15

V2.(21)12/Ahd-III/2012

BRIEF FACTS OF THE CASE:

M/s. Grace Nutrients (India) Pvt. Ltd., situated at Plot No. E/64, GIDC Estate Sector-26, Gandhinagar–382016 (hereinafter referred to as ‘the appellants’ for the sake of brevity) have filed the present appeal against Order-in-Original No. 120 To 147/REB/Cex/2011-12 dated 13.01.2012 (hereinafter referred to as ‘the impugned order’ for the sake of brevity) passed by the Assistant Commissioner, Central Excise, Gandhinagar Division, Ahmedabad-III (hereinafter referred to as ‘the adjudicating authority’ for the sake of brevity).

2. The facts of the case, in brief are that the appellants are engaged in the manufacture of “Rainbow” brand Indian Mouth Freshener (PAN MASALA). The appellants have purchased raw material “Rainbow Mouth Freshener” (PAN MASALA) in bulk pack of 40 Kg from M/s Unicorn Industries, situated at Jorethang, Sikkim, (hereinafter referred to as “M/s Unicorn” for the sake of brevity) at the rate of Rs. 1700/- per Kg. M/s Unicorn is availing the benefit of Notification No. 32/99-C.E. (N.T.), dated 11-5-1999 as amended, by way of claiming the refund of duty what has been paid from PLA. The appellants are engaged in the activity of re-packing of the “Rainbow” brand Indian Mouth Freshener (PAN MASALA) in small plastic containers of 450 gms 240 gms and 135 gms from bulk pack of 40 Kg of Mouth Freshener (PAN MASALA) purchased from M/s Unicorn and export the said re-packed small containers under claim of rebate under Rule -18 of Central Excise Rules-2002 to Dubai / Mombasa after making a value addition of 5% approximately. The appellants have exported Mouth Freshener in small pack of Mouth Freshener under the brand name of “Rainbow” brand Indian Mouth Freshener at the rate Rs.1822/- per Kg on payment of Central Excise duty. The appellants were exporting the entire production under the claim of rebate as per Notification No.19/2004 -C.E. (N.T.), dated 6-9-2004. The appellants have filed 28 rebate claims amounting to Rs. 85,39,247/- for the consignments of “Rainbow” brand Indian Mouth Freshener exported in the month of June,2011. On scrutiny of the rebate claims it was observed that the appellants have claimed rebate of duty on exported goods higher than the value of goods as market inquiry revealed that the maximum sale price of 1 Kg. of Mouth Freshener consisting of similar ingredients with similar Plastic jar packing is around Rs.400/- per Kg., whereas the appellants have claimed rebate of duty of Rs. 732/- per Kg. Therefore, it has been noticed that the genuine rebate under Rule-18 of Central Excise Rules, 2002 comes to Rs.161/- per Kg. instead of rebate of duty of Rs. 732/- per Kg as claimed by the appellants.

3. In the above circumstances, a Show Cause Notice bearing F.No.V.-21/16-1619/Reb/Cex/2010-11/1194 dated 18.11.2011 was issued to the appellants for rejection of the entire rebate claims as per the provision of Section 11-B of Central Excise Act, 1944 on the grounds of contravention of the condition as laid down at Sr. No. 2 (e) of Notification No. 19/2004 -C.E. (N.T.), dated 6-9-2004 read with Rule 18 of the Central Excise Rules,2002.In the impugned notice it was also alleged that the appellants are indirectly related with the owners of M/s Unicorn, who have overvalued the cost of raw materials supplied to the appellants. The adjudicating authority vide impugned order has decided the matter and rejected the 28 claims of rebate filed by the appellants on the ground of contravention of the condition as laid down at Sr. No. 2 (e) of Notification No. 19/2004 -C.E. (N.T.), dated 6-9-2004 read with Rule 18 of the Central Excise Rules,2002.

