2024 (5) TMI 989 - AT - Central Excise

Rejection of refund claim - refund of duty paid on outward freight charges - no requirement to pay duty on the transportation charges, as the appellant was clearing goods from their factory gate - goods are sold on FOR basis - difference of opinion - majority order - HELD THAT - Following the ratios of the law laid down by the Larger Bench of the Tribunal in the case of M/s The Ramco Cements Limited 2020 (6) TMI 794 - CESTAT CHENNAI and the decision of Hon ble High Court of Himachal Pradesh in the case of M/s Inox Air Products Pvt Ltd 2024 (4) TMI 32 - HIMACHAL PRADESH HIGH COURT , it is opined that the impugned orders denying the refund of the excise duty paid by the appellant on transportation of the goods up to the buyer s premises are not sustainable in law and hence, the same is set aside by allowing all the appeals of the appellant with consequential relief, if any, as per law. When the sale is on a FOR basis and the outward freight charges are included in the assessable value, the appellant is entitled to claim a refund of the central excise duty paid on the freight. Appeal allowed.

Summary

Issues Involved:
1. Entitlement to refund of duty paid on outward transportation charges under Notification No. 56/2002-CE.
2. Determination of the place of removal and inclusion of outward freight in the assessable value.

Summary:

Issue 1: Entitlement to Refund of Duty Paid on Outward Transportation Charges:
The appellant, located in Jammu and Kashmir, manufacturing Lead Ingots and Lead Oxide, claimed a refund of duty paid on outward transportation charges under Notification No. 56/2002-CE. The revenue argued that since the goods were cleared from the factory gate, the appellant was not required to pay duty on transportation charges and thus not entitled to a refund. The appellant contended that the sales were on FOR basis, requiring delivery at the buyer's place, and thus, duty paid on outward transportation charges should be refundable. The Tribunal referenced the decision in Commissioner of Customs & Central Excise, Aurangabad vs. Roofit Industries Ltd. - 2015 (319) ELT 221 (S.C.), supporting the appellant's claim.

Issue 2: Determination of Place of Removal and Inclusion of Outward Freight in Assessable Value:
The Tribunal examined whether the place of removal was the factory gate or the buyer's premises. The appellant argued that the transportation charges should be included in the assessable value as the sale was on FOR basis, meaning the ownership and risk remained with the appellant until delivery at the buyer's premises. The Tribunal considered the Supreme Court's decision in Commissioner of Customs & Central Excise, Nagpur vs. Ispat Industries Ltd. - 2015 (324) ELT 670 (S.C.), which distinguished between ex-works sales and FOR sales. The Tribunal noted that in FOR sales, transportation charges are included in the transaction value, making the buyer's premises the place of removal.

Majority Decision:
The Tribunal, referencing the Larger Bench decision in M/s The Ramco Cements Limited vs. CCE, Puducherry and the jurisdictional High Court decision in M/s Inox Air Products Pvt Ltd vs. CCE & ST, held that in FOR sales, where the outward freight charges are included in the assessable value, the appellant is entitled to a refund of the central excise duty paid on these charges. The impugned orders denying the refund were set aside, and the appeals were allowed with consequential relief.