INTAS PHARMA LTD. Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner company is a unit working under the Special Economic Zone, manufacturing pharmaceutical products. To promote and develop specified areas, the Government has introduced a scheme of Special Economic Zone and has given various benefits like tax exemption scheme, exemption from customs duties, exemption from excise duties, etc., to the units in the said area. The Special Economic Zones Act, 2005 also gives deemed benefit to the local/DTA industries who supply goods or provide services in the SEZ demarcated area as if such goods are exported out of India and get all the benefits, which are otherwise available to a normal exporter who exports his goods or provides services to a unit out of India. It is the case of the petitioner that since Special Economic Zones Act, 2005 and the Special Economic Zones Rules, 2006 authorise the DTA unit to supply goods to SEZ unit/developer as export, the DTA unit also can get the same benefits, which are otherwise available under the Central Excise Act, 1944 and the Central Excise Rules, 2002. Under the provisions of Rule 18 of the Central Excise Rules, 2002 it is specifically provided that 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 fulfilment of such procedure, as may be specified in the notification. In the present case, the petitioner company has purchased the raw materials from various local dealers/traders who have either imported such raw materials from foreign countries or procured the same from local manufacturers. It is the case of the petitioner that since the goods are exported to the petitioner company by the DTA supplier, the petitioner is eligible to claim the rebate of duty as in the present case the supplier has given disclaimer certificate in favour of the petitioner company. The petitioner company, therefore, lodged a rebate claim of the duty suffered on the raw materials received by the supplier on payment of duty including CVD. The petitioner filed rebate claims under Rule 18 of the Central Excise Rules, 2002 for the amount of the duty paid on the goods, which are ultimately supplied by the DTA dealers or manufacturers for the period from February, 2010 to August, 2011. The respondent authorities returned such rebate claims on the ground that the same should be filed before the Maritime Commissioner and also raised an objection that ARE-1 is a mandatory document for claiming the rebate, whereas the petitioner had filed rebate claim on the basis of invoices. The petitioner once again resubmitted all the claims before the concerned authority, which came to be disallowed on the ground that rebate shall be available only on the goods manufactured and processed in India and in the present case the goods were imported by the dealer and no further processes were undertaken and straightaway transferred to the petitioner company. The petitioner being of the confirmed opinion that the goods supplied to the SEZ unit or developer are export for the supplier and import for them and hence rebate is well within its rights, once again submitted all the claims with the authorities, but till date there was no positive outcome. Being aggrieved by the inaction on the part of the respondents, the petitioner has filed the present petition for quashing and setting aside the communication dated 18th May, 2011 of the Assistant Commissioner, Central Excise, Ahmedabad-II (the Respondent No. 3 herein) and seeks a declaration that the petitioner is eligible to get the rebate claim.

(2.) Mr. Dhaval Shah, learned advocate for the petitioner submitted that the entire basis of the respondents for denying the rebate claim is wrong as the respondents have failed to consider the correct facts of the claim. It was submitted that it is an admitted position that the petitioner has purchased the goods from the dealers who have either imported such raw materials from foreign countries or procured the same from the local manufacturer. It was submitted that objection raised by the respondents for denying the rebate claim on the ground that the goods on which rebate claims are filed are imported and not produced or manufactured or processed in India but sold directly by the registered importers without any manufacturing or processing being done on them in India is without appreciating the correct legal provisions and without considering the deeming fiction created by the statute. It was submitted that the dealers have imported the goods and paid all the duties including Countervailing Duty (CVD), which is equivalent to the central excise duty as if the goods are manufactured in India and the same have been supplied to the petitioner company, whereas, in some of the cases, the goods are supplied from the suppliers which are manufactured in India. It was pointed out that when the goods are imported into the territory of India, duties, namely, basic customs duty, CVD, Education Cess and Higher Secondary Education Cess have to be paid at the time of clearance of the goods. The CVD is basically an additional duty levied under Section 3 of the Customs Tariff Act, 1975 which provides that any article which is imported into India shall, in addition, be liable to a duty equal to the excise duty for the time being levied on a like article if produced