What is the value for sanctioning rebate claims? Dilemma continues unabated
Rebate is a dreaded word for many Commissionerates. In a performance appraisal system driven more by achieving the targets for revenue, this area of refunding money to the exporter gives sleepless nights for many officers as it eats up the revenue targets. So, all possible provisions will be explored to curtail the cash rebates. The value to be adopted for payment of excise duty for export goods is a major area where a lot of confusion prevails which affects the quantum of rebate to be sanctioned.
Prior to the introduction of the new Section 4, and the transaction value, when the value was normal price, Board had issued a Circular No 209/21/1985-CX6 dated April 10, 1986 stating that representations have been received from the trade requesting for acceptance of FOB value as assessable value for export consignments. The good Board had accepted the request decided that the FOB value would be accepted as assessable value for exports under Bond and under claim of rebate.
After nearly 10 years, the same doubts have arisen in respect of value of export goods for Central Excise purposes. This time the Board had done a somersault and directed that the FOB value is relevant only customs schemes like DEEC etc, but, for Central Excise, the value should be determined under Section 4 of the Central Excise Act. Board has reiterated the above directions in Circular 510/06/2000-CX, Dated : February 3, 2000
Interestingly, after the introduction of the transaction value under new Section 4 from 1.7.2000, no fresh instructions have been issued and now what is the value for sanctioning rebate is a big question with apparently no answer. If section 4 value is relevant for export, then with effect from 1.7.2000, different transaction values are accepted for different buyers and the transaction value, i.e. the amount paid by the importer would be relevant for arriving at the value for paying duty and subsequent rebate.
But, as the department Circulars are b(l)inding on the officers, it seems even after 1.7.2000, the value for export goods is determined under Section 4 of the CE Act under Circular dated 3rd Feb 2007. When asked how the value is determined under Section 4 as there can be different transactions for different buyers, a shrewd officer replied "normally we take different transaction values and even the FOB value and adopt the lowest value" for rebate.
Even in the era of normal price, the FOB value was upheld by the CESTAT as normal price for the exports consignment as the export orders were under a separate contract and clearances of goods made for exports stand on different class of buyers. Please see 2004-TIOL-725-CESTAT-BANG
It is high time the Board clarified what is determination of Section 4 value for exports even after 1.7.2000.