2008 (10) TMI 444 - AT - Central Excise

Rebate - Quantum of - Export of watches and clocks - N/N. 10/2003-C.E., dated 1-3-2003 - Held that - Exemption N/N. 10/2003-C.E., dated 1-3-2003 is applicable in respect of watches and clocks of retail price not exceeding ₹ 500/- per piece. Even though export price of watches may be less than ₹ 500/- as observed by the Commissioner (Appeals) but not confirmed by the ld. Advocate during the hearing. Rupee is currency of India, retail price cannot be affixed on the export goods. Therefore, the exemption Notification cannot be applied to watches sold in other countries. Since Indian Government has no control over sale price in respect of exported goods, it is clear that exemption notification is inapplicable to exported goods. Whether the appellants are encashing the Cenvat credit or not is not relevant, what is relevant is to be seen whether the contention of the Revenue is legally valid and correct - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Duty rate payable on exported watches.
2. Applicability of exemption notification.
3. Assessment of duty for exported goods.

Analysis:
1. The appellants, engaged in manufacturing quartz watches, paid duty at 16% on watches exported by them, though the effective rate for watches with a retail price below Rs. 500/- was 8%. The Revenue sought to recover the differential amount. The appellant claimed that duty should be assessed under Section 4 for exports, not under the exemption notification. The ld. Advocate argued that since export prices are not affixed with retail prices, the exemption does not apply. The SDR contended that the price being below Rs. 500/- necessitates the 8% duty. The Tribunal found the appellants discharged their duty correctly at 16% and upheld the rebate claim.

2. The Tribunal analyzed Exemption Notification No. 10/2003-C.E., which applies to watches with a retail price not exceeding Rs. 500/- per piece. While export prices may be below Rs. 500/-, the Tribunal noted that the exemption does not extend to goods sold in other countries. As retail prices cannot be affixed to export goods, the exemption notification does not apply to exported goods. The Tribunal emphasized that the Standard of Weight and Measures Act is also inapplicable to goods exported from India due to the lack of control over sale prices. The decision highlighted the irrelevance of encashing Cenvat credit, focusing on the legal validity of the Revenue's contention, which was deemed incorrect.

3. The Tribunal concluded that the appellants correctly paid duty at 16% for the exported watches, and the rebate claim was rightfully sanctioned. Consequently, both appeals by the appellants were allowed with consequential relief, emphasizing the legal correctness of the duty payment and the inapplicability of the exemption notification to exported goods.