or manufactured in India and if such excise duty on a like article is leviable at any percentage of its value, the additional duty to which the imported article shall be so liable shall be calculated at that percentage of the value of the imported article. Therefore, any importer, who imports goods from foreign countries, is liable to pay duties including additional duties as if such goods are manufactured in India by way of deeming fiction. It was submitted that the statute provides for a set off of duties suffered/paid on the goods exported and therefore, 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 process of such goods. In the present case the petitioner had paid the additional duties in the form of CVD in lieu of central excise duties on the goods imported and therefore, had filed rebate claim of the CVD already paid and available because, for the supplier it was export and therefore he is eligible to get the set off in the form of rebate. It was, accordingly, urged that such a benefit, though available under the Act, cannot be denied by any authority on a flimsy ground. It was submitted that the objection with regard to the claim of the rebate on the ground that the rebate is allowed if excise duties are paid on the goods, which are manufactured or processed in India and the goods which are imported and sold are not eligible, is not the correct interpretation of law. It was submitted that it is a fact that the goods imported and supplied to the petitioner company are excisable goods, because such goods are specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 as being subject to a duty of excise; that at the time of import, the goods have suffered additional duty (CVD) which is equivalent to the central excise duty payable on such goods if manufactured in India and, therefore, such goods satisfy the requirements of excisable goods. Under the circumstances, the claim of the petitioner company with regard to the rebate of additional duty (CVD) is well within the four corners of law and is, therefore, required to be allowed by the respondent authorities. It was urged that Rule 3(vi) of the Cenvat Credit Rules, 2004 allows to take credit of the additional duty leviable under Section 3 of the Customs Tariff Act and, therefore, if under the Cenvat Credit Rules, 2004 credit of the duties which are paid under Section 3 of the Customs Tariff Act, 1975 is allowed, there is no reason why the petitioner cannot get the same benefit as rebate when the goods are admittedly supplied to an SEZ unit. Referring to the notification issued under Rule 18 of the rules, it was pointed out that the same does not provide any condition to the effect that rebate has to be granted only if the input is processed or manufactured in India. It was urged that the goods purchased by the petitioner have suffered duty and that the petitioner is, therefore, entitled to claim rebate and is eligible to get rebate of the goods exported by it.

(3.) Opposing the petition, Mr. Y.N. Ravani, learned senior standing counsel for the respondent invited the attention of the Court to the reasons assigned by the Assistant Commissioner while returning the rebate claim applications filed by the petitioner, to submit that the additional duty equal to excise duty paid on the goods exported to the petitioner is levied only to offset the disadvantage to like Indian goods due to high excise duty on their inputs. It is levied to provide a level playing field to indigenous goods which have to bear various internal taxes. However, such duty is not an excise duty and accordingly, notwithstanding the fact that the goods have borne countervailing duty, such goods remain imported goods. It was submitted that duties paid under the Customs Tariff Act cannot be equated with the duties paid under the Central Excise Act. Under the circumstances, the petitioner is not entitled to the rebate of the duties paid by it on such goods. Referring to Rule 18 of the rules, it was pointed out that the same clearly speaks of the duty paid on excisable goods. The attention of the Court was drawn to the definition of the expression 'excisable goods', as defined under Section 2(d) of the Central Excise Act, to submit that such goods are the goods specified in the First Schedule and Second Schedule to the Central Excise Tariff Act, 1985 as being subject to a duty of excise. Therefore, for the purpose of being eligible to get rebate under Rule 18 of the rules, the goods have to be subjected to central excise duty, whereas, in the facts of the present case, the goods in question have not borne any excise duty. Reference was also invited to Section 3 of the Act to point out that the same provides for levy of the duty specified in the First Schedule and Second Schedule to the Central Excise Tariff Act, 1985 on the goods which are manufactured in India. It was submitted that therefore, Rule 18 clearly envisages the grant of rebate in relation to excisable goods, namely, goods which are manufactured or processed in India and not in relation to imported goods. It was, accordingly, submitted that the impugned order being in consonance with the provisions of the Act and the rules framed thereunder as well as notifications issued under Rule 18 of the rules, does not warrant for any interference by this Court.