2018 (9) TMI 1428 - AT - Central Excise

Refund of education cess and higher education cess - Area based exemption - N/N. 56/2002-CE dated 14.11.2002 - Held that - The procedure for return of goods and re-clearance was clearly cover by the provisions of Central Excise Rules, 2002, and the appellants followed the same. There is no allegation of violation of any provision of said Rule or above mentioned notification. In the absence of any contrary legal provision, the concession available under N/N. 56/2002 on payment of duty on the goods cleared by the appellants, cannot be denied. Valuation of the final products cleared by the appellants - inclusion of freight element for paying duty - place of removal - Held that - The appellant 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 should form part of the assessable value in such FOR sale - Hon ble Supreme Court in CCE, Nagpur vs. Ispat Industries Limited 2015 (10) TMI 613 - SUPREME COURT held that 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 . The impugned order records that the appellant has 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. Refund/self-credit - eligibility in terms of N/N. 19/2008-CE dated 27.03.2008 and 34/2008-CE dated 10.06.2008 - whether the appellants are entitled to claim refund/self-credit as restricted by these notifications or not? - Held that - The notifications in question have been examined by the Hon ble J & K High Court in the case of Reckit Benckiser vs. UOI 2010 (12) TMI 237 - JAMMU AND KASHMIR HIGH COURT , wherein the Hon ble High Court quashed the notifications in question. Therefore, in terms of N/N. 56/2002-CE dated 14.11.2002, the appellants are entitled to claim refund/ self-credit of duty paid through PLA - refund allowed. CENVAT Credit - Sales returns - Rule 16 of Central Excise Rules, 2002 - Held that - The appellant-assessee are entitled for concession as envisaged under Notification No. 56/2002. The appeals on this ground are allowed. Appeal disposed off.

Summary

Issues Involved:
1. Eligibility for refund of education cess and higher education cess.
2. Valuation of final products including outward freight element.
3. Eligibility for refund/self-credit under specific notifications.
4. Treatment of sales returns of finished goods for re-credit/refund.

Analysis:

Issue 1: Eligibility for refund of education cess and higher education cess:
The first issue revolved around the eligibility of the appellant for a refund of education cess and higher education cess paid on final products. The decision was based on the Hon'ble Supreme Court's ruling in a similar case. The court held that the appellant would be eligible for such refund when the excise duty itself is exempted from levy. Consequently, this dispute was decided in favor of the appellant.

Issue 2: Valuation of final products including outward freight element:
The second issue concerned the valuation of final products cleared by the appellant, specifically the inclusion of the outward freight element for duty payment and refund claims. The court analyzed the definition of "place of removal" under the Central Excise Act and referred to relevant Supreme Court decisions. It was concluded that the inclusion of freight element post-sale was unjustified, as the place of removal cannot be considered the buyer's premises. Therefore, the claim of the appellant in this regard was deemed unsustainable.

Issue 3: Eligibility for refund/self-credit under specific notifications:
The third issue involved determining the eligibility of the appellants for refund/self-credit under specific notifications. The court referred to a High Court judgment quashing the relevant notifications and upheld the appellants' entitlement to claim refund/self-credit based on a Tribunal decision. Thus, the appellants were allowed to claim refund/self-credit under the applicable notification.

Issue 4: Treatment of sales returns of finished goods for re-credit/refund:
The final issue addressed the treatment of sales returns of finished goods by the appellant. The Revenue objected to the re-credit/refund claimed for goods cleared a second time after being rejected by buyers. The court observed that the procedure for such returns and re-clearance was governed by the Central Excise Rules, and the appellant had followed the prescribed process. As there was no legal provision denying the concession under the relevant notification for re-clearance, the appellant's claim was upheld, and the appeal was allowed on this ground.

In conclusion, the appellant was eligible for refund/re-credit of education cess and higher education cess but not for the value attributable to outward freight. The restriction on refund/self-credit under specific notifications was not justified, and the appellant was entitled to the concession under Notification No. 56/2002 for sales returns of finished goods.