2018 (4) TMI 943 - AT - Central Excise

Refund claim - education/ higher education cess - appellant was enjoying area based exemption under N/N. 56/2002-CE dated 14/11/2002 - Held that - the assessee is eligible for such refund which is paid alongwith the excise duty once the excise duty itself was exempted - refund allowed. Valuation - inclusion of outward freight up to the place of delivery of their finished goods - Held that - the impugned order records that the appellant/assessee 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/assessee delivered at the buyers premises will not make the place of removal as buyers premises - 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. The appeal by the appellant/assessee regarding assessable value with inclusion of freight element are dismissed. Appeal allowed in part.

Summary

Issues:
1. Eligibility of the appellant/assessee for refund of education/higher education cess.
2. Valuation of excisable goods manufactured and cleared by the appellant/assessee.

Issue 1 - Eligibility for refund of education/higher education cess:
The appellant/assessee, located in Jammu and manufacturing excisable goods, was enjoying an area-based exemption under Notification 56/2002-CE. The dispute arose regarding the eligibility of the appellant/assessee for the refund of education/higher education cess paid on the final products cleared by them. The Revenue contended that such cess was not refundable as no specific exemption was provided for it. Both sides agreed that the issue was covered by a decision of the Hon'ble Supreme Court, which held that the assessee was eligible for a refund of such cess once the excise duty itself was exempted. Following the Supreme Court's decision, the appeals on this issue were decided in favor of the appellant/assessee.

Issue 2 - Valuation of excisable goods:
The second issue revolved around the valuation of excisable goods manufactured and cleared by the appellant/assessee. The appellant/assessee included the 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 and cleared at the factory gate, and the freight component should not be included in the transaction value. The impugned order referred to the statutory definition of "place of removal" under Section 4 of the Central Excise Act, which includes premises like a factory, warehouse, or consignment agent's premises. The Tribunal noted that the appellant/assessee failed to demonstrate that the goods were cleared from the factory gate to a place like a warehouse or consignment agent's premises before being sold. Relying on the Supreme Court's decision in a similar case, the Tribunal held that there was no justification for the appellant/assessee to consider the assessable value with the inclusion of the freight element after the goods were sold or removed from the factory. Consequently, the claim of the appellant/assessee regarding the inclusion of the freight element in the assessable value was deemed unsustainable, and the appeals were partly allowed with respect to this issue.

In conclusion, the Tribunal dismissed the Revenue's appeals contesting the eligibility of the appellant/assessee for the refund of education cess and also dismissed the appellant/assessee's appeal regarding the assessable value with the inclusion of the freight element. The judgment was delivered by the Appellate Tribunal CESTAT Chandigarh, with detailed analysis and references to relevant legal provisions and precedents.