TaxTMI 
TaxTMI 
2014 (12) TMI 948
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....ity found that the invoice value declared in shipping bill No.1157499/03/08/2012 dated 31.08.2012 was., Rs. 6,46,71,000.35 or US 1175836.37 and FOB value of goods was Rs. 5,35,83,937.00 or US $ 9,74,253.3818. The amount of freight was US$ 2,01,582.97 and the commission given was US .$ 34,267.18 in respect of goods exported and he found that the conversion rate from US$ to Rupees was declared as Rs. 55.00/ US$ The adjudicating authority discussed that FOB value at that time of export should come out afte deduction of Freight/Insurance/Commission etc. from invoice value. The adjudicating authority found that FOB value should be US$ 11,75,836.37- (US$ 2,01,582.97 + US$ 34,267.18) = US$ 9,39,986.22 and in INR after conversion it comes to Rs. 5,16,99,242.10 which he found not matching with the FOB value that should have been derived from declared invoice value that is the actual transaction value. Further, the invoice No.75020550 dated 02.05.2012 as mentioned in the shipping Bill was not appended with the rebate claim. He further found that there were discrepancies in the declared gross weight and net weight in there ARE-1s. He further found that the appellant did not file Bank realizat....
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....bsp; In respect of Order-in-Original No.CE/KDH-I/DC-09(R)/12-13 the invoice value as declared by the claimant in the Shipping Bill bearing No.1 157499/03/08/2012 dated 31.08.12 was Rs. 64671000.35 or $117836.37 and FOB value was Rs. 53583937/- or $974253.38. The amount paid for Freight was $201582.97 and Commission given was $34267.18 in respect of the material export according the above mentioned Shipping Bill and conversion rate from $ to Rupees was declared at Rs. 55/- per $. FOB value at the time of export should come out after, deduction of Freight/Insurance/Commission etc. from the Invoice value. Accordingly to arrive at the FOB value, Freight(Insurance/Commission etc. are required to be excluded from the Invoice value as declared in the Shipping Bill. In this respect FOB value should )be $1175836.37 -($201582.97 + $34267.18) $939986.22. In INR it comes to Rs:51699242.10. But on scrutiny it was seen that the declared FOB value was in $974253.38 or in INR Rs. 53583937/- which does not match with FOB that should have been derived from the declared Invoice value that was the actual Transaction value. Moreover, the Invoice No.75020550 dated 02.05.12 as mentioned in th....
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.... from which the actual transaction value could have been ascertained and thereby the actual rebate they are entitled to, could be determined. 4.5 The Appellate Authority remains silent regarding the point mentioned' in the Order-in-Original No.CE/KDH-I/DC-10(R)/12-13 that the claimant had declared the goods were manufactured after availing the CENVAT credit facility and exported under claim of rebate whereas in the ARE-1 No.805 dated 04.08.12, 8 Boxes of lubricant and rubber gasket were exported without declaring the assessable value. 5. A show cause notice was issued to the respondent under Section 35 EE of Central Excise Act 1944 to file their counter reply. The respondents vide their written submission dated 26.2.2014 mainly stated as under: 5.1. At the outset ,we would like to submit that export contracts under which the goods were supplied vide the two shipping bills were on CFR basis Le. inclusive of freight. Since the place of, removal in case of export is considered as the port of export, we had reduced the freight component from the CFR prices to arrive at the FOB value/assessable value on which excise duty was discharged and duly reflected the same in the respectiv....
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....egard, we would like to submit that the said Rule 5 only seeks to exclude the cost of transportation in case of goods sold for delivery at a place other than the place of removal. In the instant case, it is an undisputed position that the FOB value for the purposes of payment of excise duty was arrived at after deducting freight from the invoice price. There is nothing what so ever in the said Rule 5 to suggest exclusion of commission in arriving at the transaction value for the purposes of payment of excise duty, On the contrary, the definition of 'transaction value' as contained in Section 4(3)(d) of the Central Excise Act specifically includes "commission" paid or payable by reason-of or in connection with sale. Therefore, the company is at a complete loss to appreciate as to how there is any violation of Rule 5 of the Central Excise Valuation Rules as alleged or at all by reason of the appellate authority sanctioning the rebate claims of the company. 5.3 Without prejudice to the submissions made herein above and in the alternative, we would like to submit that even if the revisional authority holds that commission should have been excluded in arriving at the FOB value of e....
