2015 (3) TMI 821 - CGOVT - Central Excise

Sanction of partial rebate claim - applicant had been paying duty @ 4% for the goods cleared for home consumption they were required to pay at the same rate on the export goods also - Instead of paying duty @ 4% for export clearances, they paid duty @ 10% - Assistant Commissioner sanctioned cash rebate of duty paid @ 4% on the FOB/ARE-1 value whichever is lower and remaining amount was sanctioned by way of credit in their Cenvat account under Rule 18 of the Central Excise Rules, 2002 read with Section 11B of the Central Excise Act, 1944 - Held that - applicants were availing Notification No. 4/2006-C.E., as amended till Feb., 2010 in respect of all clearances made both for home consumption as well as for exports by paying duty @ 4% only. All the rebate claims were being sanctioned accordingly. From March/April, 2010 onwards applicants started paying duty @ 10% in terms of Notification No. 2/2008-C.E. as amended on export goods and claimed rebates of duty paid at higher rate. Applicants apparently opted to pay duty on export clearances at higher rate so as to encash the accumulated Cenvat credit through the said rebate claims. In this case, both the Notifications prescribed effective rates of duty. Notification No. 30/2004-C.E. prescribed nil rate of duty provided manufacturer does not avail Cenvat credit on inputs. This clarification does not say that duty can be paid at tariff rate when the exemption notification is existing. Simultaneously availment of these notifications is allowed in the said circular as they pertain to different situation like whether he is availing Cenvat credit or not. This circular is of no help to the applicant as in their case there are no two conditional notifications prescribing two effective rates. Moreover, there is no such circular issued in case of pharmaceutical products pertaining to Notification in question allowing their simultaneous availment. The other Circular No. 937/27/2010-CX, dated 26-11-2010 is not applicable as in the instant case there is no applicability of provisions of Section 5A(1A) of Central Excise Act, 1944. 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 words 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. It can be either factory, warehouse or port of export and expenses of freight/insurance incurred up to place of removal form part of assessable value. Under such circumstances, the place of removal is the port of export if sale takes place at the port of export. Original authority and appellate authority have rightly sanctioned the rebate claim to the extent of duty paid at effective rate of duty @ 4% in terms of Notification No. 4/2006-C.E., dated 1-3-2006 as amended, on the transaction value determined in these cases in terms of Section 4 of Central Excise Act, 1944. The amount of duty paid in excess of duty payable at effective rate of 4% as per Notification No. 4/2006-C.E., as amended on the transaction value of exported goods, is to be treated as voluntary deposit made by applicant with the Government. - excess paid amount is to be returned/adjusted in Cenvat credit account of assessee. Moreover Government cannot retain the said amount paid without any authority of law. Therefore, the lower authorities have rightly allowed the re-credit of said excess paid amount of duty in their Cenvat credit account. - no infirmity in the impugned orders and therefore upholds the same. - Following decision of M/s. Belapur Sugar and Allied Industries Ltd. v. CCE 1999 (4) TMI 79 - SUPREME COURT OF INDIA and M/s. Nahar Industrial Enterprises Ltd. v. UOI 2008 (9) TMI 176 - PUNJAB AND HARYANA HIGH COURT - Decided against assessee.

Summary

Issues Involved:
1. Admissibility of rebate claim of Central Excise Duty paid at different rates.
2. Sanction of rebate based on ARE-1 and FOB value.
3. Delay in filing revision applications.
4. Treatment of duty paid on free samples.
5. Applicability of different notifications for duty rates.
6. Re-credit of excess paid duty in Cenvat account.

Detailed Analysis:

1. Admissibility of Rebate Claim of Central Excise Duty Paid at Different Rates:
The applicant, a manufacturer-exporter, paid duty on exported pharmaceutical goods at 10% under Notification No. 2/2008-C.E., while the effective rate for home consumption was 4% under Notification No. 4/2006-C.E. The adjudicating authority sanctioned rebate at the effective rate of 4%, with the excess amount credited to the Cenvat account. The applicant contested this, arguing that they should be able to choose the most beneficial notification. However, the judgment clarified that the goods for export must be assessed in the same manner as those for home consumption, thus the rebate was correctly limited to the effective rate of 4%.

2. Sanction of Rebate Based on ARE-1 and FOB Value:
The applicant argued that the rebate should be based on the higher duty paid on the ARE-1 value, not the lower FOB value. The adjudicating authority considered the FOB value as the transaction value, which is lower, and sanctioned the rebate accordingly. The judgment upheld this, stating that the transaction value should conform to Section 4 or Section 4A of the Central Excise Act, and the rebate should be based on the lower of the two values.

3. Delay in Filing Revision Applications:
Some revision applications were filed with delays ranging from seven to thirty-eight days. The applicants provided electronic tracking details as proof of timely dispatch and requested condonation of the delay. The judgment found genuine reasons for the delay and condoned it, allowing the revision applications to be decided on merit.

4. Treatment of Duty Paid on Free Samples:
The applicant contended that rebate should not be denied on goods supplied as free samples. The judgment noted that since no foreign remittance is received for free samples, the rebate is rightly denied under Rule 18 of the Central Excise Rules, read with Notification No. 19/2004-C.E. However, the duty paid on these samples should be re-credited to the Cenvat account, as retaining it without legal authority is not permissible.

5. Applicability of Different Notifications for Duty Rates:
The applicant argued that they could choose between two notifications prescribing different duty rates. The judgment clarified that the effective rate of duty must be applied uniformly for both export and home consumption. The effective rate of 4% under Notification No. 4/2006-C.E. was applicable, and the higher rate of 10% paid under Notification No. 2/2008-C.E. was not admissible for rebate.

6. Re-credit of Excess Paid Duty in Cenvat Account:
The judgment upheld the decision to re-credit the excess duty paid at 10% to the Cenvat account. It referenced several case laws and circulars, concluding that the excess amount paid voluntarily should be returned in the manner it was paid, adhering to the principles laid out by the Hon'ble Supreme Court and other judicial precedents.

Conclusion:
The judgment rejected the revision applications, affirming the lower authorities' decisions to sanction rebates at the effective duty rate of 4% and re-credit the excess duty paid. The applicants' arguments regarding the choice of notifications and the treatment of free samples were found to lack merit. The judgment emphasized the need for uniform application of the effective duty rate and compliance with statutory provisions and C.B.E. & C. instructions.