Bombay High Court Sets Aside Order Rejecting Yamaha Motors India's NCCD Rebate Claim; Says Core Issues Not Examined

A Division Bench of Justice M.S. Sonak and Justice Advait M. Sethna remanded the matter to the Central Government (Revisionary Authority) to reconsider Yamaha's claim afresh and pass a reasoned order within six months.

The assessee, India Yamaha Motor Pvt. Ltd. manufactures motorcycles attracting Basic Excise Duty (BED) and NCCD. The assessee argued that BED credit could be used to pay NCCD a and after a change in Rule 3(4) of the CENVAT Credit Rules, BED credit could no longer be used to pay NCCD.

The assessee inadvertently continued using BED CENVAT credit for paying NCCD and
later, it paid ₹22.31 crore in cash, under protest, to correct the position.

The assessee then filed 63 rebate claims under Rule 18 of the Central Excise Rules, 2002, seeking rebate of NCCD on exported goods. Rebate of BED was allowed, but rebate of NCCD was rejected.

However, the Revisional Authority rejected the rebate on the grounds, Interest on delayed NCCD was not paid, the rebate had lapsed under Section 142(4) of the CGST Act, and settlement under SVLDRS barred the claim.

The assessee preferred a writ petition before the High Court for quashing of the revisional authority and a writ of mandamus directing the Government to grant and pay the rebate amount, along with admissible interest, under Rule 18 of the Central Excise Rules, 2002.

The High Court observed that Rule 18 and Notification 19/2004 was not examined stating that the authority completely failed to apply its mind to Rule 18, which governs rebate on exported goods.

The Bench observed that rebate claims must be examined strictly under the notification and procedure laid down for export rebate.The authority did not analyse whether Yamaha was legally entitled to rebate of NCCD paid in cash for exported motorcycles.

The Bench noted that even if interest on NCCD was payable, the authority did not show how non-payment of interest could justify denial of rebate.

The Bench further held that the impugned order itself did not treat payment “under protest” as a ground for rejection. It held that statutory orders must stand on their express reasons, and new reasons cannot be introduced across the Bar.

Also observed that the impact of settlement under SVLDRS (Sabka Vishwas Legacy Dispute Resolution Scheme, 2019) on an independent export-rebate claim was never examined by the authority.

In view of the above, the High Court remanded the matter for a fresh, reasoned decision within six months.

Case Title: India Yamaha Motor Pvt. Ltd. Vs. The Union of India & ors.

Case No: Writ Petition No. 3587 of 2022

Appearance for Petitioner: Mr. V. Sridharan, Senior Advocate a/w Ms. Payal Nahar, Mr. Shanmuga Dev i/b Mr. Sriram Sridharan

Appearance for Respondents: Mr. Karan Adik a/w Mr. Ram Ochani

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