2022 (1) TMI 315 - AT - Central Excise

Refund claim - deduction of net excise duty paid or total amount of duty paid, from the sale value of goods - deduction of freight outward from the sale Value - as per explanation given in Para 6 (5) of N/N. 1/2010-CE dared 6.2.2010, only excise duty, value Added Tax and other indirect taxes are required to be excluded - HELD THAT - In appellant s own case for earlier period in KANGARO INDUSTRIES LIMITED VERSUS CCE, JAMMU 2017 (11) TMI 90 - CESTAT CHANDIGARH , this Tribunal after considering the issue in detail held that when an amount of duty is refunded to the assessee, under N/N. 1/2002-CE, the same has to be deducted from the excise duty paid by the appellant while arriving at actual value addition - regarding deduction of outward freight it was held that It is settled law that in the context of Section 4(3)(C) when the goods are on FOR destination sales and the freight is paid by the seller and the goods are to be insured by the seller, then the seller cannot claim deduction of freight and insurance from sale price - also, in the balance sheet for 2011-2012, the freight outward is shown under selling and distribution expenses. Hence, the freight outward is includible in the sale value. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether net excise duty paid or total amount of duty paid should be deducted from the sale value of goods for fixing special rate under Notification No.1/2010-CE.
- Whether freight outward should be deducted from the sale value of goods as per Notification provisions.

Analysis:

1. Issue 1 - Excise Duty Deduction:
The appellant sought fixing of special rate under Notification No.1/2010-CE, which specifies the value addition for goods. The dispute arose on whether net excise duty paid or total duty paid should be deducted from the sale value. The Tribunal analyzed the notification's objective to determine actual value addition. It highlighted that the refunded excise duty, paid through PLA and refunded to the assessee, should not be deducted from the actual value addition. The Tribunal emphasized that the refunded amount is exempted, not an incentive or value addition. It also differentiated between excise duty and total duty paid, concluding that the terms are not identical. The Tribunal referred to Circulars and past cases to support its interpretation, ultimately holding that the refunded duty should not be deducted.

2. Issue 2 - Freight Outward Deduction:
Regarding the deduction of freight outward from the sale value, the Commissioner held that under Accounting Standard-9 and Central Excise Act, freight and insurance should not be included in the sale value if the point of sale is the factory gate. However, the Tribunal noted that the appellant's sales were on FOR destination basis, with evidence of freight payment and insurance by the appellant. It referred to relevant case laws and the balance sheet to support inclusion of freight outward in the sale value. The Tribunal distinguished a cited case where transportation charges were reimbursed by the buyer, finding the Commissioner's decision not sustainable. Consequently, the Tribunal set aside the Commissioner's decision on this issue as well.

In conclusion, the Tribunal set aside the impugned orders and allowed the appeals, aligning with its previous order for the appellant's earlier period. The judgment provides a detailed analysis of the issues related to excise duty deduction and freight outward deduction under Notification No.1/2010-CE, emphasizing the correct interpretation of the provisions and supporting its decision with legal reasoning and precedents.