2018 (3) TMI 409 - AT - Central Excise

Refund of education/ higher education cess - Revenue entertained a view that such cess is not refundable as no exemption is provided for the same - appellant enjoyed area based exemption under N/N. 56/2002-CE dated 14/11/2002 - Held that - reliance placed in the case of M/s. SRD Nutrients Private Limited Versus Commissioner of Central Excise Guwahati 2017 (11) TMI 655 - SUPREME COURT OF INDIA , where it was held that appellants were entitled to refund of Education Cess and Higher Education Cess which was paid along with excise duty once the excise duty itself was exempted from levy - decided in favor of appellant. Valuation of excisable goods - outward freight up to the place of delivery of their finished goods - includibility - Held that - the appellant have not produced anything on record which would show that they had cleared the goods from the factory gate to a warehouse, any other premises, a depot, consignment agents premises etc. from where such excisable goods were sold. Admittedly, the goods sold by the appellant delivered at the buyers premises will not make the place of removal as buyers premises - there is no justification for the appellant to consider the assessable value with inclusion of freight element after the goods were sold/removed from the factory - decided against appellant. Appeal allowed in part.

Issues:
1. Eligibility of the appellant for refund of education/higher education cess paid on final products.
2. Valuation of excisable goods manufactured and cleared by the appellant, specifically regarding inclusion of freight in transaction value.

Analysis:

Issue 1:
The first issue pertains to the eligibility of the appellant for a refund of education cess paid on final products. The dispute arose as the Revenue contended that such cess is not refundable due to the absence of specific exemption. However, both parties agreed that the issue was settled by the Hon'ble Supreme Court in a previous case. Following the Supreme Court's decision, it was established that the appellant is entitled to a refund of the education cess paid along with excise duty once the excise duty itself was exempted. Consequently, all appeals related to this issue were decided in favor of the appellant based on the Supreme Court's ruling.

Issue 2:
The second issue concerns the valuation of excisable goods manufactured and cleared by the appellant, focusing on whether the freight component should be included in the transaction value. The appellant considered the transaction value inclusive of outward freight up to the place of delivery, while the Revenue argued that the goods were sold at the factory gate, and the freight component should not be included. The Revenue's stance led to the denial of refunds under Notification 56/2002-CE. Upon review, it was noted that the statutory definition of the place of removal under the Central Excise Act indicated that the factory, warehouse, or premises of a consignment agent could be considered as the place of removal. The appellant claimed that goods were sold on a Free on Rail (FOR) basis, making the delivery point the place of removal. However, the Apex Court's decision in a previous case clarified that the buyer's premises cannot be the place of removal for valuation purposes. Since the appellant failed to demonstrate clearance of goods from the factory gate to a designated place of sale, inclusion of the freight element in the assessable value post-sale was deemed unjustified. Consequently, the appellant's claim regarding the inclusion of the freight element in the assessable value was dismissed, leading to the denial of refunds under Notification 56/2002-CE.

In conclusion, the appeal regarding the eligibility of the appellant for a refund of education cess was allowed, while the appeal concerning the inclusion of the freight element in the assessable value was dismissed based on the detailed analysis and legal precedents discussed in the judgment.

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