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2013 DIGILAW 704 (GUJ)

Messrs Plastene India Ltd. v. Union of India

2013-12-05

M.R.SHAH, R.P.DHOLAKIA

body2013
JUDGMENT M.R. Shah, J. 1. By way of this petition under Article 226 of the Constitution of India, petitioners have prayed for an appropriate writ, direction, order quashing and setting aside the impugned order dated 03.10.2012 to 08.10.2012 passed by the Revisional Authority – Joint Secretary, Government of India and to hold and declare that the petitioner is eligible to get the rebate claim. 2. That the petitioners established their unit at village Nani Chirai manufacturing Plastic Packaging Products like HDPE/PP, Woven Fabrics, HDPE/PP Woven sacks and bags, FIBC bags etc. and availed the benefit of area based exemption Notification No. 39/2001CE(NT) dated 31.07.2001. That the petitioners established their unit on and from 31.07.2001. 2.1 According to the petitioners in addition to the clearance of their finished excisable goods on payment of Central Excise Duty at appropriate rate for home consumption, the petitioners are also engaged in exporting their finished excisable goods to foreign countries or SEZ units, either without payment of Central Excuse Duty under Rule 19 of the Central Excise Rules, 2002 [hereinafter referred to as “the Rules”] or under UT1 or on payment of Central Excise Duty under a claim of Rebate under Rule 18 of the Rules. That according to the petitioners, the petitioners supplied the final products to the buyers who are situated in Kandla Special Economic Zone after payment of Central Excise Duties. That according to the petitioners, since the goods were supplied to Kandla Special Economic Zone, it is to be considered as export of goods under the scheme of the Special Economic Zones Act, 2005 [hereinafter referred to as “SEZ Act”], which also gives deemed benefit to local/DTA industries who supplies goods or to provide services in the SEZ demarcated area as if it is exported out of India and get all the benefits which are otherwise available to a normal exporter who exports its goods or to provide services to a unit out of India. 2.2 That the petitioners filed various rebate claims of the duty rebate on clearance to the SEZ as export before the concerned authority and uses the capital goods installed after 31.12.2005. According to the petitioners, if the goods are manufactured from plant and machinery installed after 31.12.2005, they were eligible for rebate under Notification No. 39/2001CE(NT) and therefore, benefit under Rule 18 is available as per its scheme to the petitioners. According to the petitioners, if the goods are manufactured from plant and machinery installed after 31.12.2005, they were eligible for rebate under Notification No. 39/2001CE(NT) and therefore, benefit under Rule 18 is available as per its scheme to the petitioners. That the Deputy Commissioner vide separate orders allowed the rebate claims. 2.3 Being aggrieved with the orders in original sanctioning rebate claims by the Deputy Commissioner, Department preferred appeal before the Commissioner of Central Excise (Appeals), Rajkot. The petitioners also filed cross objections against the appeal and contended that they were maintaining separate accounts and the goods cleared for export does not avail the benefit of notification under Notification No. 39/2001CE and therefore, there is no question of denial of benefit of rebate. That the Commissioner of Central Excise (Appeals) passed a common order in Appeal No. 451 to 480 of 2010 dated 21.10.2010 to 22.10.2010 and dismissed the departmental appeal observing that the new products manufactured out of plant and machinery after cutoff date i.e. 31.12.2005, now would not fall under the purview of Notification No. 39/2001CE dated 31.07.2001 and therefore, held that goods are entitled for rebate of duty if the prescribed conditions are fulfilled. 2.4 Feeling aggrieved and dissatisfied with the order in appeal passed by the Commissioner (Appeals), the Department preferred revision application before the respondent No. 2. That at the time of hearing of the revision application, the petitioner also relied upon Circular No. 110/21/2006CX.3 dated 10.07.2008, whereby the cenvat credit of capital goods are allowed which are installed after cutoff date for commencement of commercial production. 