2010 (1) TMI 402 - AT - Central Excise

Rebate- FOB value- Appellants filed a rebate claim for Rs. 1,31,871/-. The Original Adjudicating Authority while sanctioning the rebate claim decided that an amount of Rs. 5015/- cannot be paid in cash but has to be allowed as credit in the cenvat credit account. The ground on which this decision has been taken is that FOB value mentioned in the Bank Realization Certificate is less than the assessable value mentioned in the ARE-l. On an appeal filed by the appellant, Commissioner (Appeals) upheld the order of Original Adjudicating Authority but on a totally different ground. Commissioner (Appeals) observed that appellants had claimed rebate on the basis of CIF value whereas it should have been claimed on FOB Value. Commissioner (Appeals) also relied upon Circular No. 510/6/2000-CX., dated 3-2-2000 in support of his contention that the claim is to be restricted to FOB Value. Held that- difference in amount explained as because of exchange rate. C.B.E.&C. Circular No. 510/6/2000-CX, dated 03.02.2000 holds that requantification of rebate amount not permissible on basis of some other exchange rate subsequent to date on which duty paid. Copy of invoice ARE-1 and BRC produced to show that claim only on FOB value. Appeal allowed.

Summary

Issues:
1. Rebate claim dispute - Cash payment vs. credit in cenvat account.
2. Discrepancy in claimed value - CIF value vs. FOB value.
3. Interpretation of Circulars - Circular No. 687/3/2003-CX and Circular No. 510/6/2000-CX.
4. Exchange rate fluctuation impact on rebate claim.

Analysis:
1. The appellant filed a rebate claim for Rs. 1,31,871, but the Original Adjudicating Authority decided that Rs. 5015 cannot be paid in cash and should be allowed as credit in the cenvat credit account due to a discrepancy in values in the Bank Realization Certificate and the ARE-1. The Commissioner (Appeals) upheld this decision, stating that the rebate should have been claimed on FOB value instead of CIF value. However, the Tribunal found that Circular No. 687/3/2003-CX supports the appellant's claim, emphasizing that the refund of duty on exported goods cannot be given as credit in the cenvat account. The Circular also clarifies that rebate should be based on the exchange rate prevalent at the time of clearance and shipping bill filing.

2. The Tribunal noted that the Circular cited by the Commissioner (Appeals) actually favored the appellant's case, as it prohibits re-quantifying rebate amounts based on subsequent exchange rate fluctuations. The appellant provided evidence, including invoices, ARE-1, and Bank Realization Certificates, to demonstrate that the rebate claim was based on FOB value and the difference in realized amount was due to exchange rate variations. Consequently, the Tribunal concluded that both lower authorities erred in their decisions, and the rebate claim should be allowed based on the FOB value of the goods under Section 4 of the Central Excise Act, 1944, as per the Circulars referenced.

3. In summary, the Tribunal allowed the appeal, providing consequential relief to the appellants by affirming that the rebate claim should be determined based on the FOB value of the goods, in accordance with the Circulars issued by the Board. The judgment clarified the correct interpretation of Circulars No. 687/3/2003-CX and No. 510/6/2000-CX, highlighting the importance of considering the exchange rate prevailing at the time of clearance for rebate calculations. The decision emphasized adherence to the provisions of the Central Excise Act and relevant Circulars in resolving rebate disputes and ensuring fair treatment for exporters.