2009 (12) TMI 652 - CGOVT - Central Excise

Revision application rebate re-credit - claims of rebate of duty paid on the exported goods from Cenvat Credit Account Held that - rebate in cash is admissible only on the duty paid on the transaction value of the goods as determined under Section 4 of the Central Excise Rules, and not in the excess amount paid on differential value not forming part of transaction value, Government permits the applicant to take re-credit in cenvat credit account of the excess amount/deposit which was paid as Central Excise Duty erroneously on the goods exported by the applicant, revision application is being disposed off

Issues Involved:
1. Eligibility for rebate of duty paid on exported goods.
2. Determination of transaction value for rebate purposes.
3. Impact of exchange rate fluctuations on rebate claims.
4. Legality of granting rebate partly in cash and partly as Cenvat credit.

Detailed Analysis:

1. Eligibility for Rebate of Duty Paid on Exported Goods:
The respondent, M/s. Panacea Biotech Ltd., filed 48 claims for rebate of duty paid on exported goods from their Cenvat Credit Account. The Assistant Commissioner allowed the rebate only to the extent of actual bank realization and permitted re-credit of the excess duty in the Cenvat Account. The Commissioner (Appeals) reversed this decision, allowing full rebate in cash irrespective of bank realization affected by exchange rate fluctuations.

2. Determination of Transaction Value for Rebate Purposes:
The applicant Commissioner argued that the rebate should be based on the "transaction value" as defined under Section 4 of the Central Excise Act, 1944, which means the price actually paid or payable for the goods. The adjudicating authority had determined the transaction value based on the actual bank realization, aligning with the Government of India's decision in the case of Bhagirth Textiles Ltd. The Commissioner (Appeals) did not consider this precedent and instead focused on exchange rate fluctuations.

3. Impact of Exchange Rate Fluctuations on Rebate Claims:
The Commissioner (Appeals) accepted the argument that lower bank realization was due to exchange rate fluctuations and ordered the total rebate claim to be paid in cash. The applicant Commissioner contended that exchange rate fluctuations should not affect the rebate amount, which should be based on the transaction value in rupees.

4. Legality of Granting Rebate Partly in Cash and Partly as Cenvat Credit:
The respondent argued that Rule 18 of the Central Excise Rules, 2002, does not permit sanctioning part of the rebate as Cenvat Credit. They cited several judgments supporting the full cash rebate of the actual duty paid on exported goods. The applicant Commissioner maintained that any excess duty paid should be refunded as Cenvat Credit, not in cash, as per the Bhagirth Textiles Ltd. case.

Judgment:
The Government considered the relevant case records, submissions, and previous orders. It observed that the original adjudicating officer had correctly determined the transaction value based on actual bank realization, in line with the Bhagirth Textiles Ltd. case. The Commissioner (Appeals) failed to discuss this precedent and incorrectly allowed full cash rebate based on exchange rate fluctuations.

The Government concluded that the rebate in cash is admissible only on the duty paid on the transaction value as determined under Section 4 of the Central Excise Act, 1944. Any excess duty paid, which does not form part of the transaction value, should be treated as a deposit and re-credited in the Cenvat Account. Therefore, the impugned order-in-appeal was set aside, and the order-in-original was upheld.

Disposition:
The revision application was disposed of with the Government setting aside the Commissioner (Appeals)' order and upholding the Assistant Commissioner's original order. The respondent is permitted to take re-credit in the Cenvat Credit Account for the excess amount erroneously paid as Central Excise Duty on exported goods.

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