2018 (12) TMI 357 - AT - Central Excise

Refund of education/ higher education cess paid by them on such final products - Revenue entertained a view that such cess is not refundable as no exemption is provided for the same - Held that - The issue stands covered by the decision of Hon ble Supreme Court in SRD Nutrients Pvt. Ltd. vs. CCE, Guwahati 2017 (11) TMI 655 - SUPREME COURT OF INDIA , where it was held that appellants were entitled to refund of Education Cess and Higher Education Cess which was paid along with excise duty once the excise duty itself was exempted from levy - the assessee is eligible for such refund which is paid alongwith the excise duty once the excise duty itself was exempted - decided in favor of appellant. Valuation of excisable goods - inclusion of outward freight up to the place of delivery of their finished goods - Held that - The appellant has 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 - 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. Appeal allowed in part.

Summary

Issues:
1. Eligibility for refund of education cess paid on final products.
2. Valuation of excisable goods regarding inclusion of freight in transaction value.

Analysis:

Issue 1: Eligibility for refund of education cess
The appellant, located in Jammu and manufacturing excisable goods under an area-based exemption, sought a refund of education cess paid on final products. The Revenue contended that such cess was not refundable due to lack of exemption. Both parties agreed that the matter was settled by the Supreme Court in SRD Nutrients Pvt. Ltd. vs. CCE, Guwahati, where it was held that the assessee is entitled to a refund of such cess if the excise duty itself was exempted. Following the Supreme Court's decision, the appeal on this dispute was decided in favor of the appellant, modifying the impugned order accordingly.

Issue 2: Valuation of excisable goods regarding inclusion of freight
The second issue pertained to the valuation of excisable goods manufactured and cleared by the appellant, specifically the inclusion of outward freight in the transaction value. The appellant considered the transaction value inclusive of freight up to the place of delivery, while the Revenue argued that goods were sold at the factory gate, excluding the freight component. The Revenue's stance led to the denial of refunds under Notification 56/2002-CE. The Tribunal noted the statutory definition of "place of removal" under the Central Excise Act, emphasizing that the buyer's premises cannot be the place of removal. Relying on the Supreme Court's decision in CCE, Nagpur vs. Ispat Industries Ltd., the Tribunal held that the inclusion of freight in the assessable value after goods were sold from the factory was not justified. Consequently, the appellant's claim for inclusion of the freight element in the assessable value was deemed unsustainable, and the appeal on this issue was dismissed.

In conclusion, the Tribunal partly allowed the appeals, ruling in favor of the appellant on the eligibility for the refund of education cess but dismissing the claim regarding the inclusion of freight in the assessable value of excisable goods.