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....agreement with the shipping bills can be verified from a bare look of the ARE-1 wise quantity duly set out at para 1.2 above vis-a-vis the two shipping bills enclosed with this reply. In addition to the number of pieces we had also mentioned the net weight/lined/gross weight of the loose pipes owing to the mandatory format of the ARE-1s. The allegation had been that since the pipes were cleared in loose conditions the question of any gross weight did not arise and to that extent there was a misstatement. In this regard, we would like to submit that we had conspicuously stated before the appellate authority that the net weight wherever stated in the ARE-1 referred to the metal weight of the pipes exported, whereas the lined weight/gross weight was the aggregate of the metal weight and the cement motor lining weight of the pipes. Therefore, there was no mis-statement in the net weight and the gross weight as alleged or at all. It was also brought to the notice of the appellate authority that the 1575 pcs. of pipes reflected in the ARE-1s were duly exported under Shipping Bill No.1157499 & 1142621 and that when all clearance for export were under physical supervision of the officers o....
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.... instant allegation can have any bearing on the merits of the rebate claim which, was correctly allowed by the appellate authority. 6. Personal hearing was scheduled in this case on 28.3.2014 & 25.11.2014. Hearing held on 28.3.14 was attended by Shri T.M. larttong, Assistant Commissioner and Shri R.K.Das, Superintendent on behalf of the applicant department who reiterated the grounds of revision application. Shri Arvind Baheti, Sr. Associates of Khaitan & Co. and Shri Subir Kr. Chakraborty, Asstt. Manager of respondent company attended hearing on behalf of the respondents and reiterated submission made vide written reply dated 26.2.14. Nobody attended personal hearing on 25.11.2014. 7. Government has carefully gone through the relevant case records/available in case files, oral & written submissions and. perused the impugned order-in-original and order-in-appeal. 8. Government observes that the rebate claims were rejected on the ground that the FOB value should be arrived after deducting freight/insurance/commission; that the applicant failed to produce Bank realization certificates in the impugned cases and also that there were ambiguity, in net/gross weight. Commissioner (Appe....
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....he above provision it can be inferred that commission paid is required to be included in transaction value. Hence, Government finds ford in plea of the applicant that commission needs to be included in FOB value for discharging-day liability. 9.3. Government further notes that Commissioner (Appeals) has :also discussed Circular No.51(RE-2008)2004-09 dated 6.1.2009 of DGDT and observed: as under: "For the FOB value of 5hipping Bills I have carefully gone through the records. In the invoice No. 75020880 dated 02.08.2012 the amount is written as US$11,75,836.32. I find that the lower authority has pointed out that FOB value at that time of export should come out after deduction of Freight insurance/ commission etc. from invoice value. In respect of this discussion I find that there is clarification issued from DEFT vide Policy( Circular (RE 2008)2004-09 dated 06.01.2009 on the subject of FOB value of export for scheme under Chapter 3 of F7P wherein it has been clarified after examination by Ministry of Commerce that "under the various incentive scheme under Chapter 3 of FTP 2004-09, the computation of ent....
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....epartraeatis C rary to legal position and hence not tenable. 9.5 In view of above, Government observes that there are specific provision in Section 4(3)(d) of the Central Excise Act 1944 and there is logical inference from DGFT's Policy Circular No.51(RE-2008)2004-09 dated 6.1.2009 regarding inclusion of commission in transaction value. As such Government finds no infirmity in finding of Commissioner (Appeals) that rebate is admissible on FOB value (which is arrived at by including commission and excluding freight) in absence of any substantive counter argument of applicant department. Accordingly, the rebate is admissible on such transaction value. 10. Government finds that the aspect of submission of BRCs has been discussed in details by the appellate authority and Government finds no infirmity in that. As such,the department's contention is not tenable in this aspect also. 11. The original authority has also pointed out ambiguities in quantities, net and gross weight and stated that if the impugned commodity i.e. pipes are cleared in loose condition, no question of gross weight arises. In this regard, the applicant stated that net weight wherever stated in the ARE-1 r....