2014 (2) TMI 156 - CGOVT - Central Excise

Denial of rebate claim - Recovery under section 11A - Interest u/s 11B - Held that - Initially the rebate claims were sanctioned in this case. Subsequently, it was noticed that excess rebate has been sanctioned of the duty paid on portion of value which was in excess of section 4 value i.e. Transaction value. The demand of Rs. 3,76,111/- was confirmed along with interest. Commissioner upheld the order-in-original but allowed re-credit of said amount in the Cenvat credit account once the recovery was effected in PLA/cash - duty paid on portion of value which does not form part of transaction value was rightly held as not rebatable under Rule 18 of Central Excise Rules, 2002 as the rebate is admissible in respect of duty paid on value of exported goods determined under Section 4 of Central Excise Act, 1944 - Decided against Appellant.

Summary

Issues:
Recovery of excess rebate sanctioned, violation of natural justice, authority to challenge orders, refund based on Section 4 Assessable Value, power of Assistant Commissioner, duty liability basis, re-credit in Cenvat credit account, power to recover erroneously granted refunds, transaction value determination, rebate admissibility.

Analysis:
The case involved an appeal by M/s. GPI Textiles Ltd. against the order-in-appeal passed by the Commissioner of Central Excise (Appeals). The applicant had exported yarn under ARE-1s and filed rebate claims, which were later found to have been sanctioned in excess of the FOB value. Recovery proceedings were initiated for the alleged excess rebate of Rs. 3,76,111, along with interest and a proposed penalty under Rule 25 of the Central Excise Rules, 2002. The adjudicating authority confirmed the demand and interest but refrained from imposing a penalty.

The applicant contended that the impugned order violated the principle of natural justice as certain grounds were not considered. They argued that the duty had been paid on the basis of Section 4 Assessable Value, and any differences between values should not affect the rebate claim. The applicant also challenged the Commissioner (Appeals) for considering previous cases with different bases for adverse orders. The applicant raised these points in a revision application under Section 35EE of the Central Excise Act, 1944.

During the personal hearing, the applicant reiterated their grounds for revision. The Central Government carefully reviewed the case records and the impugned orders. It was observed that initially, the rebate claims were sanctioned, but later it was found that excess rebate had been granted on the duty paid on a portion of value exceeding the Section 4 value. The demand was confirmed, and the Commissioner allowed re-credit of the amount in the Cenvat credit account after recovery.

The Government noted that the power to recover erroneously granted refunds is inherent in Section 11A of the Central Excise Act, as established by judicial precedents. The duty paid on a portion of value not forming part of the transaction value was rightly held as not rebatable under Rule 18 of the Central Excise Rules, 2002. Therefore, the Government upheld the impugned order-in-appeal, rejecting the revision application for lack of merit.