2023 (8) TMI 316 - AT - Central Excise

Erroneous refund claim - overvaluation of the goods by including freight charges in the assessable value in violation of Rule 5 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - notified area declared under Notification No.32/99-CE dated 08.07.1999 - HELD THAT - The facts are not in dispute that the appellant is selling goods to their buyers on FOR basis and cost of freight is not shown separately in the invoice which means the selling price is inclusive of freight charges. Both sides are relying on the decision of this Tribunal on the said issue. On going through the decision of this Tribunal in the case of COMMISSIONER OF C. EX., SHILLONG VERSUS GUWAHATI CARBON LTD. 2009 (4) TMI 269 - CESTAT, KOLKATA , it is found that the said decision was passed by this Tribunal way back on 1st April 2009, wherein this Tribunal relied upon the decision of Hon ble Apex Court in the case of ESCORTS JCB LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI-II 2002 (10) TMI 96 - SUPREME COURT and COMMISSIONER OF CENTRAL EXCISE, NOIDA VERSUS M/S. ACCURATE METERS LTD. 2009 (3) TMI 1 - SUPREME COURT to hold that the insurance and transportation charges cannot be included in the assessable value even though the goods were transported by the assessee from factory gate to the place of State Electricity Board as per the contract. As the issue has been clarified by the subsequent Circulars of CBEC, therefore, the decision of this Tribunal in the case of Guwahati Carbon Ltd. cannot be relied upon in the changing circumstances. Hence, relying on the decision of this Tribunal in the case of M/S. RNB CARBIDES FERRO ALLOYS PRIVATE LIMITED AND OTHERS VERSUS COMMISSIONER OF CENTRAL EXCISE, SHILLONG 2021 (9) TMI 29 - CESTAT KOLKATA and CBEC Circular No.1065/4/2018-CX dated 08.06.2018 it is held that the appellant has correctly assessed their goods and paid duty thereon in cash and rightly taken the refund thereof. There are no merit in the contention of the revenue that appellant has taken erroneous refund. Therefore, the impugned order is set aside - appeal allowed.

Summary

Issues Involved:
1. Inclusion of freight charges in the assessable value of goods.
2. Entitlement to refund of duty paid including freight charges.
3. Applicability of Rule 5 of Central Excise Valuation Rules, 2000.
4. Determination of place of sale and transfer of ownership.
5. Legality of recovery of allegedly "erroneous refund."

Summary:

Inclusion of Freight Charges in Assessable Value:
The appellant sold goods on an FOR (Free on Rail) basis, where the selling price included freight charges and was not shown separately in the invoice. The appellant argued that the freight charges were correctly included in the assessable value, relying on the Tribunal's decision in RNB Carbides & Ferro Alloys Pvt. Ltd. v. Commissioner of Central Excise, Shillong.

Entitlement to Refund of Duty Paid Including Freight Charges:
The appellant claimed a refund of duty paid in cash, which included the freight charges. The Revenue contended that the appellant had erroneously taken the refund by overvaluing the goods, including the freight charges, in violation of Rule 5 of Central Excise Valuation Rules, 2000.

Applicability of Rule 5 of Central Excise Valuation Rules, 2000:
The Tribunal examined whether Rule 5 applied to the appellant's case. It was observed that Rule 5 applies where goods are sold at the place of removal but delivered elsewhere. However, in the appellant's case, the sale took place at the buyer's premises, making Rule 5 inapplicable.

Determination of Place of Sale and Transfer of Ownership:
The Tribunal noted that the sale occurred at the buyer's premises, where the goods were delivered and accepted after inspection. The ownership and risk remained with the appellant until delivery. Thus, the assessable value included all charges up to the place of sale, including freight.

Legality of Recovery of Allegedly "Erroneous Refund":
The Tribunal held that the refund sanctioned based on prevailing legal precedents and CBEC clarifications could not be termed "erroneous." The Tribunal relied on the Gauhati High Court's decision in Topcem India v. UOI, which stated that refunds granted under the law at the time cannot be recovered due to subsequent legal changes.

Conclusion:
The Tribunal concluded that the appellant had correctly assessed the goods, paid duty thereon, and rightly claimed a refund. The impugned order was set aside, and the appeal was allowed with consequential relief. The Tribunal's decision was pronounced in the open court on 04.08.2023.