Export - Rebate of Excise duty on tea under Rule 12(1)(b), exported by Manufacturer/Merchant 
exporters after blending/packaging

        I am directed to say after the imposition of Central Excise duty @ Rs. 2 per Kg. on bulk tea, problem of granting of rebate to the merchant exporters has arisen, especially those who purchased the tea from the market or in public auction and export after blending/packaging the same. The problem has now been sorted out by declaration of All Industry Rate of Drawback under sub-serial Number 0921 @Rs. 2 per Kg. (All Central Excise) [to the extent of in digenous proportion] with effect from 1-6-1999, prospectively. However, for the period prior to 1-6-1999, and even for the exporters who want to avail rebate of Excise duty under Rule 12(1)(b) in future, a request has been made to lay down suitable procedure.

2.    The Board has examined the matter.

3.    It is found that the substantial right of the exporters to get rebate of the Excise duty paid on export goods already existed under Rule 12. 'Tea' is amply covered by the Notifications 41/94-C.E. (N.T.) and 42/94-C.E. (N.T.), both dated 22-9-1994. So far availability of procedure is concerned, it is stated that under Rule 12(1)(b), rebate can be availed by the exporters. Circular 129/40/95-CX, dated 29-5-1995 already exist which specifies the detailed procedure. For the purposes of Rules 12 and 13, the expression "manufacture" has very wide connatation. It includes blending, packaging or any other operation. Even if a process do not conform to manufacture under the provisions of Central Excise Act, for the purposes of export benefits, the wider connation has to be applied. Thus the process of blending, packing etc. are well covered under Rule 12(1)(b). One problem which comes into the way is that the Notification No. 42/94-C.E. (N.T.), dated 22-9-1994 provides for procurement of goods directly from the factory of manufacture and the open market procurement is allowed only where goods are in original packed condition and the invoices are issued in terms of Rule 57GG (by Registered dealers). In case of tea, condition relating to open market purchase cannot be fulfilled. This  condition of Notification 42/94, ibid, can be relaxed under the powers conferred by proviso to Rule 12(1) to allow rebate of the specific duty on tea.

4.    it has been decided by the board to prescribe the following procedure in respect of export of tea (including blended tea and package tea), especially where the tea was/is purchased from the open market or though auction and on which duty was paid @ Rs. 2 per Kg. on or after 1-3-1999:-

(1) The exports shall be made under the provisions of Notification No. 42/94-C.E. (N.T.), dated 22-9-2994. Board's Circular No. 129/40/95-CX, dated 29-5-2995 shall be applied, mutatis mutandis, which specifies detailed procedure regarding declaration, permission, procurement of material (tea, packaging material etc. in this case), record maintenance, preparation of AR-5 and its disposal, claim for rebate, computation of rebate, etc.

(2) For the purpose of export of blended/packaged tea where such blending/packaging was/is done after purchasing bulk tea from the open market or in auctions, the condition of the aforesaid notification regarding procurement of materials (tea in this case), directly from the factory will be relaxed under the provisions of Rule 12(1) of the Central Excise rules, 1994 provided :-

(i) the Commissioner of Central Excise (Deputy/Assistant Commissioner of Central Excise to whom the powers of rule 12(1) have been delegated) or the Maritime Commissioner, is satisfied that the bulk tea contained in the blended/packaged tea has actually been exported and approximate duty of excise has been paid. For this purpose, the copies of AR-4 (for those exporters who used this form in past cases only) or AR-5, together will Bill of Landing and Shipping Bill duly endorsed by the Customs at the place of export may be verified.

(ii) in case of tea purchased in auctions, the brokers catalogue indicating the details of this invoices on which the bulk tea was removed from the factory for home consumption on payment of appropriate duty and the broker's contract relating to purchase of such tea is submitted along with rebate claim.

(iii) in case tea is purchased other than in auctions, copies of relevant invoices evidencing payment of duty are submitted along with rebate claim.

(3) The cases where exports have already taken place, it is obvious that certain conditions specified in the Notification No. 42/94, ibid and the Circular No. 129/40/95-CX, dated 29-5-1995 would not have been followed meticulously because the exporters were not aware of the procedure required to be followed. in such cases, the Commissioners may relax any other conditions of the aforesaid notification/Circular based on the facts and merits of the claims, keeping in view that the revenue is safeguarded.

(4) It should also be ensured that any exporter do not claim drawback as well as rebate under Rule 12(1)(b) simultaneously. this has already been provided under Rule 12(3).

5.    The trade and the field formations may suitably be informed. If any difficulty is noticed in the processing of claims and grant of rebate while following the above procedure, the same may be brought to the notice of the Board immediately. All the concerned exporters may be allowed to file rebate claims immediately, subject to the limitation period, in respect of export of tea effected on or after 1-3-1999. provided no drawback has been claimed. the claims should be processed expeditiously.

C.B.E. & C.Circular No. 489/55/99-CX, dated 13-10-1999