1994 (8) TMI 52 - CGOVT - Central Excise

Interpretation of 'Value' in Tax Notification Upheld: Market Value Required

In RE: GTC. EXPORT LTD.

In RE: GTC. EXPORT LTD. - 1994 (74) E.L.T. 468 (G. O. I.) Issues Involved:1. Interpretation of the term 'value' in the context of Notification No. 197/62.2. Applicability of Section 4 of the Central Excises & Salt Act to the term 'value.'3. Validity of the amendment dated 14-10-1993 to Notification No. 197/62.4. Scope of the Collector's power under Rule 12 of the Central Excise Rules.5. Timeliness and procedural aspects of the review proposals.Issue-Wise Detailed Analysis:1. Interpretation of the Term 'Value':The core issue revolves around the interpretation of the term 'value' as appearing in proviso (vii) to Notification No. 197/62. The original proviso stated: 'the value of the goods at the time of exportation is, in the opinion of the Collector, not less than the amount of rebate claimed.' The amending Notification dated 14-10-1993 substituted 'local market price' for 'the value.' The Collector of Central Excise (Appeals) had differing interpretations in various orders, with some interpreting 'value' as the F.O.B. value and others as the market price or market value.2. Applicability of Section 4 of the Central Excises & Salt Act:The applicant Collector argued that the term 'value' should be interpreted as defined in Section 4 of the Central Excises & Salt Act. However, the Government's revisionary jurisdiction had previously adopted the definition of 'value' as given in Rule 97A of the Central Excise Rules, which defines it as the market value of the excisable goods and not the ex-duty value. This interpretation was upheld in the VST Industries case.3. Validity of the Amendment Dated 14-10-1993:The amendment dated 14-10-1993 was argued to be prospective. However, it was held that the amendment was clarificatory in nature, formalizing the pre-existing interpretation of 'value' as the market value. This was supported by prior decisions and the 1965 Board's Circular, which had not been superseded by the 1993 instructions.4. Scope of the Collector's Power Under Rule 12:The Collector has the power under Rule 12 to allow 'the whole or any part of the claim for such rebate even if all or any of the conditions laid down in any notification issued under this rule have not been complied with.' This power is not restricted by the conditions of a notification. Therefore, the Collector can allow part of the claim if the market value is less than the rebate claimed, as was done in the case of M/s. Toshniwal Exports.5. Timeliness and Procedural Aspects of the Review Proposals:The review proposals were challenged for being time-barred. The orders-in-appeal were received well before the review proposals were filed, indicating delays. The appellate orders had perhaps been originally accepted but were later reviewed based on the 1993 Board clarification, leading to procedural delays and objections from the respondents.Conclusion:1. The term 'value' in proviso (vii) to Notification No. 197/62, prior to the amendment dated 14-10-1993, should be interpreted as the market value, in line with the explanation to proviso (vi) under Rule 97A of the Central Excise Rules.2. The amendment dated 14-10-1993 is clarificatory and does not negate the earlier interpretation of 'value' as the market value.3. The order-in-appeal No. KVV-479/91, dated 31-12-1991, is upheld to the extent that the restriction of the claim to the 'value' of the goods at the time of export was correct, but the interpretation of 'value' as F.O.B. value is modified to mean market value.4. The Board's instructions dated 26-3-1993 are not binding on the Collector (Appeals) as they do not conform to the law.All orders-in-appeal are upheld with the modification that the interpretation of 'value' shall conform to the explanation under proviso (vi) of Rule 97A, and rebate claims shall be allowed accordingly.