• 3111M-1-6-4 (311 -V) -tRt3 ct4KG-1 2le-c1) *

I dcl-IT dcl, .5c-LI I ei

um, mr-waraft,

— 380015.

icr) gNi

th-1-0 : File No : V2(32) 54 /Ahd-I/2013

3TIIF 31.thr cql Order-In-Appeal No..AHM-EXCUS-001-APP-071-13-14

Rcp Date : 03.02.2014 c 4 1-14zi Date of Issue 4 ( t10 1 8ft 3TF4R TaTrT 3fi-zpff (31-tirF-V) ri-rftd . Passed by Shri. Anil Kumar, Commissioner (Appeal-V)

Tr Asst./Deputy Commissioner, Div. - III A'bad - I 7rqt

MP/24/AC/2013-REF.(ST)I ft-41- : 07/10/2013 Tjf'•

Arising out of Order-in-Original Nos. MP/24/AC/2013-REF.(ST) Dated : 07/10/2013 Issued

by Asstt.Commissioner, Central Excise, Div.-III Ahmedabad-I..

3itEdTh—Ji Th-T -11 t-id I Name & Address of the Appellant / Respondent

CHOKSI ORGANICS PVT. LTD.(100% EOU) Ahmedabad

c c f e 13Ttc 31-r -zr 3T& T c u l t tferftel -f

(4,1 3rd trr a-4mm 3uk-4-9- 1TR-1-u ct) ,. Any person a aggrieved by this Order-In-Appeal may file an appeal or revision application, as

the one may be against such order, to the appropriate authority in the following way :

11 ,to 11Ncok rtIairli Revision application to Government of India :

(1) .-414 0-1 I 3Tf4TITE, 1994 8171. 3-1-d7 1TPTM El I reqff z171 cO)

—qrRT 31.2471 3fd-zt .g71-aTur 3trtq9 314F 'fl\rk<1 -c1121114-1 -F, 41 ,-1 -iflq 4-114, ft-A :il000i cb c‘r -r1t7I

(i) A revision application lies to the Under Secretary, to the Govt. of India, Revision Application Unit Ministry of Finance, Department of Revenue, 4 th Floor, Jeevan Deep Building, Parliament Street, New Delhi - 110 001 under Section 35EE of the CEA 1944 in respect of the following case, governed by first proviso to sub-section (1) of Section-35 ibid :

zrft 41 IM 4 w T col itt 7117- TrIR TIT 31-- r commi; za

f+--#r A- 916 c ,-11() TiT zit cl qtr

coktli tfr A-kg- FrF t 4-Hei 4 vi -zrr tu9• (ii) In case of any loss of goods where the loss occur in transit from a factory to a warehouse or to another factory or from one warehouse to another during the course of processing of the goods in a warehouse or in storage whether in a factory or in a warehouse.

(u) f+--4t vrIK Err r fqnci tR zif 4116 1 4-1 u I A trzn-Tr

+il d *cR ■Ic1-1Iq NZ #19Awl f Err -crtvr

(b) In case of rebate of duty of excise on goods exported to any country or territory outside

India of on excisable material used in the manufacture of the goods which are exported

to any country or territory outside India.

(Tr) 44 r I3 vre (Acrra TIT 1 -1-erA *r) fi f+--ar 41z1i er

(c) In case of goods exported outside India export to Nepal or Bhutan, without payment of

duty.

Ti ISTEd-F 3zet 4-11-0 1 41“- aftv iii YT **-1

URI 74 T TIRT 3iTz1W., 3Ti1a. tfTftU TR TIT w lq A 1'4- 40-ftzFr 0.2) 1998

UTRI 109 grtl F4Z14ff TN el- I

(d) Credit of any duty allowed to be utilized towards payment of excise duty on final

products under the provisions of this Act or the Rules made there under and such order

is passed by the Commissioner (Appeals) on or after, the date appointed under Sec.109

of the Finance (No.2) Act, 1998.

