File No.APPL-COMMOCEXJ272/2019-GST- APL-CHD en III f C"tll 3l19JCfd (3llfrc;r)

cB·-~n II -s:rrc;r ~ fI q I enx 3l19JCfd I C"tll, :q o~ ~ I q; cB~lll xl\Ji'«J ~, ~ 'ti'L~1-19,~Cfcx-1"Rfr, :qO~~Iq;

tf)T."ff.OllAICE/CHD/20~ , ~1CU~ R'lICb- ~11I1 t ~ l:'\'b~

~ ~ ~~, 1944 cBT trnT 35~/fclro ~,1994 '$T trnT 85 -$ ~ 'if. WR fffi'IT, ~ (~), ~. m ~ ,<~Cllit)'i 311g<'fdlC'1£l, ilU-5~JIct) ~ ~

~ ~ CHD-EXCUS-OOI-APpJ s- 2019-20 ~ 6 ("llq 3m 3~/~ ~/'dlll~Ek1/fltl~$ ~/3~~ _ _l(1$~eAl ~ ~ ~ ,<~Cllit)'i 311~CffiIC'1£l/~ Shimla ~ ~ ~ ~ ~ 28 & 29/CE/JC/SML/2018-19 dated 31.01.2019 'fr ~ I

3"lcDC"'lCbC'1T Cf5T ~ ~ 1Tc'fT Mis Cipla Limited, Village Malpur, Hadbust No 189, PO Bhud, Pargana Dharampura, Baddi, Distt. Solan (HP). JOwf~t:f'1 ct ~ R;cqufl-

cp) ~ ~ cB' ~ ~ ~ ~ ~~ ~ ~ ~/R~\l1"1~ ~ i.e. Additional Secretary (AS), Revision Application, 6th Floor, CBEC Offices, HUDCO

. VISHALA BUILDING, Bhikaji Cama Place, R.K. Puram, New Delhi-ll006611 ~ ~ ~ ~,1944 cBT tTRT 35(~)/~ ~,1994 cBT tTRT 86 cB' 3R'flfTI cBT \fIT ~ ~ 1 ~

~ 130lR ~ ~,1944 cBT tTRT 35(~)/~ ~,1994 cBT tTRT 86 cBT \3LltTRT(3) cB' 3R'f1tl \N! ~ ~ ~ ~ cBT ~ ~ cB' ~ '\JfA cBT mOO cB' cfA 'lll6 cB' 3FGX fcm:n \fIT ~ ~I ~ ~ cB' ~ ~ cBT ~ t \Rf ~ 11 f.imfuf ~/~ CPT 10 ~ 3l~

~ ~ ~-;:n ~ <n:rr ~ en W11<T ~ ~ cBT 10 ~ ~ ~ ~ ~~, 1944

cBT tTRT 35~ cB' 3R'flfTI \JP1T Cb'iClI '11 ~ ~ 1 3Pl! fffilT cB' X1T~ X1T~ ~ ~ / ~ cBT ~ <:n ~ cB' ~ ~ l1TC'1' cB' ~ cB' ~tl 11 fcrffr ~ cnT f.imfuf ~ cB' fW1 ~ ~ ~ <:n ~ ~ ~ ~ ~~ ~ ~ ~, ~ tfro, 1;l"~- cfRm (1(1, ~.~.3lT. ~

147-148, ~ 17-~, ijo;g)Jld 11 cBT ~ ~ 1

~) ~ ~ ~ ~ ~ tC:.-3/~.it.-5 11 qtq ~ 11 ~ ctt ~ ~ 3l'R ~ X1T~ ~ ~ cB' ~ ~ cBT ~ if ~ qtq md<:ri (~ Cfll1 ~ Cfll1 ~ \:PilfOlC1 ~ ~) X1T~ c;r1fr ~ ~ 1 0tR \Iffii ~ ~ 3l1fu;r ~e=rur 11 qrffir ~ ~ 61', ~1<1f.ioT<1"1 ~ cB' ~ cB' qtq md<:ri (~ Cfll1 ~ Cfll1 ~ \:Pi 1 fO 1C1 ~ ~)~ 'C'1Tft ~ ~ 1

