2017 (8) TMI 1209 - AT - Central Excise

Defective/Rejected goods - In respect of such rejected quantity the foreign buyer has not remitted the foreign exchange to the appellant - N/N. 42/2001-CE(NT) - Rule 19 of Central Excise Rules, 2002 - Held that - there is no condition of payment of foreign remittance against the export of goods, in the rules and notification mentioned - once the goods have been exported even though the goods were rejected by the buyer side, duty cannot be demanded as there is no condition provided under the law that once the goods is exported and if it is rejected the same should be brought back by the assessee or should be destroyed - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE, DELHI-III Versus SHYAM TELECOM LTD. 2015 (10) TMI 1783 - CESTAT NEW DELHI , where it was held that the condition regarding receipt of export proceeds cannot be imposed to demand duty foregone in respect of the goods cleared for export under bond/LUT. The duty on the goods can be demanded only if the goods have not been exported out of India within the stipulated period - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether excise duty is chargeable on rejected goods not remitted by foreign buyer after export.

Analysis:
The case involved the appellant exporting goods under bond, with a portion being rejected by the foreign buyer without remitting foreign exchange. The department argued that excise duty was chargeable due to non-receipt of foreign remittance. The consultant for the appellant contended that export completion does not hinge on foreign exchange receipt, citing a relevant case law. The Assistant Commissioner for the Revenue supported the impugned order. The Member (Judicial) analyzed the case, noting that the goods were exported and proof submitted, with duty demand based solely on non-remittance for rejected goods. The Member found no legal requirement for foreign payment against exported goods, emphasizing that duty cannot be demanded if goods are rejected post-export without return or destruction conditions. Referring to the case law cited, the Member ruled in favor of the appellant, setting aside the impugned order and allowing the appeal.

This judgment clarifies that excise duty is not automatically chargeable on goods rejected by a foreign buyer if foreign exchange is not remitted, as the completion of export does not depend on such remittance. The ruling underscores that once goods are exported, duty cannot be demanded even if rejected by the buyer without specific return or destruction conditions. The decision highlights the importance of adherence to export rules and notifications, emphasizing that duty can only be demanded if goods are not exported within stipulated periods, not based on foreign remittance receipt. The case law cited provides a strong legal basis for rejecting duty demands in similar export scenarios, ensuring fair treatment for exporters facing rejected goods situations.