(1) *-41T:i \30414 (31.41M "kz1 411c1A, 2001 * fl-ZFT 9 T 31-d-Tfiu f4fer<tz 5l4-4 Tim A -41 stfazft

Mci a r t 31-itzr it9U t c11-1 111-d7 tc4-31-rkzr 74 311re arrtzr

treT 31tu 3TTk-q-9 fTZ1T ■111.11 -firg7 13 TiTZT q.gIcII Z. TT lICaTeTtt t 31111td. tITZT 35--Z

F4dtd- tbci 1171--drff T T TrT21 7317-6 Ti I cd I-I 4 Alt tft 7Tftg I

The above application shall be made in duplicate in Form No. EA-8 as specified under

Rule, 9 of Central Excise (Appeals) Rules, 2001 within 3 months from the date on which

the order sought to be appealed against is communicated and shall be accompanied by

two copies each of the 010 and Order-In-Appeal. It should also be accompanied by a

copy of TR-6 Challan evidencing payment of prescribed fee as prescribed under Section

35-EE of CEA, 1944, under Major Head of Account.

(2) R ■31 3frk- T TTRT v161 sZ-I el ZTTI 1 cn -1731- TEO ZIT 3 TR ct) 41 cr4I

- 11-Trdm

qil ,TIN 3ftZ ■316I 04-1 Yz1141 1000 / — thti lyrdT9 I

The revision application shall be accompanied by a fee of Rs.200/- where the amount

involved is Rupees One Lac or less and Rs.1,000/- where the amount involved is more

than Rupees One Lac.

SIT 'cilcilsZ 3TIrtzt rrzraimR-crr 3T4m. :-

Appeal to Custom, Excise, & Service Tax Appellate Tribunal.

T4IZI \30-11q -1 -Z1-cK 3TPUIZFT, 1944 Ti WTI 35— tf/ * -

Under Section 35B/ 35E of CEA, 1944 an appeal lies to :-

4 , cm I te-41 ict)-f *1411c1 Zip TI-F0 4 1-1I 4M \J (-LI I •cr e IC -ew.III covi

ffs-lisr ftwr 3. 31-17. T. 711, kr'

the special bench of Custom, Excise & Service Tax Appellate Tribunal of West Block

No.2, R.K. Puram, New Delhi-1 in all matters relating to classification valuation and.

3

(71) \JctriRliZqo Li 2 (1) 14 4M7 311-R0 $ 3171-4T (6) 3P 4F, 3T 1c #FET \3c-t-04.-1

[r 'i)414rZ 3111tAll ffziTir$717T "c0-41=1 e-)11-4 r, 3-T-611-qT4Tq 4-)J40\3u, 14EITult -1 4 H, 31TIR-380016.

(b) To the west regional bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) at 0-20, New Metal Hospital Compound, Meghani Nagar, Ahmedabad : 380 016. in case of appeals other than as mentioned in para-2(i) (a) above.

(2) m\--41-4 (3-TO) Pqt-i14c1, 2001 QM 6 $ 3{ - td Acl• fqqtftff f 3i-1AR 3T(11-4171 rrzi-rf0-wR-0 4 3T1:1c f 311 f Trg 31- 71 4 -c4i ,Z vrozri u-161 \3c-414 4 v:1M ') litTT 30 critilqi RI TirFT WCR 5 9TZTI \3 ,41 1 coti t 461Tufq• 1000/- qj 14-At t/ft I vtei 4 TIT7T,vq.m. Z 1TtzT 30 719T --cN• 5 cat ZCI• ZIT 50•17§1c1c er

5000/- tft-e ef1ftl vi S II d c4I4 c 4 TIPT , v:11-v3 4 11f1T 3112 citimi titir ThT WEI• 50 -FUf zfr \3tk4 ve414I t 46i wi:r7 10000/— Eft tTfti 4 itrA -ip-r

TErz .fl. E.tzT 4 &r I Trg T-qz T2TF ft-Rit '9-rPra 1-T

\icro •R:ITziTf4$77 t.i)o Rtaiff t 1 4 -'( TINT w:r7 500/— Eft. t/ft I

The appeal to the Appellate Tribunal shall be filed in quadruplicate in form EA-3 as prescribed under Rule 6 of Central Excise(Appeal) Rules, 2001 and shall be accompanied against (one which at least should be accompanied by a fee of Rs.1,000/-, Rs.5,000/- and Rs.10,000/- where amount of duty / penalty / demand / refund is upto 5 Lac, 5 Lac to 50 Lac and above 50 Lac respectively in the form of crossed bank draft in favour of Asstt. Registar of a branch of any nominate public sector bank of the place where the bench of any nominate public sector bank of the place where the bench of the Tribunal is situated. Application made for grant of stay shall be accompanied by a fee of Rs.500/-.

