goods which are covered for exemption under this notification, that there is no condition in this exemption notification that the manufacturer availing of this exemption cannot claim refund of TED from DGFT in respect of the supplies made by him which are deemed export, that in any case, the matter of refund of TED and its correctness is between the respondent and the DGFT and, hence, just because the respondent have claimed refund of TED in respect of supplies to M/s. Reliance Telecom Infrastructure Limited from DGFT, the exemption Notification No. 56/2002 -C.E. cannot be denied to them. He also pleaded that when the goods are supplied to a person by a manufacturer by availing of Notification No. 56/2002 -C.E. the person receiving the goods is eligible for full Cenvat credit under Rule 12 of the Cenvat Credit Rules, 2004, as if in respect of the goods supplied by the manufacturer no exemption has been claimed, and that if those supplies are deemed exports, as per the provisions of Foreign Trade Policy, the person receiving the goods has option either to take Cenvat credit or to claim refund of TED and, hence, there is no double benefit.

(3.)WE have considered the submissions from both the sides and perused the records. The point of dispute in this case is as to whether the respondent would be eligible for the exemption under Notification No. 56/2002 -C.E. There is no dispute that their unit is located in the area specified in this notification and the goods are also covered for exemption under this notification. The dispute is in respect of the goods supplied to M/s. Reliance Telecom Infrastructure Limited against invalidated EPCG licence. The customer M/s. Reliance Telecom Infrastructure Limited had not availed Cenvat credit in terms of Rule 12 of the Cenvat Credit Rules, 2004 and in this regard had given a certificate that they will not claim refund of TED from DGFT. Based on this certificate, the respondent claimed refund of the excise duty from DGFT. It is seen that as per the policy of DGFT, refund of terminal excise duty is not admissible if the goods supplied are exempted goods and in this regard DGFT has initiated proceedings against the respondent and has imposed penalty of Rs. 11 crores for wrongly claiming the refund availment of excise duty. In our view the matter of claiming terminal excise duty refund from DGFT in respect of the goods supplied by the respondent is a matter between them and the DGFT and on this ground it would not be correct to deny the benefit of Notification No. 56/2002 -C.E. to the respondent for which the necessary condition stand satisfied by them. Since, the respondent had availed the exemption under Notification No. 56/2002 -C.E. in respect of the goods supplied by them to M/s. Reliance Telecom Infrastructure Limited against invalidated EPCG licences, the respondent should not have claimed refund of terminal excise duty from DGFT and since they have claimed the refund, DGFT has imposed penalty on them. But this cannot be the ground for denial of the benefit of the exemption notification to the respondent. We, therefore, do not find any merit in these appeals. The same are dismissed.
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