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TMI Blog2022 (12) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... Roofit case, it did not have occasion to examine the provisions of Section 4, since it was enacted and amended from time to time in the Central Excise Act r/w the Valuation Rules. After examining Section 4 r/w the rules, the Apex Court observed that the cost of transportation from the place of removal up to the place of delivery of excisable goods is excluded from Assessable value for the computation of excise duty - Appeal allowed. Valuation - inclusion of freight and transit insurance in assessable value or not - period from August 2016 to July 2017 - HELD THAT:- The cost of freight and transit insurance need not be included in assessable value - appeal allowed. Rejection of Refund claim - determination of assessable value for the purpose of payment of duty - HELD THAT:- The issue of inclusion of freight in the assessable value, under the admitted facts and circumstances, has already been held in favour of the appellant-assessee relying on the ruling of the Apex Court in the COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE, NAGPUR VERSUS M/S ISPAT INDUSTRIES LTD. [ 2015 (10) TMI 613 - SUPREME COURT] - demand set aside. Requirement to issue SCN - Section 11AC (1)(d) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spatched by road including packing, forwarding and unloading charges and also including the cost of freight charges. It appeared to the Revenue that the assessee are supplying the final products to the customers destination/address i.e. at various delivery places as stipulated in the agreement/ purchase order. It was further observed that cost of transportation incurred from the factory to the place of removal (destination) was not included for arriving at the assessable value during the relevant period, and thereby it appeared that the assessee have short paid the Central Excise duty on such goods. Appeal No. E/30164/2019 (By assessee) 4. Show Cause notice dated 5.9.2018 was issued (Mallacheruvu works, C.E. Regn. No. AABCM9480CXM001) proposing to demand Central Excise duty on the freight element which was not included in the assessable value of the finished goods in respect of sale/clearance made to the industrial consumer on FOR basis, for an amount of Rs. 4,04,24,003/- for the period August, 2016 to June, 2017. Further interest and penalty was also proposed. 5. The appellant contested the Show cause notice by filing reply wherein they inter alia stated that the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This fact also indicates that in fact the sale took place at the buyer s premises. It was further observed that under section 20 of the Sale of Goods Act, it is provided - Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment of the price or the time of delivery of the goods, or both, is postponed . Further it was observed that in the facts of the present case, the contract were not unconditional, as there are conditions specified for acceptance of the goods. The fact in the present case deliverable state of goods, arises only at the time of safe delivery of goods at the customers premises specified in the purchase order. However, with reference to section 24 of the Sales of Goods Act, it was observed that in the instant case, the property in the goods have passed only at the site of buyer. Therefore such place constitutes the place of removal of goods for section 4 of the Central Excise Act. 7. The Adjudicating Authority after taking notice of ruling of Apex Court in the case of Ispat Industries (supra) obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the transaction value. 10. The place of removal is the factory gate of the appellant as per the appellant, and it is the premises of the Customers, where the delivery of goods have been made, as per the Revenue. That the Board had issued a clarification by its clarificatory Circular dated 8.6.2018 referring to its earlier Circular(s) with respect to the subject place of removal under section 4 of the Act, the CENVAT Credit Rules and drawn attention to the four judgment of the Apex Court namely; 1. Roofit Industries Ltd. [2015 (319) ELT 221(SC)] 2. CCE vs Ispat Industries Ltd. [2015 (324) ELT 670 (SC)]; 3. CCE, Mumbai III vs Emco Ltd. [2015(322) ELT 394 (SC)] 4. CCE ST vs Ultra Tech Cement Ltd. [2018(9) GSTL 337 (SC)] The Board rescinded its earlier Circular No. 988/12/2014-CX. dated 20 October 2014 and also omitted clause (c) of para 8.1 and para 8.2 of its circular No. 97/8/2007-CX dated 23.8.2007. It was clarified that by way of general principle as regards determination of place of removal, the principle laid down by the Apex Court in the case of CCE vs Ispat Industries Ltd. may be applied wherein the Apex Court have reiterated the principle laid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded. 12. Learned