(3) ftzff ‘311-11 rt7 * ,o ITt f fa-ur rr-St wrd A q-u ,) f Truritqfd- 34-Lit-A-4

*fl 3iTtZT 14 44 to 31T-4714 4-)1 Ti4r4zr 6-11 31)-47r tbrt-i 1 Tidm

- Trzi-rilTR-0T cl R 3reft7 zrr emvz -> 3frkTfff Tr ulidf t

In case of the order covers a number of order-in-Original, fee for each O.I.O. should be paid in the aforesaid manner not withstanding the fact that the one appeal to the Appellant Tribunal or the one application to the Central Govt. As the case may be, is filled to avoid scriptoria work if excising Rs. 1 lacs fee of Rs.100/- for each.

(4) -4IIeitqiu cr6 31f417Ff 1970 TP-TT ,41Nnici That 3IT1-1 Z 34-ditff It 3T-170 37fr 341-\44-9- zr1

3i1-471-1124TR-P-ifi f414ZM 7TRITh-Ttf 31-TT T1tiA c et c.r) Af cT Zn Zri.6.50 WI •-qlqicv-f e1 4 11 61•11 qrft7

One copy of application or O.I.O. as the case may be, and the order of the adjournment authority shall a court fee stamp of Rs.6.50 paise as prescribed under scheduled-I item of the court fee Act, 1975 as amended.

(5) T4-4-1)-ffT1I 1c cb 1-)zkul CP ciic) f4zI1,14 $:taTYz'tit zzIN 311$14•Uf 1T undi wl#Frr m\---4t7 74 \.)clicm 317f1R1 (4q1raf) ffizPi, 1982 14 f'4ftff t I

Attention in invited to the rules covering these and other related matter contended in the Customs, Excise & Service Tax Appellate Tribunal (Procedure) Rules, 1982.

V2(32)54/Ahd-I/2 013

ORDER-IN-APPEAL

M/s. Choksi Organics Pvt. Ltd., 604, Satkar Complex, B/h. Swagat

Complex, C.G.Road, Ahmedabad (here-in- after referred to as " the appellant") has filed

appeal against following impugned Order-In-Original No. MP/24/AC/2013-REF

dated 07.10.2013 (here-in-after referred to as "the impugned order' )

passed by the

Assistant Commissioner, Central Excise, Division-Ill, Ahmedabad-I ( here-in-after

referred to as " the adjudicating authority ").

2. The appellant is engaged in manufacture of S.O. dyes falling under Chapter

Heading No. 32 of the Central Excise Tariff Act, 1985. They have filed refund claim of service

tax amounting to Rs. 1,21,096/- under Notification No 41/2012-ST dt 29.06.2012, in

respect of service tax paid on the taxable services viz., Port charges, Agency charges, THC

Charges and Transport (Services) by Rails utilized for export of goods done during the

period July 2012 to September 2012.

3. During the scrutiny of the rebate claim, in respect of nine Shipping bills, the

difference of amount of rebate claimed under procedure specified in para 2 and paragraph 3

of Notification No 41/2012-S.T, dated 29.06.2012, was found to be less than twenty percent

of rebate available under the procedure specified in paragraph 2. Since it appeared that the

condition of paragraph 1(c) of the said Notification was not fulfilled in these case, a Show

Cause Notice was issued to the appellant seeking as to why the rebate claim shoUld not be

rejected for non compliance of the prescribed condition of the Notification. The adjudicating

authority has rejected the rebate claim amounting to Rs.22,841/- vide the impugned

under the provisions of the aforementioned Notification read with provisions of Section 11 B

of the Central Excise Act, 1944, made applicable to Section 83 of the Finance Act, 1994.

