Proportionate duty on freight and insurance

[Guest]

We export our FG on payment of duty under rebate claim procediue u/r 18 of CER, 2002..We pay duty as per Sec 4 of the CEA,1944. & no abatement on account of freight & insurance is being claimed to arrive at ASV. Excise dept while sanctioning rebate claim wants us to give freight & insurance figures incurred on export consignment by assuming it as post factory expenses. We are of the view that, for export goods, place of removal is port and not factory gate as understood by the dept. Please let me know whether dept's view is legally sustainable? Also pl let me know if any case law/board circular stating that proportionate duty on freight & insurance is not to be deducted while sanctioning claim. Request the learned readers to share their wisdom.

[Surender Gupta]

For the purpose of excise, the place of removal is factory gate only. Your understanding that the place of removal is port is correct in the context of export procedure. But, you query is not clear whether you pay excise duty inclusive of freight and insurance. Once you pay excise duty on the inclusive value, department is wrong to deny the rebate claim of the same.

AI Summary

Place of removal impacts rebate: factory gate treatment means duty inclusive of freight and insurance cannot be disallowed from rebate. For excise law the place of removal is the factory gate while export procedure may treat the port as removal. The department sought to treat freight and insurance as post factory expenses and adjust proportionate duty when granting rebate. If excise duty was paid on a value inclusive of freight and insurance, denial of rebate on that ground is not sustainable.