2016 (7) TMI 232 - CGOVT - Central Excise

Rebate / refund claim on export of goods - non-realization of foreign exchange - exporter has not submitted (BRCs) in respect of export clearances - Commissioner (Appeals) observed that submission of BRCs have not been envisaged as precondition for grant of rebate under Notification No. 19/2004-CE(NT) dated 06.09.2004 read with Rule 18 of the Central Excise Rules, 2002. Held that - It is a fact on record that the stipulated period of one year for the realization of export proceeds had been exceeded much before issue of the show cause notices. The question of submission of BRC would not arise when rebate is filed and sanctioned within one year of the date of export. However, in a scenario as in the present case were pending the sanction of rebate, the Bank Remittance Certificate had become due, it cannot be held that rebate ought to be sanctioned as it is not a prescribed document at the time of filing of rebate. It is also a fact on record that till date the respondent has failed to submit the BRCs to the department. Though it is claimed by them before the Revisionary Authority that remittance has been received by them partially, no evidence has been produced to that effect. It is a universally known principle that one of the main reasons any export incentive including rebate is allowed is to encourage export- generated foreign exchange earnings for the country. From a harmonious reading of Rule 18 of Central Excise Rules, Notification No. 19/2004-CE(NT) dated 06.09.2004, relevant provisions of Foreign Exchange Management Act, Foreign Trade Policy and RBI guidelines as applicable, it can be concluded that exports are entitled for rebate benefit only if export realization is received, which has not happened in the present case. Rebate / refund claim cannot be granted - Decided in favor of revenue.

Issues Involved:
1. Submission of Bank Remittance Certificates (BRCs) for rebate claims.
2. Compliance with RBI guidelines on realization of export proceeds.
3. Applicability of CBEC and RBI Circulars.
4. Interpretation of Notification No. 19/2004-CE(NT) and Rule 18 of the Central Excise Rules.
5. Reliance on previous judgments and orders.
6. Verification of export proceeds realization.

Detailed Analysis:

1. Submission of Bank Remittance Certificates (BRCs) for rebate claims:
The respondents, registered under Central Excise, filed rebate claims for excise duty paid on exported goods under Rule 18 of the Central Excise Rules, 1944. The adjudicating authority rejected these claims due to the non-submission of BRCs, which are vital documents for monitoring the realization of export proceeds. The Commissioner (Appeals) ruled that BRCs were not preconditions for granting rebates under Notification No. 19/2004-CE(NT) dated 06.09.2004 and could be verified subsequently. The Government, however, observed that while BRCs are not required at the time of filing rebate claims, they are essential for verifying the realization of export proceeds, and their absence at the time of rebate sanctioning justified the rejection of claims.

2. Compliance with RBI guidelines on realization of export proceeds:
The RBI Circular A.P. (DIR Series) No. 50 dated 03.06.2008 mandates the realization and repatriation of export proceeds within twelve months from the date of export. The adjudicating authority noted that the respondents failed to submit BRCs within this period, leading to the rejection of their rebate claims. The Government upheld this view, emphasizing that the stipulated period for realization had lapsed, and no evidence of realization was provided even after multiple opportunities.

3. Applicability of CBEC and RBI Circulars:
The Commissioner (Appeals) relied on CBEC Circular No. 354/70/97-CX dated 13.11.1997, which allows for the submission of BRCs within 160 days of rebate sanction. However, the Government clarified that this Circular applies to cases where rebates have already been sanctioned and subsequent recovery is needed for non-submission of BRCs. In the present case, rebates were not sanctioned initially, making the Circular inapplicable.

4. Interpretation of Notification No. 19/2004-CE(NT) and Rule 18 of the Central Excise Rules:
The Government noted that Notification No. 19/2004-CE(NT) and Rule 18 do not prescribe BRCs as documents to be submitted with rebate claims. However, the realization of export proceeds is a fundamental condition for granting rebates. The provisions of the Foreign Exchange Management Act (FEMA) and related RBI guidelines necessitate the realization of foreign exchange, failing which rebate claims cannot be sanctioned.

5. Reliance on previous judgments and orders:
The respondents cited the Hon'ble Allahabad High Court's Order in the case of Polyplex Corporation Ltd. vs. Joint Secretary, Finance, which dealt with settlement in rupee terms by ECGC for rebate benefits. The Government distinguished this case from the present one, noting that the facts were different and not applicable to the current scenario.

6. Verification of export proceeds realization:
The Government emphasized the importance of verifying the realization of export proceeds before sanctioning rebate claims. Despite claims of partial realization by the respondents, no evidence was provided. The Government held that without proof of realization, rebates could not be granted, aligning with the principles of encouraging export-generated foreign exchange earnings.

Conclusion:
The Government found the order of the Commissioner (Appeals) unjust and improper, setting it aside and restoring the original authority's order rejecting the rebate claims. The Revision Applications succeeded, reinforcing the necessity of compliance with RBI guidelines and the realization of export proceeds for rebate eligibility.

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