4. The appellant, being aggrieved by the impugned Order, has filed an

appeal against the same before Commissioner (Appeals), on the following grounds:

(i) The impugned order has been passed in violation of principles of natural justice.

(ii) The substantive benefit of rebate of Service Tax paid on the specified services

not utilized in the goods exported has been denied only because they have

followed procedural aspect. They have relied on the following judgements:

(a)Krishna Filament Ltd reported at 2001 (131) E.L.T 726 (G01).

(b) Barot Export reported at 2006 (203) ELT 321.

(ii) Para (c) of the proviso to the said Notification is a procedural condition and

that the adjudicating authority cannot be rejected on the basis of procedural

infraction.

(iii) The details of the nine shipping bills have not been mentioned in the

impugned order and thus they cannot explain the observations of the

adjudicating authority.

5 V2(32)54/Ahd4/2013

(iv) The core of the order pertaining to difference between the amount in Para 3

an Para 3 has not been incorporated in the impugned order, in absence of

which it is not possible to rebut the observations of the adjudicating

authority.

(v) The adjudicating authority has incorrectly relied on the decision of M/s.

Saraswati Sugar Mills as the facts of this case are different from the facts of

the case of the appellant.

(vi) The adjudicating authority has negated the contention of the appellants on

the order passed by Commissioner (Appeals). In Notification No.17/2009, it

is stipulated that no refund claim shall be allowed if the same is for an

amount less than Rs.500/-. In the Notification No. 41/2012-S.T., Para c

stipulates the procedure for the refund claim and therefore consideration of

individual shipping Bills is not warranted.The adjudicating authority has

assumed that the claim has to be Shipping bill wise and that the said

Notification does not use the word 'Individual' shipping bills.

(vii) Para 2 and 3 are mutually exclusive, meaning thereby that the exporter can

claim rebate of the Service Tax by following any of the procedure

prescribed under the above two paras. It is also well settled that if two

options are available to an exporter, the one which is more beneficial can

be adopted by him and there should not be any reason for the department

to reject their claim.

(viii) The adjudicating authority has ignored the intention of the legislation and

has failed to consider that it is not merely a rebate, but is also an exemption

granted on the service tax paid on the specified services utilised by the

exporter in the export of goods.

DISCUSSION AND FINDINGS:

5. Personal Hearing was held on 22.01.2014 and Shri N.K.Tiwari,

Consultant and Shri I. K Purohit appeared before me and reiterated the submissions

made in their memorandum of appeal. The rebate claim has been rejected, as the

difference between the amount of the rebate claimed under procedure prescribed

in para 2 and para 3 of the Notification no. 41/2012-S.T., dated 29.6.2012, is less

than 20% of the rebate available under the procedure specified in the para 2 of the

said notification. The Para 2 and 3 are mutually exclusive and since they were

unable to go for the procedure laid down under para 2, they have opted for the

procedure under Para 3. They have requested that their appeal be allowed as

substantive benefit cannot be denied on the basis of procedural aspect.

6 V2(32)54/Ahd-I/2 013

6, I have gone through the facts of the cases and the written

submissions made by the appellant in their memorandum of appeals. I find that the

issue to be decided is whether in respect of the Shipping bills as detailed in Para 3

above, Rebate claim to the extent of that amount, wherein the condition preseribed

in the Notification No. 41/2012-S.T., dated 29.06.2012, has not been fulfilled, is

required to be rejected or otherwise.

7. At the outset, I find that the appellant has submitted that the details

of the relevant nine shipping bills, against which the rebate has been partly

denied, have not been mentioned in the impugned order and thus they are finable

to explain the observations of the adjudicating authority. I find that this allegation

to be baseless, as the details of the Shipping Bills have been mentioned in the

Show Cause Notice issued to them, which was eventually adjudicated vide the

impugned order.