4.1. Being aggrieved, the appellants have filed the present appeal against the impugned order. The appellants have contended in their grounds of appeal that the substantive conditions for admitting rebate claims were undoubtedly satisfied in the facts of the present case; that the main and substantive conditions for admitting and allowing any rebate claim are that export of the excisable goods should be actually made to a foreign country, that the goods exported should have suffered duty liability by actually paying excise duties thereon and that documents like ARE-1, Shipping Bill etc. establishing payment of excise duty and export of the goods were submitted by the exporter within the time limit specified under Section 11B of the Central Excise Act for claiming rebate. All these conditions are admittedly fulfilled in the present case.

4.2. They further contended that there is no dispute at all about the export of the excisable goods in question and there is also no dispute on the fact that the documents like ARE-1, export invoices, shipping bill etc. establishing payment of excise duties and actual export of the goods were also submitted by the appellant before the Assistant Commissioner within the time limit specified under the statute; that there is also no dispute on the fact that a total sum of Rs. 85,39,247/- was paid/discharged as excise duties by the appellant on the goods exported and thus the duty paid character of the goods as well as actual export thereof were not at all in any doubt or dispute.

4.3. They further stated that the refund claim of the appellant was admittedly less than the market price of the goods exported inasmuch as the appellant has exported the goods at the price of Rs.1822/- per Kg. which was received also from the buyer and the market price i.e. the value inclusive of excise duties was thus much higher than the rebate claim of Rs.732/- per Kg. lodged by the appellant; that in this view of the matter, the substantive conditions for admitting and allowing a rebate claim were satisfied in the present case.

4.4. The appellants argued that the adjudicating authority has rejected the rebate claims on non-existing and unproved facts/allegations in as much as all the reasons given for rejecting the rebate claims are incorrect and unsustainable in facts as well as in law; that there was no connivance between the appellant and the Unicorn Industries for any over-valuation in the facts of this case, the price fetched by the appellant from the overseas buyer was Rs.1822/- per Kg. which was paid by the buyer to the appellant and hence no further justification for the price in the international market was required to be submitted by the appellant; the case law as well as circulars issued by the Government in the matter of rebate lays down that a rebate sanctioning authority had no jurisdiction to decide the duties payable on the exported goods even if the duties paid and claimed as rebate were higher than the duty liability otherwise attracted; that the adjudicating authority has not adduced any evidence while passing the impugned order for establishing any connivance between the Unicorn Industries of Sikkim and the appellant herein or for any other violation of the exported goods and therefore the rejection of the rebate claims on mere assumptions and presumptions is ex-facie illegal.

4.5. They stated that the adjudicating authority has referred to market enquiry carried out by the DGCEI for market value of the goods exported for holding that the market value of the goods was maximum Rs.400/- per Kg. but no details of any such market enquiry has been revealed to the appellant despite a specific issue having been raised by the appellant as regards the sanctity of any such enquiry by DGCEI while requesting for the details thereof so as to effectively meet with the allegations of over-valuation; that the adjudicating authority has referred to the so called market enquiry of DGCEI as if there was a conclusion validly arrived at by an authority having jurisdiction to decide the value of the goods while passing the impugned order whereas it has been the appellant’s case that there has been no such market enquiry by DGCEI as regards the goods manufactured and exported by the appellant in as much as there could never be any such enquiry in the local market when the goods manufactured and exported by the appellant were never sold in the local market trade.

4.6. The appellants submitted that no evidence brought on record to establish any connivance between the Unicorn Industries and the appellant, and it is also not shown by the Revenue in this case as to why two parties dealing with each other on principal to principal basis would connive with each other and for whose benefit; that neither the appellant nor Unicorn Industries has been given any opportunity to meet with the allegation of connivance and also with the allegation of market value of the appellant’s goods being Rs.400 per Kg.; that the case of over-valuation of the goods manufactured and exported by the appellant is only in the realm of conjectures and surmises.

