2016 (6) TMI 994 - CGOVT - Central Excise

Rebate / refund claim - export goods - receipt in Indian Rupee through Vostro Account - claim rejected to the extent of remittance not received in foreign currency - The applicant submits that the order of the respondent is erroneous and legally untenable in as much as there is no condition that rebate of duty on exports would be allowed only if the export proceeds are realized in convertible foreign exchange. The applicant submits that Rule 18 or notification issued under the said rule does not prescribe any condition that the rebate is dependent on realization of export proceeds. Held that - Government notes that the applicant has contended that they have made inward remittance in the instant case in Indian Rupees through Vostro Account through Vostro Account with Deutche Bank. On perusal of copies of some documents, Government finds that an amount of INR has been shown in the Bank statement of M/S. Standard Chartered Bank. Applicant has given his submission before Commissioner (Appeals). However, there is no findings of Commissioner (Appeals) on this point while drawing the conclusion that applicant did not comply with provision contained in para 2-40 of the FTP. - Matter remanded back.

Summary

Issues:
- Rebate claim rejection based on non-realization of remittance in foreign exchange.
- Compliance with provisions of Foreign Trade Policy (FTP) 2009-14 for export proceeds realization.
- Interpretation of FTP provision 2-40 regarding export proceeds realization.

Analysis:
1. Rebate Claim Rejection: The applicant, a manufacturer of Excisable goods, exported products and filed rebate claims under rule 18 of the Central Excise Rules, 2002. The adjudicating authority denied a portion of the claim due to remittance not received in foreign currency. The applicant challenged this decision, arguing that there is no legal provision mandating realization of export proceeds in convertible foreign exchange for rebate eligibility. They contended that realization of Indian Rupees from foreign customers through Vostro accounts constitutes receipt of foreign exchange under FEMA, 1999, and is permitted under FTP 2009-14. The Central Government observed the lack of specific findings by the Commissioner (Appeals) on this matter and remanded the case for reconsideration based on the applicant's submissions and documentary evidence.

2. FTP Compliance for Export Proceeds Realization: The applicant asserted compliance with FTP provisions, allowing export proceeds realization in Indian Rupees through a freely convertible Vostro account of a non-resident bank. The Government noted the applicant's claim of inward remittance in Indian Rupees through a Vostro Account with Deutche Bank. However, the Commissioner (Appeals) did not address this point in their decision, leading the Government to remand the case for a fresh determination considering the applicant's submissions and supporting documents.

3. Interpretation of FTP Provision 2-40: The FTP provision 2-40 stipulates that export proceeds may be realized in rupees through a freely convertible Vostro account of a non-resident bank, subject to certain conditions. The Government emphasized the need for the appellate authority to reconsider the case in light of this provision and the applicant's contentions regarding the realization of export proceeds in Indian Rupees through a Vostro Account with Deutche Bank. The remand was aimed at ensuring a thorough review of the evidence and granting both parties sufficient hearing opportunities for a fair decision.

In conclusion, the Central Government's judgment set aside the original decision and remanded the case for a fresh determination by the appellate authority, emphasizing the need for a detailed examination of the applicant's compliance with FTP provisions and the realization of export proceeds in Indian Rupees through a Vostro account.