2018 (12) TMI 5 - HC - Central Excise

Valuation - inclusion of cost of transportation and insurance charges for the purpose of valuation in assessable value - Section 4 of the Act read with Rule 5 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - place of removal - appellant was not heard in support of his claim - principles of natural justice. Held that - The place of removal of goods depends upon the facts of each case and conditions of sale. Once it is contended by the appellant that sale was subject to inspection to be done by the customers at their end and payment was to be made by the customers after receipt of material(s) and testing/final approval with a condition that if the materials were not found as per the ordered specification, same will be rejected and lifted back by the appellant at his own cost. Therefore, in such a situation, place of removal is at the place of buyer on the delivery of goods subject to the satisfaction of specification and testing. Keeping in view the reasons for non-appearance before the CESTAT on 12.03.2018 coupled with the stand of the appellant that the Commissioner (Appeals) which was the last court of appeal for reappreciating the factual aspect has not appreciated the factual aspect in its right perspective same was pertinently to be looked into by the CESTAT. In case the appellant would have been heard by the CESTAT, the factual position to determine the place of removal within the meaning of Section 4 of the Act would have been decided properly. The appellant has not been heard in support of his appeal by CESTAT and in the process, vital issue regarding appreciation of factual position as was projected by the appellant before the Commissioner (Appeals), has effectively remained to be looked into by the learned Tribunal (CESTAT). The matter is remitted back to the learned Tribunal (CESTAT) for deciding the appeal a fresh - appeal allowed by way of remand.

Summary

Issues:
Appeal against CESTAT orders - Restoration application dismissed - Excess refund due to inclusion of transportation and insurance costs in valuation - Determination of place of removal for valuation - Appellant's absence during CESTAT hearing - Legal principles regarding inclusion of transportation and insurance charges in assessable value - Appellant's right to reasonable opportunity for hearing.

Analysis:
The appeal was directed against CESTAT orders dismissing the appellant's appeal on merits and rejecting the restoration application. The appellant, engaged in manufacturing and sales, availed exemption under the Central Excise Act but included transportation and insurance charges in valuation, resulting in an excess refund. The Adjudicating Authority confirmed a demand for duty and interest. The appellant's appeal before the Commissioner (Appeals) and CESTAT were both dismissed.

The appellant contended that transportation and insurance charges were included in the assessable value based on the place of removal being at the buyer's premises upon delivery. Legal precedents emphasized that the place of removal depends on the facts of each case. The appellant argued that the Commissioner (Appeals) misappreciated this aspect, which was not properly addressed by CESTAT due to the appellant's absence during the hearing.

The appellant's absence during the CESTAT hearing raised concerns about the denial of a reasonable opportunity. The court acknowledged the appellant's claim of receiving the notice late and the difficulty in arranging for proper representation. Considering the legal principle that the place of removal depends on the factual circumstances, the court held that the appellant was not heard effectively, and the factual issues remained unaddressed.

The court allowed the appeal, setting aside the CESTAT orders and remitting the matter back for a fresh decision. The judgment highlighted the appellant's right to a fair hearing and the importance of considering all factual aspects, particularly regarding the determination of the place of removal for valuation purposes. The decision emphasized the need for a reasonable opportunity for parties to present their case effectively before the tribunal.