8. Extract of Notification No. 41/2012-Service Tax, dated 29.06.2012,1(in

relation to the issue under dispute) states as under:

1(c) the rebate under the procedure specified in paragraph 3 shall not be claimed wherever the difference between the amount of rebate under

the procedure specified in paragraph 2 and paragraph 3 is less than twenty per cent of the rebate available under the procedure specified in

paragraph 2;

".(2) the rebate shall be claimed in the following manner, namely:-

(d) the exporter shall make a declaration in the electronic shipping bill or bill of export, as the case may be, while presenting the same to the

proper officer of customs, to the effect that--

(i) the rebate of service tax paid on the specified services is claimed as a percentage of the declared Free On Board(FOB) value of the said

goods on the basis of rate specified in the Schedule .

(ii) no further rebate shall be claimed in respect of the specified services, under procedure specified in paragraph 3 or in any other

manner, including on the ground that the rebate obtained is less than the service tax paid on the specified services;

(iii)conditions of the notification have been fulfilled;

(e) service tax paid on the specified services eligible for rebate under this notification, shall be calculated by applying the rate prescribed for

goods of a class or description, in the Schedule, as a percentage of

the FOB value of the said goods;

(3) the rebate shall be claimed in the following manner, namely:-

(a)rebate may be claimed on the service tax actually paid on any specified

service on the basis of duly certified documents;

(b) the person liable to pay service tax under section 68 of the said Act on

the taxable service provided to the exporter for export of goods shall not

be eligible to claim rebate under this notification;

if

7

V2(32)54/Ahd-I/2013

(c) the manufacturer-exporter, who is registered as an assessee under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder, shall file a claim for rebate of service tax paid on the taxable service used for export of goods to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, having jurisdiction over the factory of manufacture in Form A-1;....."

9. Under the above Notification, two procedures have been specified for

claiming the refund of service tax. The first procedure, as stipulated in Para 2 of the said

Notification allows rebate of service tax paid on eligible input services as a percentage

value of the declared Free on Board (FOB) value of the export goods on the basis of rate

specified in the schedule, which is to be claimed from Customs authorities. The other

procedure as stipulated in Para 3 is that the rebate may be claimed on the service tax

actually paid on any specified service on the basis of duly certified documents, which is

to be claimed from Excise authorities. However, the foremost condition as stipulated in

Para 1 (c) of the Notification is that the rebate cannot be claimed under the procedure as

per Para 3, wherever the difference between the amount of rebate under the procedure

of rebate as per Para 2 i.e. as a percentage on FOB value of goods and rebate on the

basis of documents as per Para 3, is less than twenty per cent of the rebate available

under the procedure as per Para 2. It is crystal clear that if the difference between the

amount of rebate calculated as per procedure laid down under Para 2 and at the rebate

claimed as per the procedure laid down under Para 3, is less that 20 % of the rebate

available under Para 2, the Rebate cannot be claimed under Para 3. In such a scenario,

the appellant is eligible for rebate for the amount as calculated as per Para 2 of the

notification only and cannot claim the rebate under Para 3 of the Notification ibid.

10. The appellant has relied on the Order-in-Appeal No.55 to 61/2012(AHD-I)

CE/MM/COMMR(A)/AHD dated:29.04.2012, wherein it was held that it was not proper to

take individual shipping bills for denying the claim of the appellant on the ground that

each shipping bill was less than Rs.500/-.It was further held that the above reasoning

would have been sustainable if the entire refund claim had been less than Rs.500/-. I

find that the said Order-in-original pertains to a totally different issue and it pertained to

interpretation of Notification No.17/2009, dated 7.7.2009.In the present case, the

denial is only due to a specific condition mentioned in the notification and there is no

ambiguity on this aspect as the language of the notification is very clear. Further, on

plain reading of the Notification also, it is amply clear that Individual Shipping Bills have

to be considered if the procedure would have been followed under Para 2 i.e. by

claiming Rebate claim Customs on Shipping Bills or Bills of Export as per the schedule

of the Notification ibid. I absolutely agree with the argument of the adjudicating authority

that if the appellant would have sought the rebate from Customs, it would obviously have

been on the Individual Shipping bill and the rebate would have been sanctioned as per

the schedule in respect of that Shipping bill. There cannot be different practices for

sanctioning the rebate claim in Customs or Excise, when they are claimed under the

same Notification. Thus in the present case, individual Shipping Bills have been rightly

considered while arriving at the amount of Rebate to be sanctioned under Notification

8 V2(32)54/Ahd-I/2013

no. 41/2012-S.T., dated 29.6.2012.

