2013 (11) TMI 430 - CGOVT - Central Excise

Rebate claim - Rule 18 - Valuation of export goods inclusion of freight and insurance beyond the port of export for the purpose of rebate - Held that - place of removal cannot be beyond the port of export - So the transportation cost, at the most up to port of export (the place of removal) can be included in the value. - decided against the assessee. Rebate claim on export of free samples - Held that - Applicant contended that rebate of duty paid cannot be denied on the goods supplied free as samples - The free sample has no value as they are shown free in the Shipping Bills - As per Condition 2(e) of Notification No. 19/2004-C.E. if the market price of the excisable goods at the time of exportation is less than amount of rebate claimed, the rebate will not be admissible since the goods are free and therefore rebate on such goods is rightly denied under Rule 18 of Central Excise Rules, read with Notification 19/2004. Rebate / Refund of excess amount paid as duty by including freight and insurance beyond - Held that - The adjudicating authority has held that excess paid duty i.e. duty paid on part of value exceeding transaction value is to be treated a voluntary deposit with Government and same is to be returned in the Cenvat Credit account from which said duty was paid. Adjudicating authority has directed the applicant to approach jurisdictional authorities for allowing re-credit in their Cenvat Credit account. In this regard, Government directs the jurisdictional Central Excise authorities to allow the re-credit of said excess paid amount in their Cenvat Credit account. Interest on delayed payment u/s 11BB of Central Excise Act,1944 Held that - On delayed payment of refund claims interest is paid under Section 11BB of the Central Excise Act, 1944 after the expiry of three months of the date of receipt of application for rebate in the Divisional offices in terms of Section 11BB Following M/s. Ranbaxy Laboratories Ltd. v. UOI 2011 (10) TMI 16 - Supreme Court of India - liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the period from the date on which order of refund is made In case of delayed refunds, the applicants are entitled for interest payment under Section 11BB. - Decided partly in favor of assessee.

Issues Involved:
1. Determination of the transaction value for rebate claims.
2. Inclusion of freight and insurance in the transaction value.
3. Refund of differential duty paid on CIF value.
4. Payment of interest on delayed rebate claims.
5. Rebate claims on goods supplied as free samples.

Detailed Analysis:

1. Determination of the Transaction Value for Rebate Claims:
The primary issue was whether the rebate claims should be based on the CIF value or the FOB value of exported goods. The applicants claimed that the buyer placed orders on a CIF basis, including freight and insurance in the transaction value. The Government referenced Section 4 of the Central Excise Act, 1944, emphasizing that the transaction value should be the value at the place of removal, which, in the case of exports, is the port of export. Therefore, the rebate of duty should be on the FOB value, not the CIF value, as freight and insurance beyond the port of export are excluded from the transaction value.

2. Inclusion of Freight and Insurance in the Transaction Value:
The applicants argued that freight and insurance should be included in the transaction value, citing previous decisions and circulars. However, the Government reiterated that, as per Rule 5 of the Central Excise Valuation Rules, 2000, the cost of transportation from the factory to the place of removal (port of export) should not be excluded for determining the value of excisable goods. Therefore, the transaction value should exclude freight and insurance beyond the port of export.

3. Refund of Differential Duty Paid on CIF Value:
The adjudicating authority held that any amount paid in excess of the duty liability on one's own volition cannot be treated as duty but as a voluntary deposit with the Government. This amount should be returned to the respondent in the manner it was paid. The Government directed the jurisdictional Central Excise authorities to allow the re-credit of the excess paid amount in the Cenvat Credit account.

4. Payment of Interest on Delayed Rebate Claims:
The Government noted that interest on delayed payment of refund claims is payable under Section 11BB of the Central Excise Act, 1944, after the expiry of three months from the date of receipt of the application for rebate. This was affirmed by the Supreme Court in the case of M/s. Ranbaxy Laboratories Ltd. v. UOI, which held that interest becomes payable if the amount claimed is not refunded within three months from the date of receipt of the application. The applicants were thus entitled to interest on delayed refunds.

5. Rebate Claims on Goods Supplied as Free Samples:
The applicants contended that rebate of duty paid on goods supplied as free samples should not be denied. The Government, however, upheld that since the free samples have no market value and are shown as free in the shipping bills, the rebate on such goods is rightly denied under Rule 18 of Central Excise Rules, read with Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004.

Conclusion:
The Government upheld the lower authorities' order to sanction rebate claims based on the FOB value of exported goods, excluding freight and insurance beyond the port of export. Excess duty paid should be treated as a voluntary deposit and returned as re-credit in the Cenvat Credit account. Interest on delayed refunds is payable as per Section 11BB of the Central Excise Act, 1944. Rebate claims on free samples were denied due to the lack of market value. The revision applications were disposed of accordingly.

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