4.7. They stated that there is no evidence showing that the appellant was not a genuine exporter when the appellant has been under the control and supervision of the Central Excise authorities as regards manufacturing operations of repacked and labeled Pan Masala and also when the export of the goods at the price of Rs.1882/- per Kg. to overseas buyers has actually taken place and the export price was also fully realized; that the appellant has fetched the price of Rs.1822/- per Kg. from the overseas buyers inasmuch as the goods had been of a very high quality required for eatables in countries like UAE and East Africa; that neither Rule 18 nor Notification No.19/2004-CE(NT) issued thereunder enjoins upon an exporter to give “concrete justification” for the price of the exported goods and therefore the Assistant Commissioner has mis-directed himself in holding against the appellant on the basis that the appellant never gave any concrete justification for the price of Rs.1822/- per Kg. for the exported goods. When the market value of the goods, which was obviously a sum inclusive of excise duties paid on the goods, was much higher than Rs.732/- per Kg. claimed as rebate by the appellant, the case of the Revenue that the market price of the goods was less than the amount of rebate of duty claimed is without any basis and justification.

4.8. They further stated that the appellant’s request for quantifying the rebate at a reduced rate could never have been considered as an evidence for holding that the appellant admitted over-valuation of the exported goods and that this indicated that the appellant indulged in malpractice. As is clear from the appellant’s request letter dated 10.2.2012, the request for reduced rebate was made without prejudice to the rights and contentions of the appellant, and the appellant also requested for allowing re-credit of the rest of the amount of duty paid for claiming the same as refund under Rule 5 of the Cenvat Rules, and thus there has never been any admission of over-valuation on the appellant’s part in this regard.

4.9. As regard alleged contravention of the condition of Sl.No.2 (e) of Notification No.19/2004-CE (NT), they argued that the excise duty of Rs.732 per Kg. was actually discharged by the appellant on the exported goods and therefore the market value of the exported goods was in any case Rs.732/- per Kg. plus Rs.400/- per Kg. (as alleged by the Revenue) and accordingly Rs.1132/- per Kg. which was not less than the amount of rebate claimed by the appellant. They also relied upon the following judgments in support of their claim:

1. V.S.T. Industries Ltd. – 1993 (67) ELT 997,

2. G.T.C. Exports Limited – 1994 (74) ELT 468,

5 Personal hearing in the case was held on 23.2.2012. Shri Paresh M Dave and Shri Dhaval K Shah, Advocate appeared for PH on behalf of the appellants. They reiterated the submissions made in the grounds of appeal. They stated that they have purchased the goods in bulk @ Rs. 1700/- per Kg and repacked in small containers and exported @ Rs. 1822/- per Kg on payment of duty. There was no dispute on these facts; that there is no basis on which market price has been determined @Rs. 400/- per Kg. N o evidence has been given in support of this. They stated that there is no violation of condition No. 2 (e) of Notification No. 19/2004 -C.E. (N.T.), dated 6-9-2004. The market price of the goods exported is the FOB price and the duty paid on it. If we add both, the market price (i.e. value cum duty) would be more than the rebate claimed. In view of the above they requested to allow the rebates.

Discussion & Findings:-

6. I have gone through the records of the case, various submissions made in the appeal memorandum and those made at the time of personal hearing and other available documents. As this is a case of rebate claim, the question of pre-deposit of duty under Section 35F does not arise. Therefore I take up the appeal for final decision.

7. I find that the appellant was engaged in the manufacture of “Rainbow brand” Indian Mouth Freshener. They purchased raw material “Rainbow Mouth Freshener” (PAN MASALA) in bulk pack of 40 Kg from M/s Unicorn Industries, Jorethang, Sikkim accompanied with Central Excise invoices showing the payment of duty of excise. M/s Unicorn is availing the benefit of Notification No. 32/99-C.E. (N.T.), dated 11-5-1999. I find that the appellants have purchased raw material Mouth Freshener in bulk pack at the rate of Rs. 1700/- per Kg. Out of the said purchased raw material i.e. “Mouth Freshener in bulk pack of 40 Kg”, the appellants have re-packed Mouth Freshener in small plastic containers of 450 gms 240 gms and 135 gms and exported the same by affixing “Rainbow brand” Indian Mouth Freshener (PAN MASALA) at the rate Rs.1822/- per Kg, on payment of Central Excise duty. They have exported the entire production under the claim of rebate as per Notification No.19/2004 -C.E. (N.T.), dated 6-9-2004 read with Rule -18 of Central Excise Rules-2002. The appellants have filed rebate claims amounting to Rs. 85,39,247/- for the consignments of “Rainbow brand” Indian Mouth Freshener exported in the month of June,2011.