Counsel further urges that the facts of the present case are squarely covered by the principle laid down by the Hon ble Sup. Court in the case of Ispat Industries Ltd. (supra). With effect from 14.5.2003 section 4 was again amended so as to re-include sub-clause (iii) of old Section 4(3)(b) (pre 2000). The amended Section 4(3)(c)(iii) reads as follows :- (3)(c)(iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory; Further, Rule 5 of the Central Excise Valuation Rule was also substituted, with effect from 1-3-2003, and read as follows : Rule 5 . Where any excisable goods are sold in the circumstances specified in clause (a) of sub-section (1) of section 4 of the Act except the circumstances in which the excisable goods are sold for delivery at a place other than the place of removal, then the value of such excisable goods shall be deemed to be the transaction value, excluding the cost of transportation from the place of removal upto the place of delivery of such excisable goods. (emp. Supp.) Explanation 1. - Cost of transportation incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of the appellants and against Revenue and the demands are unsustainable on merits and need to be set aside and we do so. Since we have taken a decision on the merits of the case, the issue of limitation becomes irrelevant. Further, a similar view was taken in M/s. Vijai Electricals Ltd., Vs. Commissionerate [2019 (11) TMI 301- CESTAT]. 15. Similar view was also taken up by the CESTAT Ahmedabad Bench in the case of Commissioner of Central Excise, Mumbai-IV Vs Emco Ltd. [2016 (12) TMI 1385-CESTAT MUMBAI] and M/s. Savita Oil Technologies Ltd., Vs. C.C.E. S.T., Daman [2022 (7) TMI 138- CESTAT Ahmedabad]. 16. It is further urged that Hon ble Supreme Court in the case of Ispat Industries Ltd. (supra), have clarified that place of removal are the manufacturers premises (factory or warehouse or the premises of the consignment agent). In view of the clarification read with rule 5 of the Central Excise Valuation Rules, cost of transportation and transit insurance is not includible in the assessable value for the purpose of calculating duty liability. Accordingly, it is prayed by the appellant assessee for setting aside the impugned order. 17. Opposing the appeal, learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of removal. Hon ble Apex Court also observed that in the Roofit case, it did not have occasion to examine the provisions of Section 4, since it was enacted and amended from time to time in the Central Excise Act r/w the Valuation Rules. After examining Section 4 r/w the rules, the Apex Court observed that the cost of transportation from the place of removal up to the place of delivery of excisable goods is excluded from Assessable value for the computation of excise duty. 19. In view of aforementioned observations and findings, we allow this appeal and set aside the impugned order. Appeal No. E/30214/2020 (by revenue with cross objection by the assessee CO No. 30149/2020). 20. The period involved in this appeal is from August 2016 to July 2017 and is related to Mulla Kalapalli Works Vizag (CER Registration AABCM9480CXM002). 21. Under similar facts and circumstances as in the above appeal, SCN dated 28/08/2018 was issued. The SCN was adjudicated by the Joint Commissioner vide OIO dated 28/12/2018 confirming the duty of Rs. 1,04,51,353/- alongwith interest and equal amount of penalty under Section 11AC (1) (a) of the Act. Aggrieved the appellant preferred appeal befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yer s by raising the excise invoice, wherein, the amount of freight has been separately shown. The appellant (Vijag Unit Regn. No. AABCM9480CXM002) was regularly filing their returns and paying the admitted amount of duty (without including the freight). 25. Based on the Audit observations made in Letter C. No. V/1/286/2014-Audit Gr.I dated 07.04.2015 issued by the Superintendent (Audit), Group-I, Kakinada Circle, from the Office of the Asst. Commissioner of Central Excise Service Tax, Audit Commissionerate, Kakinada Circle to provide the details of differential duty liability i.r.o. clearances made to depots for the period from 17.03.2012 to 31.12.2014 and details of POs, details of freight i.r.o. the FOR clearances made during the period from 17.03.2012 to 31.12.2014. In response, the Appellant vide letter dated 24.11.2015 informed the Asst. Commissioner of Central Excise Customs, Kakinada Commissionerate, Visakhapatnam that they have paid the differential duty and interest thereon on the freight element, enclosing the copies of the challans and requested to drop further proceedings. The details of the payments made are as below: Year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... +5) 2010-11 1,61,28,772 16,61,264 14,49,547 2,49,190 3,360,001 2011-12 4,28,65,844 44,73,532 33,93,468 6,71,030 8,538,030 2012-13 