Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
March 20, 2007
Subject: Rebate of Automobile Cess paid on goods exported and payment of Cess on export under bond.
Instances have been brought to the notice of the Board wherein in certain cases the Department has sanctioned the rebate of automobile cess paid on the goods exported on payment of duty even though it is not covered under the Explanation in the notification No. 19/2004 CE(NT) dated 06.09.2004. For granting such rebate, reliance has been placed on rule 3 of the Automobile Cess Rules, 1984, which reads as follows;
“Save as otherwise provided in these rules, the provisions of Central Excise Act, 1944 (1 of 1944), and the rules made thereunder including those relating to refund of duty, shall, so far as may, apply in relation to the levy and collection of the duty of excise on manufacture of automobiles under the Act and the Rules”.
2. The issue has been examined. Rebate of excise duty is governed by rule 18 of the Central Excise Rules, 2002, which states that the Government by notification may grant rebate of duty paid on excisable goods exported subject to the conditions or limitations imposed and the procedure specified in the said notification. Accordingly, notification no. 19/2004-CE(NT) dated 06.09.2004 has been issued under rule 18. Further, for the purpose of this notification the term ‘duty’ has been defined in the Explanation I. Therefore, rebate of only those duties, which are included in this Explanation can be given as rebate on exported goods. This position has also been confirmed by the Tribunal in the case Collector of Central Excise Vs. Mahindra & Mahindra Ltd. (1991(53) ELT.408(Tribunal). Further, rule 3 of the Automobile Cess Rules, 1984 cannot be applied for grant of rebate as rebate on goods exported is governed by rule 18 of the Central Excise Rules, 2002 read with notification No. 19/2004 CE(NT) dated 06.09.2004 and not by rule 3 of the Automobile Cess Rules, 1984. Therefore, since notification no. 19/2004-CE(NT) does not specify automobile cess as ‘duty’ for the purpose of granting rebate, the rebate of automobile cess cannot be granted. This interpretation would be applicable for all types of cesses.
3. Further, it is also clarified that where goods are exported under bond, without payment of duty, the applicable ‘cess’ is liable to be paid unless it is exempted by a notification. Necessary steps may be taken to safeguard the revenue.