2013 (6) TMI 689 - CGOVT - Central Excise

Denial of partial rebate claim - original authority sanctioned the claims upto the extent of duty paid on the FOB value of exported goods accepting the said value as transaction value as per Section 4 of Central Excise Act 1944 - rebate of duty paid on freight and insurance expenses incurred beyond port of export was rejected since duty on exported goods was not required to be paid on CIF value - Held that - Place of removal may be factory/warehouse a depot premise of a consignment agent or any other place of removal from where the excisable goods are to be sold for delivery at place of removal. The meaning of word any other place read with definition of Sale cannot be construed to have meaning of any place outside geographical limits of India. The reason of such conclusion is that as per Section 1 of Central Excise Act 1944 the Act is applicable within the territorial jurisdiction of whole of India and the said transaction value deals with value of excisable goods produced/manufactured within this country. Government observes that once the place of removal is decided within the geographical limit of the country it cannot be beyond the port of loading of the export goods. Under such circumstances the place of removal is the port of export where sale takes place. The satisfaction of rebate sanctioning authority requires that rebate claim as per the relevant statutory provisions is to be in order. He does not have the mandate to sanction claim of obviously excess paid duty and then initiate proceeding for recovery of the erroneously paid rebate claim. Therefore the circular of 2000 as relied upon by applicant cannot supersede the provisions of Notification No. 19/2004-C.E. (N.T.). Adjudicating authority has therefore rightly sanctioned the part rebate claim and also rightly held that any amount paid in excess of duty liability on one s own volition cannot be treated as duty and it has to be treated a voluntary deposit with the Government which is required to be returned to the assessees/respondents in the manner in which it was paid as the said amount cannot be retained by Government without any authority of law. - Decided against assessee.

Summary

Issues Involved:
1. Rebate of duty paid on exported goods.
2. Determination of transaction value for excise duty purposes.
3. Jurisdiction of Maritime Commissionerate versus factory jurisdictional officers.
4. Treatment of excess duty paid on exported goods.

Detailed Analysis:

Rebate of Duty Paid on Exported Goods:
The applicants, M/s. Aarti Industries Ltd., filed for rebate claims under Rule 18 of the Central Excise Rules, 2002, for goods exported on payment of duty. The original authority sanctioned the claims based on the FOB value of the exported goods, rejecting the rebate on duty paid for freight and insurance beyond the port of export. The Commissioner (Appeals) upheld this decision, leading the applicants to file a revision application under Section 35EE of the Central Excise Act, 1944.

Determination of Transaction Value for Excise Duty Purposes:
The core issue revolves around the correct value determination for excise duty. The applicants argued that the duty paid on the assessable value indicated in ARE-1 should be considered, not the CIF value used for customs purposes. They cited Section 4 of the Central Excise Act, 1944, which defines transaction value as the price at which goods are sold for delivery at the time and place of removal, excluding transportation costs beyond the place of removal.

Jurisdiction of Maritime Commissionerate versus Factory Jurisdictional Officers:
The applicants contended that the correct valuation of goods cleared from their factory falls under the jurisdiction of the factory's officers, not the Maritime Commissionerate. They argued that the value and duty indicated in ARE-1 and excise invoices, as accepted by the factory jurisdictional officers, should be final.

Treatment of Excess Duty Paid on Exported Goods:
The applicants claimed that any excess duty paid should be eligible for rebate under Rule 18, as it speaks of "duty paid" rather than "duty payable." They referenced the case of Sri Bhagirath Textiles Ltd., where excess duty paid was allowed to be re-credited in the Cenvat account.

Government's Observations and Decision:

Statutory Provisions and Definitions:
The government reviewed relevant statutory provisions, including Section 4 of the Central Excise Act, 1944, and Rule 5 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. It noted that the place of removal is within India's geographical limits, typically the port of export for exported goods. The transaction value should exclude costs incurred beyond this point.

Circulars and Notifications:
The government examined C.B.E. & C. Circulars 203/37/96-CX and 510/06/2000-CX, noting that the concept of transaction value introduced on 1-7-2000 supersedes earlier circulars. Notification No. 19/2004-C.E. (N.T.) under Rule 18 prescribes conditions for rebate claims, requiring the sanctioning authority to ensure claims are in order before approval.

Excess Duty Treatment:
The government agreed with the applicants that excess duty paid should not be retained by the government. Citing the case of M/s. Nahar Industrial Enterprises Ltd. v. UOI, it concluded that excess duty paid should be re-credited in the Cenvat account rather than refunded in cash.

Conclusion:
The government upheld the original rebate claim decision but directed that any excess duty paid should be treated as a voluntary deposit and re-credited in the Cenvat account. The Orders-in-Appeal were modified accordingly, and all revision applications were disposed of in these terms.