2.5 That by impugned order the revisional authority has allowed the revision application filed by the Department and has held that the rebate claim is not admissible to the petitioners under Rule 18 of the Rules read with Notification No. 19/2004CE(NT) dated 06.09.2004 on the ground that the prior to amendment of Notification No. 19/2004CE(NT) vide Notification No. 37/2007CE (NT) dated 17.09.2007, there was no such restriction on grant of rebate to unit availing are based exemption notification, the said condition does not say anything about the availment or nonavailment of benefit of Notification No. 39/2001CE on the exported goods. That while passing the revisional order, the Revisional Authority has also observed that petitioner has admitted himself that they are availing benefit of said area based exemption notification at the same time they claimed rebate on the ground that benefit of notification No. 39/2001CE has not been availed on exported goods manufactured by plant and machinery after 31.12.2005. The Revisional Authority therefore observed that since the language of condition No. 2(h) is quite clear and it puts embargo on ground of rebate in case of export of goods manufactured by manufacturers availing benefit of Notification No. 39/2001CE and consequently the learned Revisional Authority has quashed and set aside the order in original as well as the order in appeal, rejecting the rebate claims of the petitioners. 2.6 Feeling aggrieved and dissatisfied with the impugned order passed by the learned Revisional Authority – respondent No.2 herein, petitioners have preferred the present special civil application under Article 226 of the Constitution of India. 3. Shri Dhaval Shah, learned advocate appearing on behalf of the petitioners has vehemently submitted that the Revisional Authority has materially erred in holding that the rebate claim is not admissible to the petitioners. 3.1 It is further submitted by Shri Shah, learned advocate appearing on behalf of the petitioners that the Revisional Authority has failed to consider the overriding effect of Special Act i.e. SEZ Act on all other Acts. It is submitted that sub-clause (c) of Section 26 of the SEZ Act gives specific exemption to the unit in SEZ from any duty of excise, under the Act or the Central Excise Tariff Act, 1985 or any other law for the time being in force, on goods brought from Domestic Tariff Area to a SEZ or unit, to carry on the authorized operations by the Developer or entrepreneur. It is submitted that in view of the aforesaid provisions of Special Act, denial of rebate claim is contrary to the said provisions and therefore, impugned order deserves to be quashed and set aside. 3.2 It is further submitted by Shri Shah, learned advocate appearing on behalf of the petitioners that the Revisional Authority has misinterpreted the condition of Notification No. 19/2004CE and has wrongly denied the rebate claim because the petitioner has exported their final products as a normal manufacture – exporter without availing benefit of Notification No. 39/2001CE. 3.2 It is further submitted by Shri Shah, learned advocate appearing on behalf of the petitioners that the Revisional Authority has misinterpreted the condition of Notification No. 19/2004CE and has wrongly denied the rebate claim because the petitioner has exported their final products as a normal manufacture – exporter without availing benefit of Notification No. 39/2001CE. 3.3 It is further submitted by Shri Shah, learned advocate appearing on behalf of the petitioners that the unit was established at Kutch District for availing benefit of Notification No. 39/2001CE, thereby exemption was given from payment of taxes with a condition to start commercial production on or before 31.12.2005. It is submitted that petitioners admittedly started their commercial production on the specific date. It is submitted that the petitioners never claimed any rebate benefit for the period prior to the cutoff date i.e. 31.12.2005. It is submitted that in the present case the petitioners purchased various capital goods as well as raw materials after the cutoff date and also maintained the separate accounts. It is submitted that even the Superintendent has also confirmed vide its report that the petitioner maintains separate records of the goods manufactured out of the capital goods or raw material purchased before cutoff date and after the cutoff date. It is submitted that in that situation, there cannot be any doubt or any confusion with regard to the availability of the Notification No. 19/2004CE. 3.4 It is further submitted by Shri Shah, learned advocate appearing on behalf of the petitioners that the Revisional Authority has even erred in brushing side the Circular No. No. 110/21/2006CX.3 dated 10.07.2008, whereby it has been clarified that in the case of introduction of new product but installing fresh plant and machinery or capital goods after the cutoff date the said new produce would be cleared on payment of duty and separate account records were required to be maintained to distinguish production of this product from the products which are eligible for the exemption. It is submitted that in the present case admittedly the petitioner maintained separate accounts of capital goods and raw materials after cutoff date i.e. 31.12.2005 and before cutoff date. It is submitted that in the present case admittedly the petitioner maintained separate accounts of capital goods and raw materials after cutoff date i.e. 31.12.2005 and before cutoff date. It is submitted that therefore now denying the rebate only on the ground that Notification No. 19/2004CE got amended by Notification No. 37/2007CE (NT) is nothing but depriving the petitioner in claiming their substantial benefit of rebate, which is not tenable in the eyes of law and the same is against the provisions of the Act. Making above submissions, it is requested to admit/allow the present special civil application. 