Goods cleared at 2% duty - can rebate be claimed?
A netizen writes in -
"Sir, I am a manufacturer of Sanitary napkins classifiable under Tariff Item 9619 of the CETA, 1985. These goods are entitled for concessional rate of basic duty of 2% in terms of notification 1/2011-CE as amended (Sr. No. 131) and are valued on RSP basis in terms of notification 49/2008-CE(NT), Sr. No. 144 and there is an abatement prescribed of 35%.
Obviously, these are not "Inputs" for any of my consignees and there is no question of their taking CENVAT Credit of the duty being paid by me.
But, when a merchant exporter purchased these goods from me and sought to export it under a claim of rebate, he was told by the jurisdictional Excise authorities that the rebate claim might not be sanctioned for the following reason -
+ Goods cleared under 2% rate of duty are considered as "exempted goods" in terms of Rule 2(d) of the CENVAT Credit Rules, 2004 which reads -
(d) "exempted goods" means excisable goods which are exempt from the whole of the duty of excise leviable thereon, and includes goods which are chargeable to "Nil" rate of duty and goods in respect of which the benefit of an exemption under Notification No. 1/2011-CE, dated the 1st March, 2011 or under entries at serial numbers 67 and 128 of Notification No. 12/2012-CE, dated the 17th March, 2012 is availed;
+ Proviso appearing in Rule 3(1)(i) of the CENVAT Credit Rules, 2004 reads -
"Provided that CENVAT credit of such duty of excise shall not be allowed to be taken when paid on any goods -
(a) in respect of which the benefit of an exemption under notification No.1/2011-CE, dated the 1 st March, 2011 is availed; or
(b) specified in serial numbers 67 and 128 in respect of which the benefit of an exemption under Notification No. 12/2012-CE,dated the 17th March, 2012 is availed."
+ In view of the above, since the 2% duty paid goods are considered "exempted" and CENVAT credit is not being allowed on such goods, there is no question of allowing any Rebate.
I could not see any connection between the CENVAT Credit Rules, 2004 and Rule 18 of the CER, 2002 and when I tried to reason with them, the authorities say that I cannot read and understand the law.
Now, I may advise the merchant exporter to try to go for the B-1 bond and CT-1 procedure but don't think even that may work out.
Will the kind CBEC clarify OR should I tell the merchant exporter to purchase these "duty" paid materials and export them just like that?"