2014 (12) TMI 995 - CGOVT - Central Excise

Denial of rebate claim - original authority sanctioned the rebate claims - Orders were reviewed by the Jurisdictional Commissioner, on the ground that the assessable value is higher than FOB value - appellate authority accepted the appeals of the department that extra amount paid by the assessee on freight and insurance (if any) being duty, has to be treated as extra payment - Place of removal - Held that - place of removal may be factory / warehouse, a depot, premise of a consignment agent or any other place of removal from where the excisable goods are-to, be sold for delivery at place of removal The meaning of word any other place read with definition of Sale , cannot be construed to have meaning of any place outside geographical limits of India. The reason of such conclusion is that as per Section 1 of Central Excise Act, 1944, the Act is applicable within the territorial jurisdiction of whole of India and the said transaction value deals with value of excisable goods produced/manufactured within this country. Government observes that once the place of removal is decided within the geographical limit of the country, it cannot be beyond the port of loading of the export goods. Under such circumstances, the place of removal is the port of export where sale takes place. Place of removal' is critical to decide the transaction value. In these cases, there is no categorical findings by lower authorities to mention 'place-of removal'. Hence, Government finds it necessary that 'place of removal' may be decided by original authority before reaching at conclusions on transaction value. As such, the cases need to be remanded back to decide afresh after deciding place of removal' - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Rebate claim of duty paid on exported goods under Central Excise Rules, 2002.
2. Discrepancy in assessable value and FOB value leading to restriction of rebate.
3. Jurisdiction and authority of the Commissioner (Appeals) in the decision-making process.
4. Legal precedents and case laws supporting the applicant's contention.
5. Interpretation of statutory provisions regarding the determination of transaction value under the Central Excise Act, 1944.

Detailed Analysis:
1. The revision applications were filed by M/s. United Phosphorus Ltd., challenging the Order in-Appeal passed by the Commissioner of Central Excise regarding rebate claims on duty paid for exported goods. The original authority had sanctioned the rebate claims, but the Jurisdictional Commissioner and the Commissioner (Appeals) raised concerns over the assessable value being higher than the FOB value, leading to a restriction on the rebate amount.

2. The applicant argued that they cannot be held responsible for discrepancies in FOB value declared by merchant exporters, as they have no control over the selling price in the overseas market. The Commissioner (Appeals) decision was challenged based on jurisdiction and authority, citing a previous order in the applicant's favor and legal precedents supporting their case.

3. The Government analyzed the relevant statutory provisions, including Section 4 of the Central Excise Act, 1944, defining the transaction value based on the sale of goods and the place of removal. Rule 5 of the Central Excise Valuation rules, 2004, was also considered, emphasizing the exclusion of transportation costs beyond the place of removal from the transaction value.

4. Referring to legal precedents and case laws, the Government highlighted the importance of determining the "place of removal" to ascertain the transaction value accurately. The decision in the case of M/s. Escort JCB Ltd Vs CCE Delhi was cited to emphasize the significance of ownership transfer and the critical role of the place of removal in determining transaction value.

5. Ultimately, the Government concluded that the lower authorities had not definitively determined the "place of removal," necessitating a remand of the cases for a fresh decision based on this critical factor. The impugned orders-in-appeal were set aside, and the cases were remanded to the original authority for a reevaluation in line with the observations made regarding the determination of the place of removal and its impact on the transaction value.