2014 (4) TMI 654 - AT - Central Excise

Refund of duty paid on removal of goods after including transportation charges (FOR) - area based exemption - notification no.56/2002-CE - Held that - The invoices issued by the appellant mention only one consolidated FOR price and also mention that the sales are on FOR destination basis. This fact is not disputed by the department. When the invoices themselves mention the sales as on FOR sales, risk of loss of goods or damage to the goods during transit would be of the appellant and the ownership of the goods during transit would be treated as of the appellant and if the Department alleges that the sales are not as FOR basis, the burden of proof in this regard would be on the Department. Just because there are no purchase orders placed by the customers or there are no agreements between the appellant and their customers regarding sale of the goods and the terms of sale, it cannot be concluded that the sales are not on FOR destination basis. We find neither any inquiry in this regard has been conducted by the Department nor any evidence has been produced. In view of this, the impugned orders are not correct. The same are set aside - Decided in favour of assessee.

Summary

Issues:
Interpretation of exemption notification under Central Excise Tariff for manufacturers of plastic film and printed plastic pouches regarding duty payment on FOR destination basis.

Analysis:
The case involved manufacturers availing exemption under a notification for central excise duty on plastic film and printed plastic pouches. The dispute arose when the department alleged that the appellant's clearances were not on FOR destination basis, leading to excessive duty payment and refund claims. The department confirmed duty demands against the appellant, imposed penalties, and dismissed appeals filed by the appellant. The Tribunal remanded the matter back to the Commissioner for reevaluation based on specific criteria for determining sales on FOR destination basis. The Commissioner once again held that the sales were not on FOR destination basis, leading to the filing of appeals.

The appellant argued that their sales invoices clearly indicated a consolidated FOR price, demonstrating sales on FOR destination basis. They highlighted that the risk of loss and ownership during transit were borne by them, supported by insurance costs. The appellant distinguished their case from previous judgments cited by the department, emphasizing the specific circumstances of their sales. On the other hand, the department defended the original decision, stating that the appellant failed to provide evidence satisfying the criteria outlined in the circular.

Upon review, the Tribunal found that the invoices explicitly stated sales on FOR destination basis, placing the burden of proof on the department to dispute this claim. The lack of evidence or inquiry by the department regarding the nature of sales led to the conclusion that the impugned orders were incorrect. As a result, the Tribunal set aside the orders, allowed the appeals, and disposed of the stay applications, ruling in favor of the appellant.