Order date – 28 November 2022

Facts –

• The Appellant, M/s. My Home Industries Pvt Ltd. is engaged in manufacture of cement which is dutiable under Central Excise Tariff Act. 
• Scrutiny of records by Revenue pertaining to sales and supplies of cement dispatched to bulk consumers / industrial users, it was observed that they were selling their goods on FOR basis dispatched 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. Further 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
• Show Cause notice dated 5.9.2018 was issued 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.
• Being aggrieved the appellant had filed an appeal. 

Issue –

• Whether the duty can be claimed on 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?

Order –

• The Tribunal relied on the decision of the Apex Court (in Ispat Industries) distinguishing its earlier ruling in the case of Roofit Industries, have held that the place of removal referred to in Section 4 r/w Rule 5 and Rule 7 of Central Excise Valuation Rules, clearly indicates, that the place of removal refers to only the sellers premises (factory gate, warehouse, depo, consignees premises). It is nowhere stated that the buyer’s premises can be place of removal.
• It was also held that 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.
• Hence the appeal is allowed.

Appeal No. E/30214/2020 (by revenue with cross objection by the assessee CO No. 30149/2020)

Key Pointers –

• The revenue has filed an appeal in relation to Mulla Kalapalli Works Vizag Under similar facts and circumstances as in the above appeal.
• Being aggrieved on the order of Commissioner (appeals) which was in favour of the assessee, revenue is in appeal on the ground that the Commissioner (appeals) have erred in not properly appreciating the ruling of the Apex Court in the case of Roofit Industries (supra) as well as the CBIC Circular dated 08/06/2018 for determining the place of removal.
• The Tribunal observed that the issue in this appeal is wholly covered by the facts and findings in the aforementioned Appeal E/30164/2019. Accordingly, in view of the finding recorded hereinabove, dismiss this appeal by revenue and allow the cross objections of the respondent-assessee.

Appeal No. E/30031/2019 & E/30032/2019

Key Pointers –

• The Appellant, Vijag Unit, have cleared the goods from their factory to the institutional buyer’s by raising the excise invoice, wherein, the amount of freight has been separately shown. The appellant was regularly filing their returns and paying the admitted amount of duty (without including the freight).
• They had deposited excise duty (short paid) pursuant to audit objection for the period 2010-2011 to 2015-2016, and subsequently, after the ruling of Hon’ble Supreme Court in the case of Ispat Industries Ltd., judgment dated 07/10/2015, the assessee applied for refund which was rejected.
• Further Appellate Commissioner also allowed the grounds raised in the cross-appeal filed by the Revenue, that amounts paid voluntarily by the Appellant due to audit intervention for dropping the proceedings, are concluded in terms of Section 11AC(d) of the Central Excise Act, 1944. On these findings the Appellate Commissioner dismissed the Appeal filed by the Appellant and allowed the Appeal filed by the Revenue.
• The Tribunal states that the place of removal, in the facts and circumstances is always the premises of the seller, following the clarification by Hon’ble Supreme Court in the case of Ispat Industries Ltd. (supra).
• The issue involved here is whether the refund claim has been rightly rejected by the court below?
• The Tribunal finds that in absence of the condition precedent, that is issue of show caus 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 revenue deposit. Admittedly, the appellant have done the self-assessment at the time of clearance of the goods without including the freight element. In the facts and circumstances, there cannot be any subsequent self assessment. Further, admittedly no revised return was filed.
• Thus it held that the limitation prescribed under Section 11B is not applicable. Accordingly, we hold that the appellant-assessee is entitled to refund of the amount deposited alongwith interest as per rules.
• Thus the appeal is allowed.