2017 (1) TMI 1123 - AT - Central Excise

Refund claim - excise duty paid on the freight element for transportation of transformers along with interest - whether the appellant are eligible for refund or not? - Held that - the appellant had two distinct contracts, one for sale of goods and other one for transport of said goods. The sale is at the factory gate - the appellant is not liable to pay Central Excise duty on such freight. When the refund is eligible for the said amount, we note that interest paid on said duty have to be refunded. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Payment of excise duty on the freight element for transportation of transformers; eligibility of refund of duty and interest.

Analysis:
The appeals before the Appellate Tribunal CESTAT NEW DELHI involved a dispute regarding the payment of excise duty on the freight element for the transportation of transformers. The appellants, engaged in the manufacture and sale of transformers, initially paid duty on freight charges along with interest. Subsequently, they claimed a refund of both duty and interest. The Original Authority sanctioned the refund of duty but rejected the interest on such duty, leading to a revenue appeal. The Commissioner (Appeals) held that neither the refund of duty nor interest was eligible for the appellant, attributing the differential amount collected by the appellant from clients to the assessable value.

During the proceedings, the appellant's counsel argued that the refund claim was based on two separate contracts with clients: one for the sale of transformers and the other for their transportation. The amount in question for the refund was specifically related to the freight contract, as acknowledged by the Original Authority. The counsel contended that the appellate authority's findings lacked a legal basis and contradicted the recorded evidence. It was emphasized that if the refund of duty was rightfully allowed, the interest paid on such duty should also be refunded, citing the decision in CCE, Delhi-III vs. Northern Minerals Ltd.

After hearing both sides and examining the records, the Tribunal noted that the appellant had distinct contracts for the sale and transport of goods, with the sale occurring at the factory gate. The Tribunal found the Original Authority's analysis and findings to be legally sound, concluding that the appellant was not obligated to pay Central Excise duty on the freight. Therefore, the Tribunal held that if the refund was applicable to the amount in question, the interest paid on the duty should also be refunded. The Tribunal referenced the decision of the Hon'ble P & H High Court in Northern Minerals Ltd to support this conclusion.

In light of the above discussion, the Tribunal deemed the impugned order unsustainable and consequently set it aside, allowing the appeals with consequential relief. The order was dictated and pronounced in open court by the Tribunal.