North East exemption – no refund and rebate – once duty is refunded it is no more “duty paid”
It’s almost a year since we carried an interesting article by one of our regular columnists “Region specific exemption and rebate of duty - Having the cake and eating it too!!”.
The article delved into the issue of rebate of goods manufactured and cleared by units availing region-specific exemption notification and subsequently exported under Rule 18 of the Central Excise Rules.
The issue in brief :- Rule 18 of the Central Excise Rules provides for grant of rebate of duty paid on exported goods. In terms of the relevant exemption notifications, exemption from excise duty is available only to the extent it is in excess of the amount paid out of CENVAT credit. However, the said exemption notifications come into effect only when payment of duty on finished goods at the appropriate rate is made and that too by way of refund of duty paid in cash.
One of the question raised by the author was “Whether the goods cease to be duty paid goods for the purpose of granting rebate given the fact that cash refund of the same has been availed by the manufacturer” . Given Board’s clarification that “ As there appears to be no legal bar, the Board desires the claim ( read rebate claim ) should be processed as per the existing provisions of law”, it appeared the issue was well and truly settled and rebate could not be denied of the quantum of cash refund availed by the manufacturer. In spite of the same, the author signed off pondering aloud “Hope there is no scope for interpretation now ? Or is it too early to hazard such a statement !!!”
No way this “la Nostradamus” prediction could have come a cropper. This matter was referred to the Law Ministry by the Board who has since opined that the term 'duty paid' used in rule 18 does not include that portion of duty, which is subsequently refunded to the manufacturer. They have further opined that the amount so refunded to the manufacturer is to be treated as an exemption and rebate of the said amount cannot be paid.
The clarification ends with a parting directive - “In view of the above statutory position, it is hereby directed that all pending show cause notices may be decided accordingly. Even pending rebate claims should be decided as per said interpretation. Show Cause Notices may be issued in respect of sanctioned claims, which are within the statutory time limit of one year.”
As far as the field formations are concerned, the issue is quite clear now. Deny rebate for pending rebate claims and issue demand notices in respect of sanctioned claims which are within the statutory time limit – mercifully!!!
However a few questions beg answers.
a) What happened to the earlier clarificatory letter stating that there is no legal bar in grating rebate?
b) Why again no circular and only a clarificatory letter?
c) Does the Law Ministry’s opinion imply ‘the statutory position” on the subject matter?
d) Can the Board direct the adjudicating authority to decide all pending show cause notices according to Law Ministry’s opinion?
e) Who is responsible for the loss of revenue in rebates already sanctioned?
Maybe, yet another clarification to clarify the above clarification!!!!
F.No.-6