Export incentive eligibility on FOB value upheld where no inflation was proved and circulars allowed commission up to the prescribed limit.

Export incentives could not be denied merely because the declared FOB value included agency commission, where the exports were made under direct contracts with foreign buyers, the shipping bill values matched the tender values and remittances received, and no fraud or inflation of export value was established. The circulars relied upon permitted benefits on FOB value without deduction of agency commission up to 12.5% of FOB value, with deduction required only for commission above that limit. On these facts, the export benefits were correctly allowed, the Revenue's challenge failed, and the Commissioner (Appeals) order was upheld.

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Issues: Whether export benefits were liable to be denied on the ground that the declared FOB value included agency commission and was allegedly inflated, and whether the Board and RBI circulars permitted grant of export incentives on the full FOB value.

Analysis: The exports were made under direct contracts with foreign buyers on the basis of open tenders, and the consideration declared in the shipping bills matched the tender value and the remittances received. The circulars relied upon by the Revenue permitted export benefits on FOB value without deduction of agency commission up to 12.5% of FOB value, and only commission exceeding that limit required deduction. On the facts found, no fraud or inflation of export value was established, and the circulars applied to permit the benefit claimed.

Conclusion: The challenge to the grant of export incentives failed, and the Revenue's appeals were rejected.

Final Conclusion: The order of the Commissioner (Appeals) was upheld, and the export benefits claimed by the assessee were held to be correctly allowed.

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