2014 (12) TMI 948 - CGOVT - Central Excise

Rebate claim - discrepancies in the declared gross weight and net weight in there ARE-1s - shipping Bill was not appended with the rebate claim - appellant did not file Bank realization certificate along with rebate claim - Arrival of FOB value after deduction of freight/insurance/commission - held that - Government finds that rule 5 only provides for exclusion of cost of transportation in case of goods sold for delivery at a place other than the place of removal. Government notes that there is no mention whatsoever regarding exclusion of commission from FOB value to arrive at transaction value. As such; this- contentiorG of theapplicant departraeatis C rary to legal position and hence not tenable. There are specific provision in Section 4(3)(d) of the Central Excise Act 1944 and there is logical inference from DGFT s Policy Circular No.51(RE-2008)2004-09 dated 6.1.2009 regarding inclusion of commission in transaction value. As such Government finds no infirmity in finding of Commissioner (Appeals) that rebate is admissible on FOB value (which is arrived at by including commission and excluding freight) in absence of any substantive counter argument of applicant department. Accordingly, the rebate is admissible on such transaction value. On perusal of sample AREs-1 No.614 dated 11.7.12 and ARE-1 N6.757 dated 29.7.12 and relevant shipping bill No.1157499 dated 1.8.12 and 1142621 dated 2.8.12, Government observes that goods covered vide said two sample- AREs-1 have been cleared under physical supervision of central excise authorities and ultimately exported along with goods covered vide 18 other AREs-1, vide above mentioned two shipping bills, as evident from endorsement of custom authorities on part B of said ARE-1. There is no finding of original authority regarding correlation between excise documents and export documents except ambiguity in weight, which has been explained by the respondent as mentioned in para (11) above. Under such circumstances, keeping in mind whole fact of the case, Government finds force in argument of the respondent regarding ambiguity in net weight/gross weight. As such export of duty paid goods stands established. Under such circumstances, Government finds that rebate is admissible for the reasons of substantial compliance of export of duty paid goods. Rebate/drawback etc. are export-oriented schemes. A merely technical interpretation of procedures etc. is to be best avoided, if the substantive fact of export having been made is not in doubt, a liberal interpretation is to be given in case of any technical lapse. Once a view is taken that the party would have been entitled to the benefit of the notification had they met with the requirement of the concerned rule, the proper course was to permit them to do so rather than denying to them the benefit on the technical grounds that the time when they could have done so, had elapsed. In fact, as regards rebate specifically, it is now a title law that the procedural infraction of Notifications, circulars, etc. are to be condoned if exports have really taken place, and the law is settled now that substantive benefit cannot be denied for procedural lapses. Procedure has been prescribed to facilitate verification of substantive requirement. The core aspect or fundamental requirement for rebate is its manufacture and subsequent export. As long as this requirement is met other procedural deviations can be condoned. This view of condoning procedural infractions in favour of actual export having been established has been taken by tribunal / Govt. of India in a catena of orders, including Birla VXL Ltd. 1997 (7) TMI 383 - CEGAT, NEW DELHI , Alfa Garments 1995 (3) TMI 281 - CEGAT, NEW DELHI , T.I. Cycles 1983 (5) TMI 138 - CEGAT, BOMBAY , Atma Tube Products 1998 (5) TMI 98 - CEGAT, NEW DELHI , Creative Mobus 2003 (7) TMI 682 - GOVERNMENT OF INDIA , Ikea Trading India Ltd. 2003 (7) TMI 99 - GOVERNMENT OF INDIA and a host of other decisions on this issue. - No infirmity in impugned order - Decided against Revenue.

Summary

Issues Involved:
1. Discrepancies in rebate claims regarding invoice and FOB values.
2. Non-submission of Bank Realization Certificates.
3. Ambiguities in quantities, net, and gross weight of exported goods.
4. Simultaneous claim of drawback and rebate.
5. Non-submission of legible copies of accompanying documents.

Detailed Analysis:

1. Discrepancies in Rebate Claims Regarding Invoice and FOB Values:
The adjudicating authority found discrepancies in the declared FOB values and invoice values in the rebate claims. For the first claim of Rs. 65,66,993/-, the declared FOB value did not match the value derived from the invoice after deducting freight and commission. Similarly, for the second claim of Rs. 38,48,035/-, the declared FOB value was inconsistent with the derived value. The department argued that the FOB value should be calculated by deducting freight, insurance, and commission from the invoice value. The respondent contended that their invoice value was on a CFR basis, inclusive of freight, and that commission should be included in the FOB value as per DGFT Policy Circular No. 51(RE-2008)/2004-09 and Section 4(3)(d) of the Central Excise Act, 1944. The appellate authority agreed with the respondent, stating that commission should be included in the transaction value, and the Government upheld this view, finding no infirmity in the appellate authority's decision.

2. Non-submission of Bank Realization Certificates:
The adjudicating authority noted that the respondent did not submit Bank Realization Certificates (BRCs) with their rebate claims. The appellate authority found that the respondent had submitted BRCs from the DGFT website, which were verified by the departmental officer. The Government found no infirmity in the appellate authority's decision and deemed the department's contention untenable.

3. Ambiguities in Quantities, Net, and Gross Weight of Exported Goods:
The adjudicating authority pointed out ambiguities in the declared net and gross weights of the exported goods, stating that if the goods (pipes) were cleared in loose condition, the question of gross weight did not arise. The respondent explained that the net weight referred to the metal weight of the pipes, while the gross weight included the cement mortar lining weight. The Government found the respondent's explanation reasonable and concluded that the export of duty-paid goods was established, making the rebate admissible.

4. Simultaneous Claim of Drawback and Rebate:
The adjudicating authority expressed ambiguity regarding the simultaneous claim of drawback and rebate. The respondent argued that the AIR of duty drawback neutralized only the customs duty incidence on inputs, which was permissible irrespective of the CENVAT facility. The appellate authority accepted this contention, supported by CBEC Circular No. 35128. The Government found no irregularity in the simultaneous availment of excise rebate and customs duty drawback.

5. Non-submission of Legible Copies of Accompanying Documents:
The department alleged that the respondent submitted illegible copies of invoices, with serial numbers inscribed by hand, intending to mislead the department. The appellate authority found that original invoices were available for verification and that the serial numbers were inscribed by hand only in one instance, which was countersigned by excise and customs officials. The Government observed that procedural lapses should be condoned if the substantive fact of export was not in doubt, aligning with the broader concept of justice as established by various court decisions.

Conclusion:
The Government upheld the appellate authority's decision, finding no infirmity in the order-in-appeal. The revision application was rejected, and the rebate claims were deemed admissible based on the established export of duty-paid goods and the inclusion of commission in the FOB value. The Government emphasized a liberal interpretation of procedural requirements in favor of substantive compliance with export-oriented schemes.