2013 (3) TMI 601 - CGOVT - Central Excise

Denial of rebate claim - cash rebate - Rebate to extent of duty paid by them on transaction value of the export goods in terms of Section 4(l)(a) - Held that - expenses incurred upto the place of removal/point of sale are includible in the value determined under Section 4 of Central Excise Act, 1944. In this case, there is no dispute about place of removal which is stated as port of export where ownership of goods is transferred to the buyer. Applicant s claim that in this case place of removal is not factory but the port of export, is not disputed by department. Since applicant has included only local freight for transportation of export goods from factory to port of export and not the ocean freight or freight incurred beyond port of export, there is no reason for not considering the local freight as part of value in view of above discussed statutory provisions. As such the demand of duty and interest as confirmed with the impugned orders is not sustainable. Government therefore set aside the impugned orders - Decided in favour of assessee.

Summary

Issues:
1. Dispute over erroneously sanctioned rebate due to duty payment on local freight instead of transaction value.
2. Interpretation of relevant statutory provisions for determination of excisable goods' value.
3. Application of Circulars and Rules governing rebate claims.
4. Consideration of expenses up to the place of removal in excisable goods' value determination.

Analysis:
1. The case involved a dispute regarding the sanctioning of a rebate to M/s. Banswara Syntex Ltd. for allegedly paying duty on local freight instead of transaction value. The original authority confirmed the demand of the erroneously sanctioned rebate but allowed the option for Cenvat credit. The Commissioner (Appeals) upheld the decision, leading to the revision application filed by the applicant.

2. The Government analyzed the relevant statutory provisions, including Section 4(1)(a) of the Central Excise Act, which determines the value of excisable goods based on transaction value or prescribed manner. The definition of 'Sale,' 'Place of Removal,' and Rule 5 of Central Excise Valuation Rules were crucial in understanding the valuation process.

3. The applicant argued based on Circulars and Rules governing rebate claims, emphasizing that duty paid should be rebated, and the rebate sanctioning authority should not re-quantify the amount. The applicant also cited case laws to support their claim that duty actually paid should be rebated in cash, as per established legal principles.

4. The Government's decision focused on the inclusion of expenses up to the place of removal in the excisable goods' value determination. As the applicant included only local freight for transportation from the factory to the port of export, and not beyond, the Government found no reason to exclude local freight from the value calculation. Consequently, the demand of duty and interest was deemed unsustainable, and the initial sanction of rebate claims was upheld.

In conclusion, the Government set aside the impugned orders, ruling in favor of the applicant's revision application based on the interpretation of statutory provisions and the inclusion of expenses up to the place of removal in the excisable goods' value determination.