2008 (1) TMI 234 - AT - Central Excise

Differential duty demanded on ground that assessee ought to have paid duty on the transaction value between them & the merchant-exporter - but payment of duty was made on the price between the merchant-exporter & the foreign company assessee contested the demand on the ground of revenue neutrality by submitting that any differential amount of duty would be available as rebate - since rebate of equal amount is available to assessee, position is revenue neutral so demand is set aside

Summary

Issues:
- Demand of differential duty on goods exported under claim for rebate
- Applicability of revenue neutrality principle
- Tribunal's decision in similar cases

Analysis:
1. Demand of differential duty on goods exported under claim for rebate:
The case involved an appeal against a demand for payment of over Rs. 52 lakhs as differential duty on goods cleared for export under a claim for rebate. The department alleged that duty should have been paid on the transaction value between the assessee and the merchant-exporter, rather than the price between the merchant-exporter and the foreign company. The assessee contested this demand, arguing for revenue neutrality and claiming that any differential duty paid would be available as rebate.

2. Applicability of revenue neutrality principle:
The appellants contended that they had satisfied all conditions for rebate and had obtained rebate to the extent duty was paid. They argued that any additional duty paid would be offset by rebate, resulting in revenue neutrality. The Tribunal found the assessee's case to be forceful, noting that the claim for rebate of the additional duty should have been allowed by the adjudicating authority, following the principles established in previous cases like Punjab Tractors Ltd. v. Commission of Central Excise, Chandigarh.

3. Tribunal's decision in similar cases:
The Tribunal considered its previous decision in Indus Theco Pvt. Ltd. v. Commissioner of Central Excise, Raigad, where a similar demand for duty was set aside on grounds of revenue neutrality. The Tribunal found that the facts of the present case were similar to those in the previous case, and the distinction made by the adjudicating authority was not convincing. Ultimately, the Tribunal set aside the demand for differential duty and the penalty, allowing the appeal on the grounds of revenue neutrality.

This judgment highlights the importance of considering revenue neutrality in cases involving differential duty on exported goods under rebate claims. The Tribunal emphasized the need to apply consistent principles established in previous decisions to ensure fair treatment of taxpayers and to avoid unnecessary financial burdens.