2017 (5) TMI 692 - AT - Central Excise

Refund claim - freight and insurance - denial of rebate claim in respect of duty attributed to freight and insurance against the export of goods - denial on the ground that excess payment is not on the correct assessable value and therefore the same is not duty and not refundable u/s 11B - Held that - the refund claim in the present case is arising due to denial of rebate claim in respect of duty attributed to freight and insurance against the export of goods. Therefore, after decision of the rebate, this amount does not remain as rebate but it is an excise duty paid on the value which is not part of the assessable value in respect of export goods. Therefore its duty and refund thereof is clearly governed by section 11B. The appellants filed refund claim as refund of duty on the freight and insurance. Therefore, the filing of refund is a fresh case which cannot be pursued by appeal remedy. Refund allowed subject to the verification on the aspect of unjust enrichment - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of rebate claim on duty attributed to freight and insurance for exported goods.
2. Contention on the correct assessable value for duty payment.
3. Rejection of refund claim based on time bar and non-appeal against the sanction order.

Analysis:
1. The case involved the denial of a rebate claim on duty related to freight and insurance for exported goods. The appellants paid duty at CIF value and claimed a rebate based on this value. However, the sanctioning authority argued that freight and insurance costs should not be included in the assessable value for duty calculation. Consequently, the duty was paid on an enhanced value, and the duty attributable to the cost and insurance was considered non-rebatable, leading to a reduced rebate amount.

2. The appellants filed a refund claim for the reduced rebate amount, asserting that even though the rebate was not granted, duty was paid, making it eligible for a refund under Section 11B. The refund claim was rejected on the grounds that the excess payment was not on the correct assessable value and, therefore, not refundable under Section 11B. The lower authorities also contended that since the rebate sanction order was not appealed against, the refund claim was not maintainable. Additionally, the Commissioner (Appeals) deemed the refund time-barred as it was not filed within one year from the duty payment date.

3. The counsel for the appellants argued that the duty on freight and insurance was indeed paid, and the refund claim was distinct from the rebate issue. They contended that the refund claim was valid as it was based on the duty paid on freight and insurance, which was different from the rebate denial. It was also highlighted that the refund claim was filed within one year from the sanction order of the rebate, not the duty payment date. The Tribunal found in favor of the appellants, stating that the refund claim arose due to the denial of the rebate claim on freight and insurance duty, making it eligible for a refund under Section 11B. The Tribunal rejected the argument of non-appeal against the sanction order, noting that the refund claim was a separate issue from the rebate denial and did not require an appeal. The refund claim was considered timely as it was filed within the one-year period from the rebate sanctioning order.

In conclusion, the Tribunal allowed the appeal, stating that the appellants were entitled to the refund claim, subject to verification for unjust enrichment.