Case Details: Indorama Synthetics (I) Ltd. Versus Union of India (2025) 31 Centax 242 (Bom.)
Judiciary and Counsel Details
- B.P. Colabawalla & Firdosh P. Pooniwalla, JJ.
- S/Shri Sriram Sridharan a/w. Shanmuga Dev a/w. Ms Aditi Jain, Adv., for the Petitioner.
- S/Shri Jitendra Mishra, Abhishek Mishra, Rupesh Dubey, Adv., for the Respondent.
Facts of the Case
The petitioner claimed rebate of excise duty paid on exported goods under Rule 18 of the Central Excise Rules, 2002 read with Notification No. 19/2004-C.E. (N.T.), dated 06-09-2004, while simultaneously claiming duty drawback on inputs at the All Industry Rate of 16% under the category ‘Cenvat facility not availed’, after reversing the Cenvat credit. The Revision Authority rejected the claim, reasoning that the petitioner need not have paid duty on the exported goods and had attempted to encash idle credit balances; that allowing both rebate and drawback constituted an impermissible double benefit; and that reversal of credit did not amount to non-availment for the purposes of Condition No. 12(i) of ‘Notification No. 68/2007-Cus. (N.T.), dated 16-07-2007’, which states: ‘no Cenvat facility has been availed for any of the inputs used in the manufacture of export product’. It was also contended by authorities that utilisation of Cenvat credit in unrelated transactions violated the condition. The matter was accordingly placed before the Bombay High Court.
High Court Held
The Bombay High Court held that the reversal of Cenvat credit is equivalent to non-availment and thereby entitles the assessee to claim duty drawback under ‘Notification No. 68/2007-Cus. (N.T.), dated 16-07-2007’. It ruled that Rule 18 of the Central Excise Rules, 2002 read with ‘Notification No. 19/2004-C.E. (N.T.), dated 06-09-2004’ neither prohibits rebate on exported goods where drawback is claimed on inputs, nor mandates that the output duty must be paid in cash for rebate eligibility. The Court found that the Revision Authority erroneously conflated input-side and output-side benefits and misinterpreted Condition No. 12(i), which only requires that no Cenvat credit be availed on inputs used in the manufacture of the specific exported goods for which rebate is claimed, it does not extend to inputs used in unrelated past transactions. The petition was allowed in favour of the assessee, clarifying that the law does not bar simultaneous rebate on output and drawback on inputs, provided credit on input side is duly reversed.
List of Cases Cited
- Commissioner v. Bombay Dyeing and Mfg. Co. Ltd. — 2007 (215) E.L.T. 3 (S.C.) — Followed [Paras 31, 56]
- Commissioner v. Indorama Textiles Ltd. — 2006 (200) E.L.T. 3 (Bom.) — Referred [Para 32]
- Kunal Houseware Pvt. Ltd. v. Union of India — Writ Petition No. 2215 of 2023 by Bombay High Court — Distinguished [Paras 44, 68]
- Raghav Industries Ltd. v. Union of India — 2016 (334) E.L.T. 584 (Mad.) — Relied on [Paras 43, 69]
- Raghav Industries Ltd. v. Union of India — 2023 (383) E.L.T. 63 (Mad.) = (2022) 1 Centax 167 (Mad.) — Departed from [Paras 43, 69]
- Spentex Industries Ltd. v. Commissioner — 2015 (324) E.L.T. 686 (S.C.) — Followed [Paras 32, 34, 42, 58, 59, 64, 67, 68, 69, 70, 71]
List of Notifications Cited
- Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 [Paras 10, 16, 25, 33, 49, 50, 60, 62]
- Notification No. 68/2007-Cus. (N.T.), dated 16-7-2007 [Paras 26, 37, 51, 66, 67]