'1) ~C1 cp X1T~ ~ ~ ~ ~,1944 cBT tTRT 35~(6)/fcRr ~,1994 cBT tTRT

86 (6) cB' 3R'flfTI ~ cB' ~ 11 X'1. ~ 6\i'fTX <:n X'1. qtq 6\i'fTX <:n ~ 6\i'fTX ~ \JlT \Rf ~ 11 ~ ~ ~ cBT ~ ~, 11 6X ~ ~ 11 'lf1T ~ (fiX q fcrffr ~ ~ ~ ~ ~ W11<T ~

~ ¢r ~ LR frr:R Cfitrft fcp erg qtq C1mr ~ <:n ~ Cfll1, qtq C1mr ~ 1TilTff ~ ~ 3l~

q'f.fH, C1ruf ~ ~ ~ ~, ~ ~ 1llllC1T 6T,X1T~ WIT N'1T ~ 1 <:ffi ~ ~ ~{5j 1 FcbC1 ~ ~ ~ tt ~ ~ \JlT ~ cB' tq cB' fi g 1 <1 Cb x fV1 '(~ 1 x cB' qe:r 11 ~ if '(i'~ \Iffii tq R{>;fC'f ~ Cffii fcp {1~LI<P(1 ~ 11 ~ <W<l N'1T ~ 1 ~, ~ ~ ~ ~ ~ ~ <:n cpffl 31IMCf1SI"1

cB' ~ cf; ~ qx ~ ~ ~ "11ff ~I

File NO.APPL·COMMOCEX/272/2019·GST· APL·CHD

NATION .I: TAX

GST MARKET

Office of the Commissioner(Appeals) Cfi I 4~ i>I 4 3ml'fCf (~) ~

Central Goods and Services Tax Commissionerate, Chandigarh ~ m'i>t" 'QCf ~ )11 4Cf(i i>l14, ~ ~ . Plot No.l9, C.R Building, Sector-l7C, Chandigarh ~ m.19, ~ 3IT{ fl~s'lI ~·17 ~,

~ ITelephone:Ol72-2720240; ~/Fax:Ol72-2720240;

~-~/E-mail:chandigarhiiappeals@yahoo.in/Website:cgstappealschd.gov.in

C. No. APP-COMMOCEXJ272/2019-GST-APPL-CHD Appeal No.01&02/A/CE/CHD/2019-20 ----44-\\ .l-:>(b d"

ORDER-IN-APPEAL \,r> \6~

ORDER-IN-ORIGINAL CHD-EXCUS-OOI-APP- -19-20 Dated: ~.11.2019

Dated: 8 .11.2019

Name of the Appellants Mis Cipla Limited, Village Malpur, Hadbust No 189, PO Bhud, Pargana Dharampura, Baddi, Distt.

I--- Solan (HP)

Orders-in-Original No. & Date 28 & 29/CE/JC/SML/20 18-19 dated 31.01.2019

• Adjudicating Authority The Joint Commissioner, Central GST

Commissionerate, Shimla.

Amount of rebate involved Rs 1,69,767/- & Rs 10,73,297/- Period of Dispute 29.06.2015 to 12.10.2015 and 17.06.2015 to 31.07.20 5

Mis Cipla Limited, Village Malpur, Hadbust No 189, PO Bhud, Pargana Dharampura, Baddi, Distt. Solan (HP) (for brevity 'the Appellants'), have filed the subject appeals against the Orders-in-Original No. 28 & 29/CE/JC/SMLl20 18-19 both dated 31.01.2019 (for brevity 'the impugned orders') passed by the Joint Commissioner, Central GST Cornmissionerate, Shimla (for brevity 'the adjudicating authority'). Since issue involved in the above mentioned two appeals are identical in nature and pertains to the single appellant, the same are being collectively taken up for decision under this common order.

