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CX - Rule 19 & Notifn 42/2001-CE nowhere lay down any condition of payment of foreign remittance against export of goods: CESTAT

By TIOL News Service

MUMBAI, AUG 03, 2017: THE appellant exported goods under bond in terms of Rule 19 read with Notification No. 42/2001-CE(NT) .

Out of the total exports, certain quantity was found defective and rejected by the foreign buyer. In respect of such rejected quantity, the foreign buyer has not remitted the foreign exchange to the appellant.

The contention of the department is that since the foreign remittance against the export of goods has not been received, excise duty is chargeable on the said goods.

In appeal before the CESTAT, the appellant contended that receipt of foreign exchange is not the requirement to fulfill the export of goods; that the goods have been admittedly exported out of India and proof of export has been submitted; that, therefore, even though certain quantities were rejected at the buyer's place, no excise duty can be demanded. Reliance is placed on the decision in Shyam Telecom Ltd. - 2014-TIOL-3223-CESTAT-DEL.

The AR reiterated the findings of the impugned order.

The Bench observed -

"4. … From the admitted fact of the case the goods cleared for export have been exported out of India and the proof of export has been submitted to the department. The demand of duty was confirmed and upheld by the Commissioner (Appeals) only on the ground that against certain rejected quantity at the end of the foreign buyer, the payment in foreign exchange was not received by the appellant. The export under bond is governed by Rule 19 of Central Excise Rules, 2002 and Notification no. 42/2001-CE(NT) issued there under. On going through the said Rule and notification I nowhere find that there is any condition of payment of foreign remittance against the export of goods. Both the lower authority also pointed out that the rejected goods was neither received back by the appellant nor destroyed, for this reason also the appellant is required to pay the duty. In this regard I am of the view that once the goods have been exported even though the goods were rejected by the buyer side, duty cannot be demanded as there is no condition provided under the law that once the goods is exported and if it is rejected the same should be brought back by the assessee or should be destroyed…."

Noting that the decision in Shyam Telecom Ltd. (supra) has been aptly relied by the appellant, the demand was held to be unsustainable.

Setting aside the impugned order, the appeal was allowed.

(See 2017-TIOL-2744-CESTAT-MUM)


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