2015 (3) TMI 1039 - CGOVT - Central Excise

Denial of rebate claim - original/duplicate copies of AREs-1 could not be filed along with relevant proof of export - original authority ordered for re-credit in Cenvat account on the ground that transaction value in impugned cases is the lowest of three FOB values given in impugned AREs-1, Shipping Bills and BRCs - Held that - The FOB value declared on Shipping Bill is exactly same. The difference in BRC value is due to fluctuation in foreign exchange rate and not due to any inclusion of ocean freight value. Government notes that the original authority has not given any finding/reasoning for choosing lowest of the values mentioned in AREs-1, Shipping Bills and BRCs. Such conclusion without any basis is not proper and legal. Once, port of export is not disputed as place of removal , and sale contract is on FOB basis there is no reason to reject the ARE-1/FOB value as transaction value. - C.B.E. & C. vide Circular No. 510/06/2000-Cx, dated 3-2-2000 has clarified that there is no question of re-quantifying the amount of rebate by applying some other rate of exchange prevalent subsequent to the date on which the duty was paid. As such, the rebate amount need not to be changed on account of lower realization in BRCs due to exchange rate fluctuation. - The contention of the applicant that difference in said values is due to fluctuation in exchange rate has not been considered by lower authorities - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Disputed rebate claims on duty paid for export products under Rule 18 of Central Excise Rules, 2002; Denial of cash rebate; Interpretation of transaction value and exchange rate fluctuation affecting rebate claims.

Analysis:
1. The revision applications were filed against Orders-in-Appeal related to rebate claims on duty paid for export products. The initial rebate claims by the applicant were partly sanctioned, with a portion denied in cash. The rejected sum was disallowed due to missing documentation, while a portion was credited to the Cenvat account. The Commissioner (Appeals) modified the Orders-in-Original, allowing a portion of the rebate claims but rejecting the plea for cash rebate on the remaining amount.

2. The applicant challenged the denial of cash rebate, arguing that duty was paid on the transaction value of the goods, and the fluctuation in exchange rates did not justify denying the rebate. The government noted that the original authority did not provide a valid reasoning for choosing the lowest value among different documents. The Circular No. 510/06/2000-Cx clarified that rebate assessment should not be affected by exchange rate fluctuations post-duty payment.

3. The government observed that the value declared on the Shipping Bill matched the FOB value, and any differences in values were due to exchange rate fluctuations, not additional costs. The case was remanded to verify if the discrepancies in values were indeed due to foreign exchange rate fluctuations, with a directive to sanction the rebate claim accordingly if justified. The decision was made to afford a reasonable opportunity for a hearing to the party before final determination.

4. The judgment emphasized the importance of assessing rebate claims based on the transaction value at the time of export, without being influenced by subsequent exchange rate fluctuations. The case highlighted the need for proper documentation and adherence to legal provisions in sanctioning rebate claims, ensuring fairness and compliance with the law.