1

File No.APPL-COMMOCEX/272/2019-GST - APL-CHD

2. Briefly stated, the appellant were registered with the department vide Registration No. AAACC1450BXM014 for the manufacture and Export of P & P Medicaments falling under Chapter 30 of the Central Excise Tariff Act, 1985 (for brevity 'the CETA'). The appellant had filed the refund/rebate claims of Rs 1,69,767/­ & Rs 10,73,2971- (as per details contained in the SCN's) in the office of the Assistant Commissioner, Central Excise Division, Baddi on 12.09.2016 & 09.05.2016 respectively under Section lIB of the Central Excise Act, 1944 (hereinafter referred to as the' Act') in respect of the goods exported in terms of Notification No 42/2001-CE ( T) dated 26.06.2001 issued under Rule 19 of the Central Excise Rules, 2002 (hereinafter referred to as the 'Rules'). The appellants sought refunds of the duty paid alongwith interest in respect of goods which were earlier cleared for export without payment of duty under LUT. However, the impugned goods were actually exported beyond the stipulated periods of six months from the date of clearances from their factory due to delayed schedule of overseas buyer. Thereafter, the appellants voluntarily discharged duty liability alongwith applicable interest for goods not exported as per the procedure laid down under Notification No 42/2001-CE (NT) dated 26.06.2001 read with Rule 19 of the Rules. Accordingly, the appellants intimated to the jurisdictional Assistant Commissioner about claiming of refund claim and requested for post facto approval of extension of delay beyond the period of six months in export of goods cleared under LUT. Thereafter, on the basis of the reports received from the jurisdictional range officers, the Assistant Commissioner, Central Excise Division, Baddi had sanctioned the two refund/rebate claims vide Orders-in-Original 0

I 880/ACIRIBaddi/2016 dated 09.12.2016 (for Rs 1,69,767/-) & 1684/AC/R/Baddi/2016 dated 22.1l.2016 (for Rs 10,73,297/-) by way of credit in the Cenvat account. Besides, post facto approvals for extension of delay in export of goods beyond period of six months were also granted on 24.11.2016 & 12.09.2016 respectively.

3. However, both the said sanctioned orders of the Assistant Commissioner, Central Excise Division, Baddi were reviewed by the department and accordingly two appeals were filed with the Commissioner (Appeals), Chandigarh through Assistant Commissioner, Central Excise Division, Baddi. Vide Orders in Appeal No CHD­ EXCUS-OO I-APP-53-54-18-19 dated 27.04.2018, the Commissioner (Appeals) decided the said two appeals in the common order where under the appeal filed by the department was allowed by setting aside the Orders-in-Original passed by the Assistant Commissioner, Central Excise Division, Baddi.

4. In the meanwhile, Show Cause Notices were issued to the appellants on the grounds that initially the appellants had cleared the goods for export under Rule 19 of

2

File No.APPL-COMMOCEX/272/2019-GST- APL-CHD

the Rules without payment of duty. As the appellants could not export goods within the stipulated period of six months, they were required to pay duty on the impugned goods, which they did. The goods were finally exported attracting provisions of Rule 18 of the Rules under Notification No 19/2004-CE (NT) dated 06.09.2004. However, in the instant case it was observed that the refund/rebate of duty was available only under the procedures laid down in Rule 18 of the Rules, whereas in the instant case the refunds/rebates were sanctioned under procedures laid down in Rule 19 of the Rules read with Notification No 42/2001-CE (NT) dated 26.06.200l.

5. Further, the appellants vide their letter dated 31.08.2018 intimated that they had availed Cenvat Credit ofRs 1,69,767/· & Rs 10,73,297/- sanctioned by way of refunds and subsequently utilized the same towards payment of Central Excise duty. Thus, from the foregoing, it appeared that the said amounts of refund claims were erroneously sanctioned to the appellants in their Cenvat account which were further adjusted by them for payment of Central Excise duties which were recoverable from the appellants alongwith interest, as proposed in the said show cause notices.

