2015 (3) TMI 906 - CGOVT - Central Excise

Denial of rebate claim - Failure to produce the copies of the BRCs - entire sale proceeds in respect of the some exported goods were not realized by the respondents within the period allowed under the FEMA, 1999 including any extension of such period - Held that - The explanation given by respondents for short realization cannot be accepted since duty is required to be paid on transaction value of goods (exported) determined under Section 4 of Central Excise Act, 1944. Since the transaction value as shown in the BRCs was less than the value declared in ARE-1 form, the department has rightly held that respondent paid excess duty on such clearance. - Government notes that this issue has already been decided by GOI order passed in the case of CCE, Nagpur v. Sri Bhagirath Textiles Ltd. reported as 2005 (7) TMI 120 - GOVERNMENT OF INDIA . It has been stipulated in the Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004 and the C.B.E. & C. Circular No. 510/06/2000-CX, dated 3-2-2000 that rebate of whole of duty paid on all excisable goods will be granted. Here also the whole duty of excise would mean the duty payable under the provision of Central Excise Act. Any amount paid in excess of duty liability on one s own volition cannot be treated as duty. But it has to be treated simply a voluntary deposit with the Government which is required to be returned to the respondent in the manner in which it was paid as the said amount cannot be retained by Government without any authority of law. - Government set aside the impugned orders-in-appeal and restores the impugned orders-in-original. Government further observe that excess paid amount of duty in case of short realization of export sale proceeds may be returned to the respondent as recredit in their Cenvat credit account. - Decided in favour of assessee.

Issues Involved:

1. Validity of rebate claims in the absence of Bank Realization Certificates (BRCs).
2. The impact of short realization of export proceeds on rebate claims.
3. Applicability of FEMA provisions in Central Excise matters.
4. Authority of Central Excise authorities to demand BRCs.
5. Penalty imposition under Rule 27 of Central Excise Rules, 2002.
6. Validity of Board's Circulars in the context of rebate claims.

Issue-wise Detailed Analysis:

1. Validity of Rebate Claims in the Absence of Bank Realization Certificates (BRCs):

The respondents filed rebate claims for duty paid on exports but failed to submit BRCs. The Department issued show cause notices and confirmed demand for recovery of erroneously refunded rebate with interest and penalty. The Commissioner (Appeals) set aside these orders, stating that non-submission of BRCs cannot be the basis to conclude that goods were not exported. The Government, however, observed that valid BRCs are essential as per Notification No. 19/2004-C.E. (N.T.), and the absence of BRCs indicates non-realization of export proceeds, which violates FEMA provisions.

2. The Impact of Short Realization of Export Proceeds on Rebate Claims:

The respondents argued that short realization of export proceeds is permissible under RBI guidelines. The Commissioner (Appeals) supported this view, referencing the RBI Master Circular. However, the Government noted that duty should be paid on the transaction value as per Section 4 of the Central Excise Act, 1944. Since the transaction value in BRCs was less than that declared in ARE-1 forms, the respondents paid excess duty, justifying the Department's demand for recovery.

3. Applicability of FEMA Provisions in Central Excise Matters:

The respondents contended that Central Excise authorities cannot invoke FEMA provisions. The Government disagreed, stating that export without realization of proceeds violates Sections 7 and 8 of FEMA, attracting penalties under Section 13. Thus, rebate claims for such exports cannot be granted as per Notification No. 19/2004-C.E. (N.T.).

4. Authority of Central Excise Authorities to Demand BRCs:

The respondents claimed no legal requirement for BRC submission under Central Excise Law. The Government countered this by highlighting that BRCs are necessary to ensure compliance with FEMA and to validate the transaction value for duty assessment.

5. Penalty Imposition under Rule 27 of Central Excise Rules, 2002:

The respondents argued against penalty imposition, citing interpretation of legal provisions. The Government upheld the penalty, emphasizing that non-compliance with BRC submission and short realization of export proceeds warranted such measures under Sections 11A and 11AB of the Central Excise Act, 1944.

6. Validity of Board's Circulars in the Context of Rebate Claims:

The respondents argued that Board's Circulars are merely opinions and cannot override statutory provisions. The Government acknowledged this but noted that the Circulars provide necessary guidelines for implementing legal provisions, particularly in ensuring proper duty assessment and compliance with FEMA.

Conclusion:

The Government set aside the orders-in-appeal and restored the orders-in-original, confirming the recovery of erroneously refunded rebate with interest and penalty. The excess duty paid due to short realization of export proceeds was to be returned to the respondents as recredit in their Cenvat credit account. The revision applications were allowed, reinforcing the necessity of BRC submission and adherence to FEMA provisions in rebate claims.

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