11. The appellant has contended that they have claimed refund of Service

Tax in terms of Notification No.41/2012-S.T which is a beneficial legislation intended to

promote the exports by granting exemption to the Service Tax paid on various Services

utilized by an exporter during the course of exports of the goods and has to be construed

liberally and that substantive benefit should not be denied for any procedural infraction.

The Service Tax for which the rebate has been claimed by them are specified services

and the Service Tax has been paid by them. I find that the adjudicating authority has

sanctioned the rebate wherever all the conditions of the Notification has been fulfilled, as

such, the appellant cannot contend they have been denied the benefits of the said

Notification.

12. The appellants have also contended that as per para (c) of the

proviso to the said Notification, it is the amount of rebate claim which has to be

considered for applicability of procedure to be followed as per para 2 or 3 of the

said Notification. They have also stated that the Para 2 and 3 are mutually

exclusive meaning thereby that the exporter can claim rebate of the Service Tax

by following any of the procedure prescribed in the two paras and that they can

adopt whichever is beneficial to them. The Notification No. 41/2012-S.T.,dated

29.6.2012, does provide two options for claiming Rebate of Service Tax and the

exporter can chose whichever procedure is beneficial to them, however, they

cannot ignore the conditions laid down in the Notification for claiming the rebate. A

Notification is a law enacted by the Government of India and where the statute

provides a condition to be fulfilled for availing the benefit of a plarticular

Notification, the provision has to be complied with as a mandatory requirement of

law.

13. The Hon'ble Supreme Court in judgement, reported at 2011 (270) E.L.T.

465 (S.C.), while dismissing the appeal filed by M/s. Saraswati Sugar Mills has held as

under:

"Interpretation of exemption notification - Notification to be strictly construed - Conditions

for taking benefit under notification also to be strictly interpreted - Wordings of notification

when clear, plain language of notification be given effect to - Court cannot add or substitute

any word while construing notification either to grant or deny exemption. [para 7]

Interpretation of statutes - Rules - Rules are framed under statute and should be read as part of statute itself - Rules required to interpreted as intra vires to Act under which they

issued. [para 8] Components - Whether particular article is component of another - Test is to look at

article and consider it uses and whether its only use or its primary or ordinary use is as

component part of another article. [para 12]

Words and Phrases - Components - Common parlance meaning - Component part of

9 V2(32)54/Ahd-I/2013

an article is an integral part necessary to constitution of whole article and without which, the article will not be complete. [para 13]"

14. In view of the above discussion, I find that the adjudicating authority has

rightly rejected that the rebate claim to that extent where the condition prescribed in the

Notification No. 41/2012-S.T., dated 29.06.2012, has not been fulfilled. Hence I pass the

following order:

ORDER

15. In view of the above discussions and findings, I reject the appeal filed by

the appellant and uphold the impugned order.

921 ) 1 ( ANIL KUMAR )

COMMISSIONER (APPEALS-V), CENTRAL EXCISE, AHMEDABAD.

Date: /02/2014 ATTESTED Y

( . Vyas) Superintendent (Appeals-V) Central Excise, Ahmedabad

By Regd. Post A.D.

To M/s. Choksi Organics Pvt. Ltd., 604, Satkar Complex, B/h. Swagat Complex, C.G.Road, Ahmedabad

Copy to:

1. The Chief Commissioner, Central Excise, Ahmedabad Zone, Ahmedabad 2. The Commissioner of Central Excise, Ahmedabad-I, 3. The Deputy/Assistant Commissioner, Central Excise, Division-III, Ahmedabad-I. E., PA to Commissioner (Appeals-V) V.- Guard File.

\/6 0?-1 - , -