6. The adjudicating authority vide the impugned orders confirmed the said demands of Rs 1,69,767/- & Rs 10,73,297/- and which were allowed in their Cenvat Credit accounts and ordered to recover the same from them along with charging of interest at the applicable rate under the provisions of law.

7. Being aggrieved against the impugned orders, the appellants filed the two instant appeals on the similar grounds which interalia are summarized below:-

);> That the Orders-in-Original had been passed by overlooking the Government policy of relieving the goods from the burden of local levies on their exportation out of country. Hence, the impugned order discouraging the export business of the country was liable to be quashed and set aside on this ground alone.

);> That there was substantial compliance to the provisions of Rule 19 of the Central Excise Rules, 2002, governing export of goods without payment of duty. This was evident from the fact that they had discharged duty along with interest on failure to export goods within six months from the date of removal from the factory, as required by the said rule. They had also applied for the post facto approval for extension of validity of the shipment beyond six months, which was duly granted by the jurisdictional Assistant Commissioner of Central Excise. Hence, there was substantial compliance to the conditions of notification, rules and regulations governing export of goods.

3

File NO.APPL-COMMOCEX/272/2019-GST- APL-CHD

> That the condition to export goods within six months from the date of clearance from their factory as stipulated in the notification was not very rigid but made flexible by empowering the Commissioner to extend the time limit to export the goods in deserving cases. Hence, when the physical export of goods was not under dispute, full condonation could be given to perceive the object and intent of Rule 18 or Rule 19 of the Central Excise Rule, 2002.

).- That the object of both the rules 18 and 19 of the Central Excise Rules, 2002, was to reduce the burden of excise levy on goods exported. CBEC vide Circular 0.283/117/96-CX dated 31.12.1996 had clarified that intention of export under

claim for rebate (Rule 18) and export under bond (Rule 19) were at parity. Hence, contentions of the revenue department with respect to Rule 18 and Rule 19 of the Central Excise Rules, 2002, governing export of excisable goods was contrary to the aforesaid board circular. Reliance placed on the case of Commissioner of Central Excise, Delhi versus Hari Chand Shri Gopal reported in 2010 (260) E.L.T 3 ts.c.)

).- That lenient view was called for when factum of export was not under dispute. Reliance was placed on the decision in the case of Alpha Garments Vs Collector of Central Excise, New Delhi reported as 1996 (86) ELT 600 and Stericat Gutstrings (P) Ltd Vs Commissioner of Central Excise, New Delhi reported in 2003 (158) ELT 779.

> That Refund/Rebate of duty on export of goods was beneficial piece of legislation and promotional measure of the Government to boost exports of the country. Hence, liberal interpretation was called for in the interest of export business of the country.

).- That the impugned order amount to premature adjudication. The appellant submitted that their appeal against the orders of Commissioner (Appeals) were pending disposal with the Revisionary Authority. As such, adjudication of the show cause notice issued as a protective demand in pursuance of order in appeal, was nothing but premature adjudication by the Joint Commissioner.

~ That Refund/Rebate of duty on export of goods could not be denied for technical breach of condition. The Joint Commissioner had failed to appreciate the physical export of goods and exercised discretionary power to relax conditions of said notification, so as to have zero rated exports.

4

File No.APPL·COMMOCEX/272/2019·GST· APL·CHD

8. The personal hearing in the case was held on 15.10.2019. Sh. Rajesh Rathore, Assistant Manager in the company appeared for the same in respect of both the appeals and reiterated the submissions made in their grounds of appeal and requested to decide the case in the light of these.

9. I have carefully gone through the facts of the case; impugned order; appeal filed by the appellant; the grounds of appeal as well as the oral submissions made by the appellants at the time of personal haring. The issue to be decided in the present appeal is whether rebate of duty paid on the exported goods claimed by the appellant under Rule 19 of the Rules read with Section 11 B of the Act is allowable or not?