3,02,51,804 37,39,124 21,23,622 5,60,869 6,423,615 2013-14 6,42,36,585 79,39,640 30,67,692 11,90,946 12,198,278 2014-15 6,77,99,620 74,95,107 8,71,752 11,24,266 9,491,125 2015-16 upto 8th Jun-15 1,88,18,760 23,52,345 18,246 0 2,370,591 Total 24,01,01,385 2,76,61,012 1,09,24,327 37,96,301 4,23,81,640 28. Upon verification of above refund claim, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80,62,798 2 0487 09.06.2015 10,88,199 18,246 0 11,06,445 3 2747 06.06.2015 11,47,269 0 0 11,47,269 4 4306 06.07.2015 1,16,877 0 0 1,16,877 TOTAL 95,78,987 8,54,402 0 1,04,33,389 30. The above SCN was adjudicated by the Asst. Commissioner vide Order-in-Original No. 36/2017 dated 17.02.2017, rejecting the refund claims on the following grounds: (i) The place of removal of good sold by the Appellant on FOR basis was the buyer s premises and not the factory gate which implied that the duty paid on freight charges was in order. Reliance is placed on the decision of the Apex Court in the case of CCE Vs. Roofit Industries Ltd. 2015 (319) ELT 221 (SC) and CCE Vs. Emco Ltd. 2015 (322) ELT 394 (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. (supra). Now, the only issue to determine is whether the refund claim have been rightly rejected by the court below. 35. Learned Counsel for the appellant inter alia urges that admittedly, the appellant at the time of clearance of the goods have determined or assessed the assessable value without including the freight element, and have accordingly paid the duty and filed the returns. It was only on subsequent audit objection communicated vide letter dated 07/04/2015, by the superintendent (audit), office of the Audit commissionerate, the appellant on being so advised in view of the ruling dated 23.04.2015 of the Apex court in the matter of Roofit Industries Ltd. (supra), deposited the differential duty on the freight element. The appellant had also deposited interest and requested for closure of the audit observation. Further, admittedly, revenue advised the appellant by their letter dated 26.11.2015 to deposit penalty @ 15% of tax under provision of Section 11AC(d) as only then proceedings can be dropped. Admittedly, the appellant paid the amount of penalty calculated at Rs. 13,51,869/- on 11.12.2015, and filed intimation with the department on 22.12.2015 with the prayer t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee does not have any right to claim any consequential refund. This issue of conclusion of proceedings was never raised in the show cause notice dated 28.11.2016, and thus, the learned Commissioner (Appeals) have travelled beyond the show cause notice in entertaining the ground and allowing the appeal of revenue. No new case can be made at the appellate stage by revenue, as have been held by the Apex court in Warner Hindustan Ltd. vs. CCE Hyderabad 1999-113-ELT-24 (SC) 38. Further, in the grounds of cross-appeal filed by the Revenue, it was contended that during the course of audit intervention the assessee has suo-moto paid Rs. 2,55,27,656/- as CE duty with interest Rs. 1,10,23,634/- and reduced penalty Rs. 38,29,149/- and vide letter dated 22.12.2015 and admitted that the non-inclusion of freight charges in the assessable value was a mistake on their part, and requested to drop further proceedings. This entire ground is bereft of factual position, for the following reasons: (a) Firstly, the full amounts actually paid towards the duty(short paid), interest and penalty in the instant are Rs.2,76,61,012/- , Rs.1,09,24,327/- and Rs.37,96,31/-,respectively and not Rs. 2,55,27, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further urged that the amount of Rs. 1,04,33,389/- have been rightly held to be hit by limitation under Section 11B of the Act. 43. Further urges that Commissioner (appeals) have rightly held that the place of removal in the facts of the present case is the place of delivery, of the premises of the buyer relying on the ruling of the Hon ble Supreme Court in the Roofit Industries. 44. Having considered the rival contentions, we find that the issue of inclusion of freight in the assessable value, under the admitted facts and circumstances, has already been held in favour of the appellant-assessee relying on the ruling of the Apex Court in the Ispat Industries (supra). 45. So far, the issue of conclusion of dispute under the provisions of Section 11AC (1)(d) is concerned, we find that in absence of the condition precedent, that is issue of show cause notice, no proceedings/dispute can be concluded. Also there is no provision for waiver of SCN, under Section 11AC (1) (d).Further, admittedly, no letter of closures was issued by the revenue as requested by the appellant-assessee. Thus, the amount deposited by the appellant-assessee pursuant to audit letter, was in the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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