2016 (3) TMI 1164 - CGOVT - Central Excise

Rebate claim - rejection on the ground that the vessel in which the goods covered in both rebate claims were loaded colluded with another vessel immediately after leaving the port and as such the goods cannot be treated as exported - whether the impugned goods can be said to have been exported for the applicant to be entitled for rebate in terms of Rule 18 of Central Excise Rules, 2002? - Held that - export takes place when goods leave India to a place outside India. It is abundantly clear that the goods have to be exported and rebate shall be paid subject to conditions and limitations set by the Central Government upon fulfillment of prescribed procedures. The C.B.E. & C. Manual of Departmental Instructions further clarifies that goods have to be actually exported for rebate to be admissible. Reliance placed in an identical case of Union of India v. Rajinder Dyeing and Printing Mills, 1999 (10) TMI 82 - SUPREME COURT OF INDIA , where the goods had been dispatched through ship for export but due to accident, the ship sunk and goods were destroyed. The exporter claimed drawback on the ground that goods were actually exported. The Apex Court placing reliance on the concept of movement of goods outside the territorial waters of India to complete the export, held the claim of drawback as inadmissible - the ratio of the decision is squarely applicable to the present case as both rebate and drawback arise only upon export of goods. Government also notes that Commissioner (Appeals) has rightly observed that the purpose of rebate of duty paid is to allow the goods to be available in the international market at a competitive price so that taxes are not exported along with the goods. Admissibility of rebate therefore, rest upon the goods joining the course of international trade. In this case, whatever be the reasons, the export has not taken place and therefore the grant of rebate of duty paid does not arise under the stipulation of Rule 18 read with N/N. 19/2004-C.E. (N.T.), dated 6-9-2004. Transfer of ownership of goods is not one of the requirements for eligibility of rebate. The entitlement of rebate benefit will arise not from change of ownership of goods per se but only when they have been exported. Rebate is allowed on the act of export of goods and if goods have not been actually exported, question of any rebate does not arise in terms of Rule 18 read with N/N. 19/2004-C.E. (N.T.), dated 6-9-2004. The export cannot be said to have been completed and thus rebate claim has rightly been held as inadmissible on this ground alone - revision application rejected.

Summary

Issues Involved:
1. Non-endorsement from Customs on ARE-1s and shipping bill.
2. Non-submission of mate receipt.
3. Rejection of rebate claims on grounds of non-export due to collision of vessel.
4. Argument of export completion under FOB terms.
5. Consideration of Bank Certificate of Export Realization.
6. Interpretation of "export" under relevant laws and rules.
7. Reliance on Supreme Court rulings regarding export and rebate eligibility.

Issue-wise Detailed Analysis:

1. Non-endorsement from Customs on ARE-1s and shipping bill:
The applicant's rebate claims were scrutinized and found lacking endorsements from Customs on the reverse side of ARE-1s and shipping bills, and the mate receipt was not submitted. This led to the issuance of a Deficiency Memo-Cum-Show Cause Notice (DM) and subsequent rejection of the rebate claims by the original authority.

2. Non-submission of mate receipt:
The absence of the mate receipt was one of the discrepancies noted during the scrutiny of the rebate claims. This was part of the grounds for rejecting the rebate claims by the Deputy Commissioner of Central Excise.

3. Rejection of rebate claims on grounds of non-export due to collision of vessel:
The original authority observed that the goods could not be treated as exported since the vessel carrying the goods collided with another vessel immediately after leaving the port. Consequently, the rebate claims were deemed inadmissible.

4. Argument of export completion under FOB terms:
The applicant argued that under FOB (Free On Board) terms, the responsibility of the exporter ends once the goods are handed over to the ship, transferring the title to the customer. They contended that since the goods were handed over and export proceeds were realized in foreign exchange, the conditions for rebate were fulfilled.

5. Consideration of Bank Certificate of Export Realization:
The applicant submitted a Bank Certificate of Export Realization as evidence of the export of goods and receipt of export sale proceeds in foreign exchange. They argued that this should suffice to grant the rebate, as the primary obligation of collecting export proceeds in foreign exchange was met.

6. Interpretation of "export" under relevant laws and rules:
The judgment examined the definition of "export" under Rule 18 of Central Excise Rules, 2002, and Section 2(18) of the Customs Act, 1962, which defines export as "taking out of India to a place outside India." The C.B.E. & C. Manual of Departmental Instructions further emphasized that goods must be actually exported for rebate to be admissible.

7. Reliance on Supreme Court rulings regarding export and rebate eligibility:
The judgment referenced the Supreme Court ruling in Union of India v. Rajinder Dyeing and Printing Mills, where it was held that export is complete only when goods move outside the territorial waters of India. Since the goods in the present case did not move beyond Indian territorial waters due to the collision, the rebate claim was considered inadmissible.

Conclusion:
The government concluded that the export was not completed as the goods did not move outside Indian territorial waters. The transfer of ownership under FOB terms and realization of foreign exchange were not sufficient to qualify for the rebate. The rejection of the rebate claims by the lower authorities was upheld, and the revision application was rejected for lack of merit.