2017 (3) TMI 597 - AT - Central Excise

Refund claim - duty paid on freight charges on transport of goods from factory to the depot for the period January 2007 to December 2007 - Held that - in case of goods sold from depot, the sale price prevailing at depot has to be considered for the purpose of valuation of goods cleared from the factory. Therefore, the price at which the appellant have paid the duty from depot is not sale price for the purpose of charging excise duty. Whether there is excess payment of duty or otherwise that can be worked out by taking into consideration the value at which duty was paid at the time of clearance and the sale value which was charged to the customer from the depot. Neither the appellant has carried out such exercise nor has the department given any light to such vital fact, for this purpose the matter is remanded to the original authority for passing a fresh order on the refund of the appellant - appeal allowed by way of remand.

Summary

Issues involved:
Refund claim rejection, Penalty under Section 11AC, Imposition of penalty, Excess duty payment on freight charges, Applicability of Section 11AC in refund cases.

Refund claim rejection:
The appellant filed a refund claim for duty paid on freight charges for transporting goods from factory to depot. Initially, they took credit but later reversed it. The adjudicating authority rejected the refund claim and imposed a penalty under Section 11AC. The Commissioner (Appeals) upheld the decision. The appellant contended that the excess duty paid on separately mentioned freight in the invoice is refundable. The Tribunal found that the actual working to determine excess payment needs to be carried out and remanded the matter to the original authority for a fresh order on the refund.

Penalty under Section 11AC:
The appellant argued that penalty under Section 11AC should not be imposed as it is not applicable in cases of refund. The Tribunal agreed, stating that Section 11AC pertains to short paid, non-paid duty, or erroneously refunded amounts, none of which applied in this case. Both lower authorities were criticized for not applying common sense in imposing the penalty under Section 11AC. The Tribunal set aside the penalty imposed under Section 11AC by the original authority and upheld by the Commissioner (Appeals).

Excess duty payment on freight charges:
The appellant claimed that duty was paid on freight separately mentioned in the invoice, which was already included in the cost basis. The Tribunal noted that the duty paid on the value from depot clearance should consider the sale price prevailing at the depot for the purpose of excise duty valuation. It emphasized the need for a detailed working to determine any excess payment of duty, considering the value at clearance and the sale value to the customer. The matter was remanded for a fresh order based on this evaluation.

Applicability of Section 11AC in refund cases:
The Tribunal clarified that Section 11AC can be invoked for recovery of short paid or non-paid duty, or erroneously refunded amounts. Since the present case did not fall under these categories, the penalty under Section 11AC was deemed inapplicable. Both lower authorities were criticized for not applying common sense in imposing the penalty under Section 11AC. The Tribunal set aside the penalty and allowed the appeal by remanding the matter for further evaluation.