2019 (1) TMI 126 - AT - Central Excise

Refund claim - excise duty paid on the excess freight charges - whether the appellant is entitled to refund of excise duty of ₹ 61,045/- paid during the relevant period? - Held that - It is not in dispute that the pattern of sale adopted by the appellant is ex-factory basis and the freight amount has been reimbursed for transporting the material from factory to the premises of the customer - the cost of freight cannot be added to the assessable value - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Entitlement to refund of excise duty paid on excess freight charges.

Analysis:
The appeal was filed against the order-in-appeal passed by the Commissioner of Central Excise (Appeals), Mumbai-I, rejecting the refund claim of excise duty paid on excess freight charges totaling to ?61,045. The appellant, engaged in the manufacture of excisable goods, contended that they paid excise duty on excess freight charges incurred in transporting goods from the factory to the customer's premises, which was later claimed as a refund. The authorities rejected the claim on the basis that the freight element should be deducted on an actual basis, not an equalized basis. The appellant argued that since their clearances were ex-factory, the cost of freight should not be part of the assessable value, citing the judgment of the Hon'ble Supreme Court in the case of CCE, Nagpur vs. Ispat Industries Ltd. The Revenue supported the findings of the Commissioner (Appeals).

The central issue in the appeal was whether the appellant was entitled to a refund of excise duty amounting to ?61,045 paid during the relevant period. It was undisputed that the appellant followed an ex-factory sales pattern and reimbursed the freight amount for transporting materials to the customer's premises. Relying on the principle established by the Hon'ble Supreme Court in the case of Ispat Industries Ltd., which stated that the cost of freight should not be added to the assessable value, the appellate tribunal allowed the appeal by setting aside the impugned order.

In conclusion, the appeal was allowed, and the appellant was granted the refund of excise duty paid on excess freight charges as the cost of freight incurred in transporting goods from the factory to the customer's premises was not to be included in the assessable value based on the legal precedent cited.