10. I find that the appellant are registered with the department for the manufacture and Export of P & P Medicaments falling under Chapter 30 of the CETA. The appellant had filed the refund/rebate claims amounting to Rs 1,69,767/- & Rs 10,73,297/- (as per details contained in the SCN's) in the office of the Assistant Commissioner, Central Excise Division, Baddi under Section 11 B of the Act in respect of the goods exported in terms of otification No 42/2001-CE (NT) dated 26.06.2001 issued under Rule 19 of the Rules. The said claims were sanctioned by the Assistant Commissioner Baddi and allowed the same to be credited in their Cenvat account. The appellants were seeking refunds of the duty paid on the goods which were earlier cleared for export without payment of duty under LUT. However, the impugned goods were actually exported beyond the stipulated periods of six months due to delayed schedule of overseas buyer. Thereafter, the appellants voluntarily discharged duty liability alongwith applicable interest as per the procedure laid down under Notification No 42/2001-CE (NT) dated 26.06.200 I read with Rule 19 of the Rules. Post facto approvals for extension of delay in export of goods beyond period of six months were also granted by the Assistant Commissioner, Baddi. The said sanctioned orders were challenged by the department before Commissioner (Appeals) and the department's appeal was allowed. To safeguard the revenue, the jurisdictional Central Excise authorities issued Show Cause Notice to the appellants for recovery of erroneously sanctioned refund/rebate claims. The adjudicating authority vide the impugned orders confirmed the demands and ordered recovery of the same alongwith interest resulting thereto the instant appeals. I also find that the appeals filed by the appellants against the orders of the Commissioner (Appeals) are also pending finalization with the Revisionary Authority.

II. In this regard I find that the provisions of Rule 18 and Rule 19 of the Central Excise Rules, 2002 read as under:

5

File No.APPL-COMMOCEX/272/2019-GST - APL-CHD

"Rule 18 Rebate of Duty - Where any goods are exported, the Central Government may by Notification, grant rebate of duty paid on such excisable goods or duty paid on materials used in the manufacture or processing of such goods and the rebate shall be subject to such conditions or limitations, if any, and fulfillment of such procedure, as may be specified in the notification. Explanation - For the purposes of this rule, "export', with its grammatical variations and cognate expressions, means taking goods out of india to a place outside india and includes shipment of goods as provision or stores for use on board a ship proceeding to a foreign port or supplied to a foreign going aircraft. "

Further, Rule 19 of the Central Excise Rules, 2002, read as under:

"Rule 19 Export without payment of duty - (1) Any excisable goods may be exported without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, as may be approved by the Principal Commissioner or Commissioner, as the case may be. (2) Any material may be removed without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, for use in the manufacture or processing of goods which are exported, as may be approved by the Principal Commissioner or Commissioner, as the case may be. (3) The export under sub-rule (1) or sub-rule (2) shall be 'subject to such conditions, safeguards and procedure as may be specified by notification by the Board. "

Initially, the appellants had cleared the goods for export under Rule 19 of the Rules i.e. without payment of duty. The appellants, however, could not export the impugned goods within a period of six months and they were required to pay duty, which they did. Finally, the goods were exported by the appellants, attracting the provisions of Rule 18 of the Rules read with Notification No 19/2004-CE (NT) dated 06.09.2004. Since the refund/rebate of duty was available only under Rule 18 of the rules. Whereas, in the instant appeals, the appellants have been sanctioned refund/rebate under procedures laid down in Rule 19 of the Rules read with conditions laid down in Notification No 42/2001-CE (NT) dated 26.06.2001. Further I find that these two provisions are two different sets of Rule which provide export benefits to the manufacturers/exporters and applies on different circumstances as stated above. The manufacturer/exporter is free to opt one of the Rules, which is more beneficial/suitable to him. Once anyone of the two options is exercised it attains finality and cannot be

6

File No.APPL-COMMOCEX/272/2019-GST- APL-CHD

reverted back subsequently. In this regard the GOI in the case ofRADIALL INDIA PVT LTD reported as 2013 (298) ELT 149 (COl) has observed as under:

"HELD: Provisions under Rules 19 and 18 of Central Excise Rules, 2002 are different sets of Rules applicable to dijferent circumstances Manufacturer/exporter free to opt for one more beneficial to him - Once anyone of options exercised, it attains finality and cannot be reverted back subsequently - Since manufacturer exercised option under said Rule 19 ibid, not open for him to pay duty and claim rebate under Rule 18 ibid subsequently - Excess amount /duty paid to be treated as voluntary deposit and re-credited in manufacturer's Cenvat credit account - Impugned Order-in-Appeal set aside - Section 35EE of Central Excise Act, 1944. s s

12. Similar view point has been adopted by the GOI in the case oiB/YAN! ALLOY P VT LTD reported as 2012 (286) ELT 445 (COl) which reads as under:

"HELD : Exporter had opted to work under Rule 19 of Central Excise Rules, 2002 by procuring raw materials duty free under Notification ibid, and in view thereof had to export goods under bond without payment of duty - Amendment in Notification ibid vide Notification No.1 0/2004-CE. (N. T) introducing para (vi) and Explanation-TT makes it mandatory/or exporter to export goods under bond only - In such cases, exporter does not have option to switch over to facility of rebate under Rule 18 ibid -If rebates are allowed in such cases, it will amount to amalgamation of two different Rules contravening each other's condition which is not envisaged in the rules - Schemes under Rule 18 ibid and Rule 19 ibid are different, under separate notification, procedures, safeguards and conditions"

13. As such, in view of the above 1 find that in case such rebates are allowed, it will amount to amalgamation of two different rules contravening each other's condition which is not envisaged in the rules. So far as following the statute by the original authority is concerned, government is of the considered opinion that it is a settled law that strict and plain wordings of statue are to be adhered to as impressed upon and spell out by the Hon'ble Supreme Court in its judgment ITC Ltd Vs CCE reported as 2004 (J 71) ELT 433 (SC). Moreover, both the schemes under Rule 18 and Rule 19 are different schemes covered under separate notification, procedures, safeguards and conditions. Hence, facility of rebate of duty under Rule 18 is not admissible to the appellant in such cases. The adjudicating authority has rightfully rejected the refund claim of the appellants which were erroneously sanctioned by the Assistant

7

,. File No.APPL-COMMOCEX/272/2019-GST - APL-CHD

Commissioner, Central Excise Division, Baddi by way of credit III their Cenvat account. r uphold the same.

14. I further find that the appellants in their grounds of appeal have cited Boards Circular No 283/117/96-CX dated31.12.1996 and from the perusal of the same r find that the said circular is not relevant to the issue involved in the instant matter.

15. As such, in view of the above, I find that the appellants are not entitled to refund/rebate under Rule 18 of the Rules as they had initially cleared the impugned goods for export under Rule 19 of the Rules. Thus, I do not find any infirmity in the impugned orders and the appeals filed by the appellant are liable to be rejected.

16. As such, the appeals of the appellant are rejected and the impugned orders are upheld. The appeals are disposed of, accordingly.

Digitally signed by S MAN BALA Date:VVed Nov 06 16: 1: 1 gIST 201 9 Reason:Approved ., .n"

,," 1\ '-"", _f (Dr. Sum Bala) COMMISSIONER (APPEALS)

REGD.A.D. ~l

M/s Cipla Limited, Village Malpur, Hadbust No 189, PO Bhud, Pargana Dharampura, Baddi, Distt. Solan (HP)

COPy to:-

1. The Chief Commissioner (CZ), Central Goods and Services Tax, Chandigarh. 2. The Commissioner, Central Goods and Services Tax Commissionerate, Shimla. 3. The Assistant Commissioner, Central Goods and Services Tax, Division, Baddi 4. Guard file. ~ \ ~ \,

l~ \\ ~ superinten~~n (Appeals)

8