2018 (9) TMI 562 - AT - Central Excise

Valuation of excisable goods manufactured and cleared by the appellant - Revenue held a view that the goods were sold and cleared at the factory gate and the appellant is not liable to include the freight component in the transaction value - Held that - The impugned order records that the appellant have not produced anything on record which would show that they had cleared the goods from the factory gate to a warehouse any other premises a depot consignment agents premises etc. from where such excisable goods were sold. Admittedly the goods sold by the appellant delivered at the buyers premises will not make the place of removal as buyers premises - there is no justification for the appellant to consider the assessable value with inclusion of freight element after the goods were sold/removed from the factory - decided in favor of appellant. Exemption/refund of education/higher education cess paid on the goods manufactured and cleared by the appellant by availing Area Based Exemption - N/N. 56/2002-CE dated 14/11/2002 - Held that - the question of paying duty on such value addition to be covered by the exemption under Notification 56/2002-CE does not arise - decided against appellant. N/N. 19/2008-CE dated 27.03.2008 and 34/2008-CE dated 10.06.2008 - whether the appellants are entitled to claim refund/self-credit as restricted by these notifications or not? - Held that - In terms of Notification No. 56/2002-CE dated 14.11.2002 the appellants are entitled to claim refund/ self-credit of duty paid through PLA relying on the decision of this Tribunal in the case of M/s Boistadt India Limited & others vide Final Order No. 61350-61411/2018 dated 14.03.2018 - Benefit allowed. Appeal allowed in part.

Summary

Issues:
1. Eligibility for exemption/refund of education/higher education cess under Notification 56/2002-CE.
2. Valuation of excisable goods including freight component in transaction value.
3. Eligibility for refund/self-credit under Notifications 19/2008-CE and 34/2008-CE.

Analysis:

Issue 1:
The first issue revolves around the eligibility of the appellant for exemption/refund of education/higher education cess under Notification 56/2002-CE. The dispute was resolved by referring to the decision of the Hon'ble Supreme Court in SRD Nutrients Pvt. Ltd. vs. CCE, Guwahati, where it was held that the assessee is entitled to such refund once the excise duty itself was exempted. Following this precedent, all appeals related to this issue were decided in favor of the appellant.

Issue 2:
The second issue concerns the valuation of excisable goods manufactured and cleared by the appellant, specifically regarding the inclusion of the freight component in the transaction value. The appellant contended that the goods were sold on a Free on Rail (FOR) basis, making the delivery point to the buyer the place of removal. However, the Revenue argued that the goods were sold at the factory gate, and the freight component should not be included in the transaction value. The Tribunal analyzed the statutory definition of "place of removal" under Section 4 of the Central Excise Act, 1944. Referring to the decision in CCE, Nagpur vs. Ispat Industries Ltd., the Tribunal concluded that the appellant failed to demonstrate clearance of goods from the factory to a location where they were sold. Therefore, the inclusion of the freight element in the assessable value was deemed unjustified, leading to the dismissal of the appellant's claim for refund under Notification 56/2002-CE.

Issue 3:
The third issue pertains to the eligibility of the appellants for refund/self-credit under Notifications 19/2008-CE and 34/2008-CE. The Tribunal considered the decision of the J & K High Court in Reckit Benckiser vs. UOI, where the High Court invalidated the relevant notifications. Relying on this judgment and the Tribunal's decision in the case of M/s Boistadt India Limited, the Tribunal held that the appellants were entitled to claim refund/self-credit of duty paid through PLA under Notification 56/2002-CE. Consequently, the appellant succeeded in their refund claim for education/higher education cess but failed in the context of transaction value, resulting in the disposal of the appeal accordingly.