2005 (7) TMI 120 - CGOVT - Central Excise

Valuation (Central Excise) - Export goods - duty paid in excess - demand refunded erroneously u/s 11A - HELD THAT - It is not the case of Revenue that the seller and buyer of the goods are related person. Govt., therefore, would agree with the contention of the applicant Commissioner that the excise duty on the goods should have been paid on transaction value as defined u/s 4(3)(d) of the Central Excise Act, 1944. CBEC vide their Circular No. 203/37/96-CX., dt. 26-4-96 have also clarified that AR 4 value should be determined u/s 4 of the Central Excise Act, which is required to be mentioned on the invoices issued under Rule 52A of the Central Excise Rules, 1944. In the instant case the respondents themselves have admitted in their letter of cross-objection dt. 26-5-2005, that they have paid Central Excise duty on CIF value of the impugned goods for purpose of claiming rebate under Rule 18 of the Central Excise Rules, 2002. Govt., therefore, would agree with the contention of the applicant Commissioner that as per provisions of Sections 4(1)(a) and 4(2)(d) of Central Excise Act, 1944 the value in terms of Section 4 should be the amount that the buyer of the exported goods is liable to pay. The buyer of the exported goods had paid an amount as shown in the Bank realization certificate. In any case the respondents are not liable to pay Central Excise duty on the CIF value of the goods but the Central Excise duty is to be paid on transaction value of the goods as prescribed under Section 4 of the Central Excise Act, 1944. However, it is also fact that the respondents have paid excess duty to the tune of Rs. 2,35,192/- which is to be refunded to the respondents in the manner in which it was paid. Thus, Govt., is of the considered opinion that the impugned Order-in-Appeal is not maintainable and Govt., accordingly sets aside the impugned Order-in-Appeal. Govt., also permits the respondents to take back the Cenvat credit of Rs. 2,35,192/- which is related to Central Excise duty paid on CIF value of the impugned goods. The Revision Application is disposed of in above terms.

Summary

Issues:
- Rebate claim discrepancy in duty paid goods for export
- Correct valuation for excise duty payment
- Interpretation of transaction value under Central Excise Act

Analysis:
1. Rebate Claim Discrepancy: The Commissioner of Central Excise filed a Revision Application against an Order-in-Appeal regarding rebate claims filed by a company for duty paid goods cleared for export. The issue arose when it was discovered that the company had realized a lesser amount than declared in the Bank Realization Certificates, resulting in an excess duty rebate payment of Rs. 2,35,192. A Show Cause Notice was issued for the recovery of this amount under Section 11A of the Central Excise Act, 1944. The adjudicating authority confirmed the demand, leading to an appeal by the company.

2. Correct Valuation for Excise Duty Payment: The Commissioner argued that the value for excise duty payment should be based on the actual amount realized by the company, as per the Bank Realization Certificates, rather than the value declared in the ARE-1 forms. The duty was rebated on a higher value than the actual realization, leading to the excess payment. The Circular by the Central Board of Excise & Customs clarified that the value declared on AR4 (now ARE-1) should be determined under Section 4 of the Central Excise Act, emphasizing the importance of accurate valuation for duty payment.

3. Interpretation of Transaction Value: The Government analyzed the provisions of Section 4 of the Central Excise Act, particularly focusing on transaction value as defined in Section 4(3)(d). It was established that the excise duty should be paid based on the transaction value, which is the price actually paid or payable for the goods. In this case, the company had paid excess duty on CIF value for claiming rebate under Rule 18 of the Central Excise Rules, 2002. The Government concluded that the duty should be paid on the transaction value, and the excess duty of Rs. 2,35,192 was to be refunded to the company.

In conclusion, the Government set aside the Order-in-Appeal, allowing the company to take back the Cenvat credit related to the excess Central Excise duty paid on the CIF value of the goods. The judgment highlighted the importance of accurate valuation and adherence to the provisions of the Central Excise Act for duty payment and rebate claims.