FEBRUARY 17, 2016

By Pradeep Jain, CA & Neetu Sukhwani, CA

1. SANCTION of rebate claim by way of re-credit:- It is common practice followed by the revenue authorities that rebate claim filed by exporters is allowed in cash only for duty paid on transaction value at factory gate and does not sanction cash refund on part of duty which amounts to the difference between FOB value and ex-factory gate. However, for all purposes including cenvat credit availment, port of export is considered as place of removal. The argument for granting rebate claim in cash for duty paid at factory gate is that as per chapter 8 of the CBEC Manual of Supplementary Instructions, it is clarified that the goods meant for export shall be assessed to duty in the same manner as the goods for home consumption and the value shall be the 'transaction value'. However, vide Board's Circular no. 687/3/2003-CX., dated 3-1-2003 it is clarified that there is no discretion with the sanctioning authority to give the refund of the duty paid on goods exported through credit accounts and refund should be granted in cash. However, field formations turn a blind eye towards the same. In the fitness of things, a suitable amendment by way of insertion of Explanation in the rebate rule would be welcome.

2. Credit reversal demands on shifting from normal to compounded levy scheme:- The assessees operating under special procedure for payment of duty under notification no. 17/2007-CE dated 01.03.2007 have been issued demands for cenvat credit reversal on inputs contained in semi-finished goods, stock of inputs as on date of conversion from normal cenvat credit scheme to compounded levy scheme. However, it is worth noting that there is restriction on availment of cenvat credit under compounded levy notification whereas there is no specific provision as regards credit reversal in the notification. Moreover, credit reversal on stock of goods should be demanded when assessee opts for exemption but in this case, only mode of payment is being changed. In this regard, it is to be noted that credit earned validly cannot be recovered from assessee. The Tribunal's have taken such a stand. Therefore, a Board Circular to settle the issue would be appreciated.

3. Not interested in granting interest for delayed sanction of refunds:- Inspite of clear provision in section 11BB of the Central Excise Act, 1944, the revenue authorities are reluctant to grant interest on delayed sanction of refunds. This inspite of the Supreme Court decision in RANBAXY LABORATORIES LTD. VS UNION OF INDIA - 2011-TIOL-105-SC-CX. No assessee is interested in getting into litigation on this count for they have already spent a lot of time and money in the initial round of litigation to get a favourable order and is more often than not cajoled to forgo the same.