The exporters in the country have urged the department of revenue, ministry of finance to grant the rebate claim based on actual duty paid on the value declared in application for removal of excisable goods for export (ARE)-1, so that it can overcome some of the avoidable litigation and reduce the hardships faced by the taxpayers.

At present the department is granting a rebate on the freight on board (FOB) value declared on the shipping bill and not on the basis of actual duty paid on the value disclosed in the ARE-1 form.

The exporters are entitled to rebate of duty paid at the time of removal of goods for export on the transaction, assessable value. For proper administration, the triplicate copy of the ARE-1 is authenticated by the relevant excise official for correct duty payment in terms of the duties and responsibilities of the excise official.

However, the difference between the ARE-1 value and the FOB value of exports is freight and insurance and the duty is not payable on freight and insurance in spite of the fact that authentication of the ARE-1 stands completed and freight and insurance are part of the transaction value if not shown separately in the invoice as per the legal provision.

Indian Drug Manufacturers' Association (IDMA) had a meeting with Ram Tirath, member (Budget), department of revenue, ministry of finance to discuss the issues faced by the industry and potential suggestions to mitigate the said issues. Recently the association had also submitted their representation to the department.

The taxpayer pays duty on assessable value being the composite consideration inclusive of freight and insurance which is noncompliance with the law and therefore, while processing the rebate claim, the assessing authority should not adopt any other value as 'assessable value' and the rebate claim should be allowed in full based on actual duty paid on the value declared in ARE-1 form, said IDMA.

Further, they also demand that the rebate claim on duty paid free goods issued as bonus quantity should also be allowed by the department.

The association has requested that an appropriate clarification by the department on the issue will help avoid substantial amount of litigation and thereby avoid hardship caused to the taxpayer.