2010 (3) TMI 970 - CGOVT - Central Excise

Summary

Issues involved:
The issues involved in this case are related to the rebate claims filed by the appellant for goods exported as free samples without realization of foreign exchange, the denial of rebate claims by the Commissioner (Appeals) based on market value considerations, and the subsequent revision application challenging the denial of rebate claims.

Rebate Claims Denial:
The appellant, a pharmaceutical company, filed rebate claims for goods exported as free samples without any realization of foreign exchange. The Commissioner (Appeals) denied the rebate claims based on the grounds that the export invoices had remarks indicating "Free samples" and "No foreign Exchange is involved," suggesting that the exports were made without any foreign exchange realization. The denial was also supported by the condition in Notification No. 19/2004-C.E. (N.T.) that the market price of the goods at the time of exportation should not be less than the amount of rebate claimed.

Appellant's Arguments:
The appellant contended that under Rule 18 of the Central Excise Rules, there is no condition requiring consideration to be received from the customer for goods exported. They argued that the denial of rebate claims was based on erroneous assumptions and contrary to the law. The appellant emphasized the distinction between "commercial value" and "market value" of goods, stating that while the commercial value was nil due to the goods being supplied as free samples, the market value was Rs. 26 Lacs, making them eligible for the rebate.

Market Value Consideration:
The appellant highlighted that the market value of the goods was not nil, as assumed in the denial of rebate claims. They argued that the goods had a market value of Rs. 26 Lacs, indicating that the market value condition for rebate eligibility was met. The appellant also pointed out that the goods were capable of being sold in the market at a price not less than Rs. 26,10,866, further supporting their eligibility for the rebate.

Government's Decision:
The Government observed that the goods exported as free samples were not meant for sale and had no commercial value, as no foreign remittances were to be received by the appellant. They emphasized that rebate schemes aim to neutralize domestic duties on exported goods to enhance competitiveness in the international market and earn more foreign exchange. The Government upheld the denial of rebate claims based on the lack of commercial value and foreign exchange realization, in line with the provisions of the Central Excise Act and Notification No. 19/2004-C.E. (N.T.).

Conclusion:
The Government found no merit in the revision application and rejected it, upholding the denial of rebate claims for goods exported as free samples without realization of foreign exchange. The impugned order-in-appeal was upheld, and the case was closed accordingly.