2018 (3) TMI 1803 - AT - Central Excise

Refund of education/ higher education cess - area based exemption under N/N. 56/2002-C.E., dated 14-11-2002 availed - Revenue entertained a view that such cess is not refundable as no exemption is provided for the same - HELD THAT -The issue stands covered by the decision of Hon ble Supreme Court in SRD Nutrients Pvt. Ltd. v. CCE, Guwahati 2017 (11) TMI 655 - SUPREME COURT . As such, following the ratio of the Hon ble Supreme Court who held that the assessee is eligible for such refund which is paid along with the excise duty once the excise duty itself was exempted. Valuation - inclusion of freight component in the transaction value - N/N. 56/2002-C.E., dated 14-11-2002 - HELD THAT - In the present case the appellant/assessee is claiming that the goods were sold on FOR basis and as such the place of removal is the delivery point to the buyer. The freight element incurred by the appellant/assessee should form part of the assessable value in such FOR sale. Hon ble Supreme Court in CCE, Nagpur v. Ispat Industries Ltd. 2015 (10) TMI 613 - SUPREME COURT . In the said decision the Apex Court held under no circumstances can the buyer s premises, therefore, be the place of removal for the purpose of Section 4 on the facts of the present case. Following the ratio of the Apex Court in Ispat Industries Ltd., it is held that there is no justification for the appellant/assessee to consider the assessable value with Inclusion of freight element after the goods were sold/removed from the factory. As such, the question of paying duty on such value addition to be covered by the exemption under N/N. 56/2002-C.E. does not arise. The appeals filed by the assessee-appellants contesting the eligibility for refund of education cess are allowed and the appeals regarding assessable value with inclusion of freight element are dismissed - Appeal allowed in part.

Summary

Issues:
1. Eligibility for refund of education cess paid on final products.
2. Valuation of excisable goods and inclusion of freight in transaction value.

Analysis:
1. Eligibility for refund of education cess: The appellant, located in Jammu and manufacturing excisable goods, sought exemption under Notification No. 56/2002-C.E. The first issue was regarding the eligibility for a refund of education cess paid by the appellant on final products. The Revenue contended that the cess was not refundable. However, both sides agreed that the issue was settled by the Supreme Court's decision in SRD Nutrients Pvt. Ltd. v. CCE, Guwahati. The Tribunal followed the Supreme Court's ruling, stating that the appellant was eligible for the refund of education cess paid along with excise duty once the duty itself was exempted. Therefore, the appeals on this issue were decided in favor of the appellant.

2. Valuation of excisable goods and inclusion of freight: The second issue revolved around the valuation of excisable goods manufactured and cleared by the appellant. The appellant included outward freight in the transaction value of their final products, claiming that the goods were sold on a Free on Rail (FOR) basis, making the delivery point to the buyer the place of removal. However, the Revenue argued that the goods were sold at the factory gate, and freight should not be included in the transaction value. The Tribunal examined the statutory definition of "place of removal" under the Central Excise Act, noting that the buyer's premises could not be considered the place of removal. Citing the Supreme Court's decision in CCE, Nagpur v. Ispat Industries Ltd., the Tribunal held that the assessable value should not include the freight element after the goods were sold or removed from the factory. Consequently, the appellant's claim for inclusion of freight in the assessable value was deemed unsustainable, and the appeals on this issue were dismissed.

In conclusion, the Tribunal allowed the appeals filed by the assessee-appellants concerning the eligibility for a refund of education cess but dismissed the appeals related to the inclusion of freight in the assessable value of excisable goods.