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TMI Blog2014 (12) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... it 12.5% is not required to be deducted from FOB value for grant of export benefits. The circular 64/2003-Cus dated 21.07.2003 is fully applicable to the facts of the present case - No merit in Revenue appeal - Decided against Revenue. - Appeal No. 269-329/2010-Cu[DB] - FO ORDER NO . 54356-54416/2014 - Dated:- 10-11-2014 - Ms. Archana Wadhwa and Mr. Rakesh Kumar, JJ. For the Appellant : Shri Amresh Jain, DR For the Respondent : Shri S.Vasuderan, Shri Avinash Mehta, Shri M.S.Bhatia, Shri Piyush Kumar Ms. Reena Rawat, Advocate JUDGEMENT Per Ms. Archana Wadhwa: Being aggrieved with the order passed by the Commissioner (Appeals) vide which he has vacated the show cause notice issued to the respondents, revenue has filed the present appeals. As all the appeals are directed towards the same impugned order passed by the Commissioner, we pass a common order in all the appeals. 2. As per facts on record in pursuance of an intelligence collected that M/s. Skipper Electricals (India) Ltd., Bhiwadi (hereinafter referred to as M/s. SEIL for brevity sake), and M/s. Seil Power Gears Ltd. Bhiwadi (hereinafter referred to as M/s. SGPL for brevity sake), both sister ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... work, delivery/completion period, total contract cost, validity of offer, terms of payment, contract documents, packing, guarantee, rejection and acceptance. In the contract also, there was no clause regarding any dealing through foreign agent or any mediator in the said deal. The contract bore the signature of the exporter and overseas buyers and witnesses. There was no signature of the foreign agent in the contract. The terms of payment indicated that the payment would be made against a confirmed and irrevocable, 100% cash backed letter of credit. Subsequently, irrevocable letter of credit used to be executed by the overseas buyer in favour of exporter through their banker. In the letter of credit also, there was no clause regarding foreign agent/mediator. Thus, it appeared that there was no foreign agent/agent/mediator in procurement of export orders from the government agencies which also transpired from the various statements. 6. In accordance with contract and letter of credit, M/s. SEIL and M/s. SPGL used to export the goods to their overseas buyers under the Shipping Bills filed by claiming the export incentives viz DEBP, DFRC,DFIA etc. Further, from the Invoice and Ship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar to be any role of any agent for securing the export order. Thus, no agency commission at all appeared to be admissible and accordingly, the excess export incentives availed on such overvalued amount appeared to be recoverable. 8. On the above basis, the respondents were issued show cause notice for denying the various export benefits obtained by them. The other notice, who were transfer of DEBP,DFRC,DFIA license and had availed the exemption from duty, were called upon the show cause against denial of the import benefits the respondents contested the show cause notice on various grounds, which stand accepted by the Commissioner. Hence the present appeal. 9. For better appreciation of the reasons adopted by Commissioner, we reproduced the relevant para from the impugned order of Commissioner:- 59.1. I further observe that the main points to be determined in the case are the following: i) The commission claimed by M/s. SEIL M/s. SPGL cannot be allowed as there was no mention about the payment of Commission in the tender documents. ii) They were sending part of their export to M/s. GTA Engineering Nigeria Ltd. And as per the RBI master Circular dated 01.07.06 payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of commission towards equity participation in overseas wholly owned subsidiaries by an Indian Partner. In the instant case annexure A-1 to the Show Cause Notice, shows the commission paid abroad. None of the amount had gone towards equity participation on M/s. GTA Engineering Nigeria ltd. Hence, the payment of commission was not hit by the RBI circular. e) Based on DGFT and CBEC circular that a commission upto 12.5% was allowed to be paid by the exporter without affecting the value of the export incentives. The exporter had actually taken only 2.9 crores which came to an average of 4 to 5% as against the limit of 12.5% claimed /claimable. f) The contention at para 8.7 of the Show Cause Notice that a reading of DGFT Policy Circular No. 55 dated 10.12.98 and No. 24 dated 14.01.2004 along with CBEC Circular No. 64/2003 Customs dated 21.07.2003 shows that if agency commission was less than 12.5% than it has to be taken on actual basis for granting the export incentive, does not appear to be correct. On a proper reading of Circular what comes out clearly was that any commission paid upto the limit of 12.5% of the FOB value need not be deducted from the FOB value for granting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t this amount of commission or even a lesser amount was paid to M/s GTA Engineering Ltd. The perusal of the records also shows that no commission was paid. Claiming a commission to be payable was something different from making an actual payment. (b) The RBI master circular and the various other circulars by the DGFT and Customs department has nowhere stated that the party should declare the name of the agents, the reasons for payment of commission to the agents or the help rendered by these agents or any other reasons for paying the commission to the agents to be mentioned anywhere in the Shipping Bill, in the tender documents or in the invoices. It has also been observed that there is no provision under Foreign Trade Policy (FTP) Customs Act and the Foreign Exchange Management Act (FEMA) which stipulate that the name and address of overseas agent to whom commission is paid should be incorporated in the contract tender documents, letter of credit, Shipping Bills, etc. Further, on a perusal of exports happening from ICD, Tughlakabad it has been found that exporters generally do not mention the name of the overseas agent in the Shipping Bill, contract and order forms and the depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ail to understand the objection of the Revenue. On one hand, it is being contended that no commission was payable as the entire contract between the respondents and their foreign buyers was a direct contract and no Commission Agent was involved. As per the Respondents, the said commissions are not exactly in the nature of the commission interests, the same are in the nature of the reward to the foreign persons, which have held the appellant in various fields and which stands paid to them through their own pocket. This fact reveal that the appellant have received the entire consideration from the one buyer and the export benefits filed on the entire consideration so received without being effected by any payment made by them to the foreign agent. 12. Apart from that we also note that the Central Board of Excise and Customs Circular No. 64/2003-Cus dated 21.07.2003 has stipulated as under:- 4. The issue has been examined in the Board. It is observed that RBI has not revised its earlier instructions as regards the limit of payment of agency commission. Therefore, it is clarified that the field formations may continue to permit export benefits on f.o.b. value without ..... X X X X Extracts X X X X X X X X Extracts X X X X
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