4. Present petition is opposed by Shri R.J. Oza, learned Counsel appearing on behalf of the Department. It is submitted that as the petitioner was eligible for exemption under Notification No. 39/2001CE and infact availed the benefit of the said notification and therefore, considering clause 2(h) of the Notification No. 39/2001CE, which was issued under Rule 18 of the Rules, the petitioner is rightly denied the rebate. It is further submitted that as such there cannot be distinction between the goods manufactured out of the plant and machinery installed prior to 31.12.2005 and the same product manufactured on the additional machinery installed after 31.12.2005. It is submitted by Shri Oza, learned Counsel appearing on behalf of the Revisional Authority that the Revisional Authority has rightly interpreted the exemption notifications and various circulars/ notifications placed before it for its consideration and has rightly denied the rebate to the petitioner. Making above submissions, it is requested to dismiss the present petition. 5. Heard Shri Dhaval Shah, learned advocate appearing on behalf of the petitioners and Shri R.J. Oza, learned Counsel appearing on behalf of the Department. The short question which is posed for consideration of this Court is whether, though the petitioners have availed exemption benefit of Notification No. 39/2001CE on exported goods manufactured by plant and machinery prior to the cutoff date i.e. 31.12.2005, the petitioners shall be entitled to claim the rebate on the exported goods manufactured on installation of additional plant and machinery after 31.12.2005? While considering the aforesaid issue/question the relevant notifications are required to be first considered. While considering the aforesaid issue/question the relevant notifications are required to be first considered. Notification No. 39/2001CE dated 31.07.2001 provides for exempting the goods to the Central Excise Tariff Act cleared from a unit located in Kutch District of Gujarat from so much of the duty of excise or the additional duty of excise, as the case may be, leviable thereon under any of the said Acts as is equivalent to the duty payable on value addition undertaken in the manufacture of the said goods by the said unit. The exemption contained in the said notification shall be subject to the conditions mentioned in clause 3 of the said exemption notification more particularly, it shall apply only to new industrial units i.e. to say units which are set up on or after the date of publication of the said notification in the official gazette but not later than 31st day of December 2005 and that the exemption shall apply for a period not exceeding 5 years from the date of commencement of commercial production by the unit. Therefore, for availing the exemption benefit under Notification No. 39/2001, the industrial unit ought to have been set up on or before the cutoff date i.e. 31.12.2005 and the exemption shall be applied for a period not exceeding 5 years from the date of commencement of commercial production by such unit. 5.1 As per the notification issued under Rule 18 of the Rules, which provides for rebate of duty on export of goods to all the countries other than Nepal and Bhutan, rebate is not allowable in case of export of goods which are manufactured by a manufacturer availing the notifications mentioned in clause 2(h) of the said notifications inclusive of Notification No. 39/2001CE dated 31.07.2001. In the present case, the petitioners were availing the benefit of exemption notification No. 39/2001CE dated 31.07.2001. It is an admitted position that the petitioners established their units in the Kutch area and installed the plant and machinery prior to 31.12.2005 (cutoff date) and also started manufacturing the goods and exported the goods after availing the benefit of exemption Notification No. 39/2001CE. It is an admitted position that the petitioners established their units in the Kutch area and installed the plant and machinery prior to 31.12.2005 (cutoff date) and also started manufacturing the goods and exported the goods after availing the benefit of exemption