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2014 (12) TMI 950 - CGOVT - Central ExciseRebate claim - amount of excess duty paid then prescribed rate of duty - Rule 18 of the Central Excise Rules, 2002 read with Notification No. 19/2004-CE(NT) dated 06 09.2004 - manufacturers had paid duty on said exported goods @ 10% under Notification No. 2/08-CE dated 01-03-2008 - original authority after following due process of law, held that duty was required to be paid on exported goods at the effective rate of duty @ 4% in terms of Notification No. 4/2006-CE dated 01.03.2006 as amended and sanctioned the rebate claims to the extent of duty payable @ 4% - rejection of rebate claim on free samples - Held that - Notification No. 4/2006-CE dated 1.03.06 when issued, originally did not prescribed any concessional rate of duty to medicaments of chapter Heading 3004 and a concessional rate of duty @8% was prescribed by amending the said notification vide notification no. 4/2008-CE dated 01.03.2008 and the same was further reduced to 4% vide amending the said notification vide notification no. 58/2008-CE dated 7.12.08. Further Notification No. 4/06-CE-was amended vide Notification No. 4/11-CE dated 01.03.2011 and the effective rate of duty was enhanced to 5%. On the other hand, the tariff rate of duty for the Chapter heading 3004 was 16% adv. There is no merit in the contentions of applicants that they are eligible to claim rebate of duty paid @10% i.e. General Tariff Rate of Duty ignoring the effective rate of duty @4% or 5% in terms of exemption notification No.4/06-CE dated 1.03.06 as amended. As such Government is of considered view that rebate is admissible only to the extent of duty paid at the effective rate of duty i.e. 4% or 5% in terms of Notification No.4/06-CE dated 1.03.06 as amended, as applicable on the relevant on the transaction value of exported goods determined under section 4 of Central Excise Act, 1944. - no foreign remittances was to be received by the applicant, they were not eligible for rebate of duty on (free trade samples). As per foreign trade policy, the exporter is allowed to send the free trade samples, but the admissibility of the rebate claim is to be decided as per relevant provisions of Central Excise Act. No commercial value is mentioned on the export documents and the market value as per records become nil. Since the market price of export goods at the time of exportation is nil, the rebate claim becomes inadmissible in terms of condition No.2(e) of Notification No. 19/2004-CE(NT) dated 6.9.2004. Amount paid in excess of duty payable on one s own volition cannot be retained by Government and it has to be returned to manufacturer/applicant in the manner in which it was paid. Accordingly, such excess paid amount/duty which is required to be returned to the applicants. Government modifies the order of Commissioner, (Appeals) to the extent discussed above. As such the excess paid amount may be recredited in manufacturer s cenvat credit account - Decided partly in favour of assessee.
Issues Involved:
1. Eligibility for Rebate of Duty Paid on Exported Goods. 2. Rebate on Duty Paid for Free Samples. 3. Re-credit of Excess Duty Paid. Detailed Analysis: 1. Eligibility for Rebate of Duty Paid on Exported Goods: The applicants, manufacturing medicaments under Chapter Heading 3003/3004 of the Central Excise Tariff Act, 1985, cleared these goods for export, paying a duty rate of 10% under Notification No. 2/2008 as amended. They later filed for rebate claims on this duty. The adjudicating authority restricted the rebate to 4%, the rate under Notification No. 4/2006 as amended. The applicants argued that Section 5A(1A) of the Central Excise Act, 1944, does not mandate paying duty at a lesser rate if another exemption notification with a higher rate exists. They cited the Supreme Court's ruling in CCE Baroda vs. Indian Petro Chemicals, which allows choosing the more beneficial notification. The government noted that the effective rate of duty for exported goods should be 4% as per Notification No. 4/2006, and the rebate claims should be sanctioned accordingly. The CBEC instructions mandate that export goods be assessed in the same manner as goods for home consumption, which in this case was at the effective rate of 4% or 5%. 2. Rebate on Duty Paid for Free Samples: The Assistant Commissioner rejected the rebate claim for duty paid on free samples, reasoning that these samples had no commercial value. The applicants contended that the samples, though not for retail sale, had a market value as promotional items. The government upheld the rejection, stating that since no foreign remittance was to be received for these samples and their market value was nil, the rebate was inadmissible under Notification No. 19/2004-CE(NT) dated 6.9.2004. 3. Re-credit of Excess Duty Paid: The applicants requested that any denied rebate amount be allowed as Cenvat credit. The government agreed, citing that any excess duty paid voluntarily should be returned in the manner it was paid. The Punjab & Haryana High Court's decision in M/s. Nahar Industrial Enterprises Ltd. vs. UOI supported this view, allowing re-credit of the excess duty in the manufacturer's Cenvat credit account. Conclusion: The government concluded that the applicants were only eligible for a rebate at the effective duty rate of 4% or 5% as per Notification No. 4/2006. The rebate on free samples was inadmissible due to their nil market value. Any excess duty paid should be re-credited to the applicant's Cenvat credit account. The revision application was disposed of in these terms.
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