2018 (9) TMI 1358 - AT - Central Excise

Exemption/refund of education/higher education cess - Area based exemption availed by appellant under N/N. 56/2002-CE dated 14/11/2002 - Held that - The issue stands settled by the Hon ble Supreme Court in M/s. SRD Nutrients Pvt. Limited vs. CCE, Guwahati 2017 (11) TMI 655 - SUPREME COURT OF INDIA , where it was held that the assessee is eligible for such refund which is paid alongwith the excise duty once the excise duty itself was exempted. Valuation of excisable goods manufactured and cleared by the appellant - Inclusion of freight component in the transaction value - place of removal - Held that - In the present case the appellant is claiming that the goods were sold on FOR basis and as such the place of removal is the delivery point to the buyer. The freight element incurred by the appellant should form part of the assessable value in such FOR sale - Hon ble Supreme Court in CCE, Nagpur vs. Ispat Industries Ltd. 2015 (10) TMI 613 - SUPREME COURT held that under no circumstances can the buyer s premises, therefore, be the place of removal for the purpose of Section 4 on the facts of the present case - the question of paying duty on such value addition to be covered by the exemption under Notification 56/2002-CE does not arise. The appellant will succeed with reference to their entitlement of refund claim for education/ higher education cess in terms of N/N. 56/2002-CE - With reference to transaction value, the appellant will not succeed. Appeal disposed off.

Summary

Issues:
1. Eligibility for exemption/refund of education/higher education cess under Notification No. 56/2002-CE.
2. Valuation of excisable goods including freight in the transaction value.

Analysis:

Issue 1:
The first issue revolves around the eligibility of the appellant for exemption/refund of education/higher education cess paid on goods manufactured and cleared under Notification 56/2002-CE. The dispute was settled by referring to the decision of the Hon'ble Supreme Court in M/s. SRD Nutrients Pvt. Limited vs. CCE, Guwahati, where it was held that the assessee is entitled to a refund of such cess when 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 outward freight in the transaction value. The Revenue contended that the goods were sold and cleared at the factory gate, and thus, the freight component should not be included in the transaction value. The statutory definition of "Place of removal" under Section 4 of the Central Excise Act, 1944 was crucial in determining this issue. The appellant claimed that the goods were sold on FOR basis, making the delivery point to the buyer the place of removal. However, the decision of the Hon'ble Supreme Court in CCE, Nagpur vs. Ispat Industries Ltd. clarified that the buyer's premises cannot be considered the place of removal in such cases. The court emphasized that the place of removal must be referable only to the manufacturer and not the buyer. Since the appellant failed to demonstrate that the goods were cleared from a designated place before being sold, the inclusion of freight in the assessable value was deemed unjustified. Consequently, the appellant's claim for exemption under Notification 56/2002-CE based on the inclusion of freight element post-sale was deemed unsustainable.

In conclusion, the appellant succeeded in their refund claim for education/higher education cess as per Notification 56/2002-CE. However, their claim regarding the transaction value, including freight, was not upheld based on the legal analysis provided. The appeal was disposed of accordingly.