Custom, Excise & Service Tax Tribunal
M/S.Hard Castle Petrofer Pvt. Ltd vs Cce, Jammu (J&K) on 5 March, 2014
IN THE CUSPTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing/ Decision: 05/03/2014
Honble Justice Shri G. Raghuram, President.
Honble Shri Rakesh Kumar, Member (Technical)
1
Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982?
2
Whether it should be released under Rule 26 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
Excise Stay Application No.60201/2013 in
Excise Appeal No.59513/2013-EX (DB)
(Arising out of Order-in-Appeal No.180/CE/Appeal/Chandi-II(J&K)2013 dated 25.4.2013 passed by the Commissioner of Central Excise (Appeals), Chandigarh)
M/s.Hard Castle Petrofer Pvt. Ltd. Appellants
Vs.
CCE, Jammu (J&K) Respondent
Appearance:
Rep. by Shri Jatin Mahajan, Advocate for the appellant. Rep. by Shri Jayant Sahay, DR for the respondent. Final order No. 51060 / 2014 Per Rakesh Kumar:
The appellant are a unit located in the state of Jammu & Kashmir in the area specified under notification no.56/2002-CE dated 14.11.2002. They manufacture Fluid power and heat treatment chemicals chargeable to central excise duty and availed exemption under notification no.56/2002-CE dated 14.11.2002. In terms of this exemption notification, an assessee is required to pay duty to the extent possible by availing cenvat credit available at the end of the month and only the balance amount of duty is required to be paid through PLA. The duty paid through PLA is refunded in terms of this exemption notification subject to upper limit in this regard prescribed in the notification. The period of dispute in this case is from 2007-2008 to 2008-2009.During this period, the appellant were selling the goods to their buyers on FOR destination basis and were paying duty on the value which included freight charges from the factory to the customers premises. The department while acknowledging that the appellant were selling the goods to their buyers on FOR basis, was of the view that in terms of the Rule 5 of the Central Excise Valuation Rules, 2005, the assessable value of the goods would not include the freight charges from the factory gate to the customers premises and accordingly, the appellant have paid more duty than the duty which was required to be paid and have availed higher quantum of refund under exemption Notification no.56/2002-CE. It is on this basis that after issue of show cause notice, the jurisdictional Dy. Commissioner vide order-in-original dated 10.1.2012 confirmed the duty demand of Rs.1,83,833/- along with interest and imposed penalty of equal amount on them under Section 11 AC. On appeal being filed to the Commissioner (Appeals), this order of the Asstt. Commissioner was upheld vide order-in-appeal dated 7.5.2013, against which this appeal has been filed along with stay application.
2. Heard both the sides.
3. Though this matter was listed for hearing of the stay matter, after hearing the same for sometime, the Bench was of the view that since only a very short issue is involved, the matter can be disposed of finally. Accordingly with the consent of both the sides, the matter was heard for final disposal.
4. Shri Jatin Mahajan, Advocate, the learned Counsel for the appellants, pleaded that as is mentioned in para-6 of the show cause notice, the appellant during the period of dispute were selling the goods to their buyers on FOR basis, that once this fact was accepted by the department, the transfer of ownership of the goods and the sale of the goods would take place on the customers premises and, hence, in terms of the provisions of Section 4 (3)(c) of the Central Excise Act, 1944, it is the customers premises, which would be the place of removal and accordingly, all the expenses incurred upto the customers premises including the freight and transit insurance would be includible in the assessable value, that Rule 5 of the Central Excise Valuation Rules, 2000 relied upon by the department has no application, that the duty has been correctly paid by the appellant on the FOR price which includes the element of freight upto the customers premises and hence, the exemption has been correctly availed, and that in view of this, the impugned order is not correct.
5. Shri Jayant Sahai, the learned DR, defended the impugned order by reiterating the findings of the Commissioner (Appeals) in it. However, he conceded that para-6 of the show cause notice itself mentions that the sales of the appellant to their customers are on FOR basis.
6. We have considered the submissions from both the sides and perused the records.
7. The point of dispute in this case is as to whether the appellant were required to pay duty on the FOR price which would include the element of freight from the factory gate to the customers premises, or the appellant were required to pay duty on the value of the goods at the factory gate i.e. FOR price minus freight charges from the factory gate to the customers premises. The show cause notice while mentioning in para-6 that the sales of the appellant are on FOR basis, still invokes Rule 5 of the Central Excise Valuation Rules, 2000 for excluding the element of freight from the factory gate to the customers premises from the assessable value and on this basis alleges that the appellant in order to avail higher quantum of exemption have deliberately paid duty on the higher value. In our view, stand taken by the department is contradictory, as once the department accepts that appellants sales are on FOR basis, the sales would take place at the customers premises and in such a situation, in accordance with the provisions of Section 4 (3) (c ) of the Central Excise Act, 1944, it is the customers premises, which would be the place of removal and accordingly, the assessable value of the goods would include all the expenses incurred upto the customers premises including the freight charges. Rule 5 of the Central Excise Valuation Rules, which provides of exclusion of freight from the place of removal to place of delivery, has no application to this case and as such, has been wrongly invoked. The appellant, therefore, have correctly paid the duty on the FOR price and have correctly availed the exemption. The impugned order, therefore, is not sustainable and the same is set aside. The appeal as well as stay application are allowed.
[Operative part of the order already pronounced in the court].
( Justice G. Raghuram ) President (Rakesh Kumar ) Member (Technical) Ckp.