Are the officials required to
facilitate orderly conduct of trade as per the laid down rules or regulations
or behave as overzealous revenue officials & become stumbling blocks. If
this happens rampantly & brought to the notice of the CBEC but then no
action is taken then what is the use of such a maim authority, who are not able
to right the wrongs even. This is the series on rebate on exports & it
shows that how the system is manipulated to get away with the wrongs. Some
actions are that of outright cheating. Here in this case, we detail the case of
export of physicians samples on which the rebate is being denied.
Please note that there are two
substantive conditions for the rebate to be sanctioned. 1. Duty payment &
2. Export. Once these two conditions are satisfied, the rebate cannot be denied.
Here in the case of the export of samples both the conditions are satisfied
therefore there is no reason to withhold the rebate claim. It is preposterous
to say that market value of the free samples is zero because the goods are
supplied free of cost because if the market value of the goods is zero then no
duty can be paid on the said goods. The authorities need to understand that you
cannot pay duty on zero market/assessable/transaction value. Further it is
pertinent to point out that that the Excise duty is a levy on manufacture or
production of goods, payable on manufacture whether or not goods are
sold/exported. If the duty paid goods are exported then the exporter is
entitled to rebate of duty as per the law. The provisions of the law are
unambiguous.
Please note that samples, which are
removed from the factory are subject to the payment of duty on the assessable
value. There is no dispute about that. This is a settled issue-case law 2011
(263) E.L.T. 641 (S.C.) in case of MEDLEY PHARMACEUTICALS LTD. Versus COMMR. OF
C. EX., & CUS., DAMAN wherein it is settled by the Apex court that duty is
payable in respect of the samples removed free of cost from the manufacturing
facility. Once the duty is payable on the samples, the rebate thereof cannot be
denied in respect of the exports as there is no provision in the law , which
says that rebate is dependent on the export proceeds. If there is any such
provision in the law then the same needs to be specifically pointed.
Please note that Notification No.
19/2004-C.E. (N.T.), dated 6-9-2004 specifically states that the market price
of the excisable goods at the time of exportation is not less than the amount
of rebate of duty claimed. This condition is satisfied because the duty is paid
on the assessable value in terms of the law at the time of the removal of
goods. We are seeking only the rebate of the duty element, which is a specific
percent of the assessable value of the goods. Further, please note that market
price of the goods is more than the rebate amount because market price not only
represents the assessable value of the goods but includes the applicable taxes &
duties. Therefore, under any circumstances, the rebate cannot be denied. Please note that the officials ought
to be well aware of the procedures followed by the exporters at the time of the
removal of the goods for exports. The exporter produces before the jurisdictional
Excise authority the export contract, the invoice, ARE-1 etc. These documents
are examined & then the triplicate is authenticated by the range officer
concerned. This authentication is an assessment order in itself. The
jurisdictional authority is validating the data given in the ARE-1 & the
related documents made available by the exporter. It cannot be the case of the
department that the authentication of the ARE-1 is simply a ritual of no value
& that procedure is introduced by the CBEC to introduce rent seeking in the
export shipments.
Please note that if the goods were
removed under the bond procedure for the purpose of export then the duty would
not be payable on the free samples. Thus the principle of export promotion i.e.
taxes & duties cannot be exported is upheld. The same applies in the case
of rebate i.e. the duty paid is rebated to the exporter to relieve the
incidence of taxes & duties on exports. Therefore, the rebate is in order
& needs to be paid in respect of the samples.
Please note the irony of the fate of
the exporters at the hands of the Excise officials i.e. they would like to
collect duty on the samples but not rebate the same even if the goods are
exported. The law is not in their favour therefore the abuse of authority is
resorted to. They remember to only collect the duty & misappropriate it.
This is the eleventh part of the story. However,
the story of the abuse of authority does not end here. Further lampooning of
the system & abuse by the authorities will follow in the next write up.
Till then Good bye.
rajiv.pec@gmail.com
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