2018 (3) TMI 987 - AT - Central Excise

Exemption/refund of education cess and higher education cess paid on final products cleared by them - Held that - 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 - the appellant/assessee shall be eligible for refund/re-credit of education/higher education cess. Valuation - inclusion of outward freight element - Held that - The refund/re-credit with reference to the value attributable to outward freight is not available to the appellant assessee. Appeal allowed in part.

Issues:
1. Exemption of education cess and higher education cess.
2. Valuation of final products for duty payment.
3. Re-credit/refund for sales returns of finished goods.

Issue 1: Exemption of Education Cess and Higher Education Cess
The appellant claimed exemption/refund of education cess and higher education cess paid on final products cleared by them. The dispute was resolved by referring to a Supreme Court decision which stated that if excise duty is exempted from levy, then the assessee is eligible for education cess/higher education cess refund. The first issue was decided in favor of the appellants based on this legal precedent.

Issue 2: Valuation of Final Products for Duty Payment
The dispute revolved around the inclusion of the outward freight element in the valuation of final products for duty payment and refund claims. The tribunal noted the statutory definition of the place of removal under the Central Excise Act, emphasizing that the buyer's premises cannot be considered the place of removal. Referring to a Supreme Court decision, it was clarified that the manufacturer's premises or premises referable to the manufacturer are the places of removal. As the appellant failed to prove that the goods were cleared from designated premises, the inclusion of freight element in the assessable value post-sale was deemed unjustified. Consequently, the duty payment on such value addition was not covered by the exemption, leading to the rejection of the appellant's claim.

Issue 3: Re-Credit/Refund for Sales Returns of Finished Goods
Regarding sales returns of finished goods, the appellant sought re-credit of duty paid on goods returned and re-cleared after processing. The Revenue objected to granting re-credit/refund for the second clearance of the same goods. The tribunal observed that the Central Excise Rules, 2002, govern the procedure for re-credit/refund of duty paid goods, and the appellant followed the prescribed process. The absence of any legal provision justifying the denial of concession under Notification No. 56/2002 led the tribunal to set aside the impugned order and allow the appeal on this issue. The appellant was deemed eligible for the concession under the notification for the re-cleared goods after processing.

In conclusion, the appellant was entitled to refund/re-credit of education/higher education cess, but not for the value attributable to outward freight. The appellant was also granted concession under Notification No. 56/2002 for re-cleared goods after processing. All the appeals were partly allowed based on the above decisions.

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