2017 (11) TMI 1780 - CGOVT - Central Excise

Export Duty Rebate Upheld Despite Non-Receipt of Foreign Exchange: Legal Clarifications

IN RE : SALASAR TECHNO ENGINEERING PVT. LTD.

The Revision Applications challenging orders-in-appeal allowing rebate of duty on goods exported despite non-receipt of foreign exchange were rejected. ... Rebate of duty - export of goods - case of Revenue is that foreign exchange has not been received against 8 ARE-1s involving rebate amount of ₹ 29,88,308/- - Held that:- There is no doubt regarding export of duty paid goods by the applicant which is the fundamental requirement under Rule 18 and the Notification No. 19/2004. For Central Excise authorities Rule 18 and N/N. 19/2004 are the guiding and governing legal provisions. If there is any violation of FEMA and RBI Notifications for not realization of the value of exported goods, the matter should be referred to other Government agencies who are entrusted with the task of enforcing these legal provisions. But these cannot be used by the Central Excise authorities to deny the rebate of duty in the light of referred Rule 18, N/N. 19/2004 and Board Circulars. There is no deficiency found in the order of the Commissioner (Appeals) - rebate is to be allowed - revision application dismissed. Issues:- Revision applications challenging orders-in-appeal allowing rebate of duty on goods exported due to non-receipt of foreign exchange.- Interpretation of relevant legal provisions including Section 8 of the Foreign Exchange Management Act, 1999, RBI Notifications, Rule 18 of Central Excise Rules, and Notification No. 19/2004-C.E. (N.T.).- Determination of whether realization of export value is a prerequisite for allowing rebate of duty.- Clarification on the role of Central Excise authorities in enforcing FEMA and RBI Notifications.Analysis:The judgment involves two Revision Applications challenging orders-in-appeal that allowed the rebate of duty on goods exported despite non-receipt of foreign exchange. The Commissioner (Appeals) set aside the orders-in-original and granted the appeals of the respondent, leading to the rebate of duty to the applicant. The revision applications were filed mainly on the ground that foreign exchange had not been received against certain export documents involving a significant rebate amount.During the hearing, the applicant primarily relied on Section 8 of the Foreign Exchange Management Act, 1999, along with relevant RBI Notifications, to argue that the rebate of duty was erroneously allowed by the Commissioner (Appeals) since the export value had not been realized. However, the Commissioner (Appeals) noted that the condition of Bank Realization Certificate (BRC) was not specified under Rule 18 of Central Excise Rules and Notification No. 19/2004-C.E. (N.T.) for sanctioning rebate claims. The Commissioner also highlighted a circular clarifying that duty paid on exported goods should be eligible for rebate.The Government, after examining all records, agreed with the Commissioner (Appeals) that there was no doubt regarding the export of duty-paid goods by the applicant, which is a fundamental requirement under Rule 18 and Notification No. 19/2004. The judgment emphasized that the realization of the value of exported goods was not a condition under Central Excise provisions, as it falls under the purview of FEMA and RBI Notifications. Central Excise authorities are guided by Rule 18 and Notification No. 19/2004, and any violation of FEMA and RBI provisions should be addressed by relevant enforcing agencies, not by Central Excise authorities.Ultimately, the judgment concluded that there was no deficiency in the Commissioner (Appeals)'s order, and the revision applications challenging the rebate of duty were rejected. The decision clarified the distinct roles of Central Excise authorities and other agencies in enforcing relevant legal provisions related to the realization of export value, emphasizing the applicability of specific rules and notifications in determining rebate eligibility.