2012 (12) TMI 971 - CGOVT - Central Excise

Denial of rebate claim - ARE-1 value was higher than FOB value declared on Shipping Bills - Held that - Rule 6 is applicable where the price is the sole consideration . But, in the instant case the applicant received free of cost material, processed them and manufactured the final export product exported the same. While exporting the final export material, they declared conversion charges of converting free of cost material into final export product which they were actually going to realize. The applicant was neither going to realize total cost of final export goods nor the total amount declared in AREs-1 which include value of free material received from foreign party plus cost of conversion. Under such circumstances, if at all there is any amount which is considered of sole consideration, would be cost of conversion and not anything else. The FOB value declared in Shipping Bills which is equivalent to cost of conversion is the transaction value in this case which is realized toward export sale proceeds - The original authority has rightly held that transaction value in this impugned case is FOB value declared in Shipping Bills and rebate of duty payable on said value is required to be sanctioned. Any excess duty paid is required to be refunded in the manner it was paid - Decided in favour of assessee.

Summary

Issues Involved:
1. Interpretation of Rule 18 of the Central Excise Rules, 2002 regarding rebate claims on exported goods.
2. Assessment of duty payment based on the transaction value and FOB value of goods.
3. Jurisdiction for determining the correct value of goods cleared for export.
4. Applicability of C.B.E. & C. Circular No. 510/06/2000-CX in rebate claims.

Analysis:
1. The case involved a dispute over rebate claims filed by the applicant for goods exported under Rule 18 of the Central Excise Rules, 2002. The applicant manufactured goods from materials supplied free of cost and exported them, claiming a refund based on the FOB value. The original authority partially allowed the rebate claims, leading to an appeal by the applicant before the Commissioner (Appeals).

2. The main contention revolved around the assessment of duty payment, with the applicant arguing that the duty was correctly paid based on the provisions of Section 4 of the Central Excise Act, 1944. The applicant claimed that the assessable value should include the manufacturing charges and the value of free supplies received, contrary to the FOB value declared on the Shipping Bills.

3. The jurisdictional aspect was raised concerning the determination of the correct value of goods cleared for export. The applicant relied on a circular to argue that the jurisdiction for determining the value lies with the factory's jurisdictional officers, not the Maritime Commissioner. However, the Government clarified that the Notification No. 19/2004-C.E. (N.T.) authorized the Maritime Commissioner to sanction rebate claims based on admissibility parameters.

4. The Government analyzed the legal precedents, including the case of M/s. Nahar Industrial Enterprises Ltd. v. UOI, to support its decision. The excess duty paid, not held admissible for rebate under Rule 18 of the Central Excise Rules, 2002, was directed to be re-credited in the Cenvat credit account. Consequently, the revision applications were rejected for lacking merit, and the impugned Orders-in-Appeal were upheld.

This detailed analysis highlights the key legal arguments, interpretations of relevant rules, and the rationale behind the decision rendered by the Government in this case.