2013 (9) TMI 1003 - CGOVT - Central Excise

Denial of rebate claim - rebate of duty paid was on declared ARE-1 value of the goods which was much higher than FOB value shown in shipping bills - FOB would be transaction value for the purpose of Section 4 of the Central Excise Act 1944 - 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 words 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. Any amount paid in excess of duty liability on one s own volition cannot be treated as duty. But it has to be treated simply a voluntary deposit with the Government which is required to be returned to the respondent in the manner in which it was paid as the said amount cannot be retained by Government without any authority of law In the case applicant has paid duty on CIF value which was declared as value in Central Excise Invoice for payment of duty. In view of position explained above the freight & insurance expenses incurred beyond place of removal cannot form part of transaction value. In this case the lower authorities has determined the FOB value as transaction value since goods stand sold at the port of export where possession of goods is transferred. As such the rebate of duty paid on FOB value is rightly sanctioned. However the excess paid amount be allowed as recredit in the Cenvat credit account from it was paid/debited - Decided partly in favour of assessee.

Summary

Issues Involved:
1. Violation of natural justice.
2. Determination of transaction value for excise duty.
3. Inclusion of freight and insurance in the assessable value.
4. Correctness of the appellate authority's decision.
5. Refund of excess duty paid.

Detailed Analysis:

1. Violation of Natural Justice:
The applicant contended that the Commissioner did not address the various submissions and decisions cited by them in their cross objections. They argued that the order passed without considering these submissions violates the norms of natural justice. The applicant emphasized that the Commissioner's findings were against the Department, yet he allowed the appeal filed by the Department.

2. Determination of Transaction Value for Excise Duty:
The core issue revolved around whether the duty should be calculated based on the CIF value or the FOB value. The Department argued that the rebate was allowed on the declared ARE-1 value, which was higher than the FOB value shown in the shipping bills. The Government clarified that as per Section 4 of the Central Excise Act, 1944, the transaction value should be the price at the place of removal, which is within the geographical limits of India, typically the port of export.

3. Inclusion of Freight and Insurance in the Assessable Value:
The applicants argued that their sale price for export consignments was on a CIF basis, inclusive of freight and insurance costs, and they had rightly paid duty on this value. However, the Government observed that the place of removal is within India, and thus, the freight and insurance costs incurred beyond this point should not be included in the transaction value. This interpretation aligns with Rule 5 of the Central Excise Valuation Rules, 2000, which excludes transportation costs from the place of removal to the place of delivery.

4. Correctness of the Appellate Authority's Decision:
The Government noted that the appellate authority's decision to accept the CIF price as the transaction value was contrary to the provisions of Section 4 of the Central Excise Act. The appellate authority's reasoning that the place of delivery might be the place of removal was found untenable. The Government emphasized that the transaction value should exclude costs incurred beyond the place of removal.

5. Refund of Excess Duty Paid:
The Government addressed the issue of excess duty paid by the applicant. It was noted that any amount paid in excess of the duty liability should be treated as a voluntary deposit and must be returned to the applicant. The Government referred to the High Court of Punjab & Haryana's decision, which held that excess duty paid should be refunded in the manner it was initially paid, typically as a recredit in the Cenvat credit account.

Conclusion:
The Government concluded that the rebate of duty should be based on the FOB value, not the CIF value. The excess amount paid by the applicant should be allowed as a recredit in the Cenvat credit account. The impugned order-in-appeal was modified accordingly, and the revision application was disposed of on these terms.