Revenue-neutral export rebate barred duty demand where any enhanced duty on exports would be fully refundable as rebate.

CESTAT New Delhi held that demand of duty, interest and penalty could not be sustained where the exported goods had been cleared on payment of duty and the assessee was otherwise entitled to rebate under Rule 18. The dispute on inclusion of commission in assessable value would only have increased the duty burden on exports, but any additional duty would have been fully available as rebate, making the matter revenue neutral. Applying the earlier decision on identical facts, the Tribunal set aside the impugned order and allowed the appeal in favour of the assessee.

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Issues: Whether confirmation of duty, interest and penalty could be sustained where the exported goods were otherwise eligible for rebate and the dispute, even if decided against the assessee on assessable value, would result in a revenue-neutral situation.

Analysis: The exported goods had been cleared on payment of duty and rebate had been granted under Rule 18 of the Central Excise Rules. The dispute concerned inclusion of commission in the assessable value, which would only have increased the duty burden on exports. Since any enhanced duty would also have been available as rebate, the exercise did not cause a net revenue gain to the Revenue. The Tribunal treated the issue as covered by the earlier decision on identical facts and applied the principle that where duty and corresponding rebate neutralize each other, confirmation of duty is not justified.

Conclusion: The demand, interest and penalty could not be sustained and the impugned order was set aside in favour of the assessee.

Final Conclusion: The appeal succeeded on the ground that the dispute was revenue neutral because any additional duty on the exported goods would have been recoverable as rebate.

Ratio Decidendi: Where enhanced duty on exported goods would be fully available as rebate, the matter is revenue neutral and a duty demand cannot be sustained.

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