Notification No. 39/2001CE. However, the petitioners installed additional machineries after 31.12.2005 and claimed the rebate with respect to the export of goods which are manufactured on the additional machinery installed after 31.12.2005 by submitting that with respect to the exports of such goods which are manufactured on the additional machinery installed after 31.12.2005, they will not claim the benefit under the exemption Notification No. 39/2001CE and they will claim the rebate of the duty on export of goods. The aforesaid is rightly rejected by the Revisional Authority. As stated hereinabove, as such the petitioners did avail and was availing the benefit of the exemption notification No. 39/2001CE dated 31.07.2001 as they established their units prior to cutoff date i.e. 31.12.2005 and they availed the benefit of central excise exemption under the notification No. 39/2001CE dated 31.07.2001. Once the unit started and/or availed the benefit of exemption notification No.39/2001CE, they were entitled to the benefit of exemption notification for a period of 5 years from the date of commencement of commercial production by the units, provided their new industrial unit is established / setup on or after the date of publication of Notification No. 39/2001CE dated 31.07.2001 in the official gazette but not later than 31.12.2005. Once such unit starts getting the benefit of exemption under exemption Notification No. 39/2001CE, there cannot be any further classification and/or distinction with respect to the goods manufactured on the machinery installed prior to 31.12.2005 and the same product manufactured on the additional machinery installed after 31.12.2005. The petitioners cannot be permitted to claim the rebate under Rule 18 of the Rules on the exported goods manufactured on additional machinery installed after 31.12.2005, may be on maintaining the separate accounts. Under the circumstances, as such the Revisional Authority has rightly denied the rebate to the petitioners on the exported goods on additional machinery installed after 31.12.2005, relying upon clause 2(h) of the notification under Rule 18 of the Rules. 5.2 Now, so far as the reliance placed upon the Circular No. 110/21/2006CX.3 dated 10.07.2008 by the petitioners is concerned, it is absolutely misplaced. 5.2 Now, so far as the reliance placed upon the Circular No. 110/21/2006CX.3 dated 10.07.2008 by the petitioners is concerned, it is absolutely misplaced. Under the aforesaid clarificatory circular, it is mentioned that in case a unit introduces the new product manufactured from raw material by installing fresh plant and machinery after the cutoff date i.e. 31.12.2005, in such a situation, exemption would not be available to the said new product and the said new product would be cleared on payment of duty as applicable and separate records will be required to be maintained to distinguish production of these products from the products which are eligible for exemption. It also further clarifies that where a unit starts producing some products [after the cutoff date] using the plant and machinery installed upto cutoff date and without any addition to the plant and machinery, in that case, the unit would be eligible for the benefit of exemption notification because the plant and machinery used for manufacturing has remained the same. In the present case, admittedly, there is no new product by installing fresh plant, machinery or capital goods after the cutoff date i.e. 31.12.2005. The same product is manufactured / continued to be manufactured however, some additional machineries have been installed. Under the circumstances, the petitioners shall not be entitled to the benefit of exemption under Notification No. 39/2001CE. The further distinction is sought to be canvassed by the petitioners i.e. the goods manufactured on the machinery installed prior to 31.12.2005 and the same product manufactured on the additional machinery installed after 31.12.2005, for the purpose of claiming the exemption under Notification No. 39/2001CE is not permissible. Once the petitioners’ unit started and availed the benefit of exemption under Notification No. 39/2001CE, considering clause 2(h) of the notification issued under Rule 18 of the Rules, the petitioners shall not be entitled to rebate of the duty on export of the goods manufactured. Under the circumstances, the petitioners are rightly denied the rebate. The impugned order passed by the Revisional Authority does not suffer from any illegality. The same is in consonance with the notifications issued under Rule 18 of the Rules, which is not required to be interfered by this Court. 6. In view of the above and for the reasons stated above, present petition fails and the same deserves to be dismissed and is, accordingly, dismissed. Notice discharged.