2024-VIL-1019-CESTAT-CHD-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise – Benefit of Area-Based Exemption Notification No. 1/2010-CE – appellant availed area-based exemption under Notification No. 1/2010-CE which required the appellant to first utilize all CENVAT credit for payment of duty and then pay any remaining duty in cash through PLA, which was refundable - appellant sought a special rate for value addition, claiming actual value addition exceeding the specified rate - Denial of full benefit basis that the entire excise duty must be deducted from the value addition and that freight and transit insurance should not be included in the sale value for the purpose of calculating value addition - Whether the entire excise duty, including the portion paid through PLA and subsequently refunded, should be deducted while computing value addition under Notification No. 1/2010-CE; and Whether freight and transit insurance should be included in the sale value for calculating value addition – HELD - the excise duty refunded under Notification No. 1/2010-CE is a mechanism to implement the area-based exemption and should not be considered part of the value addition. The refunded amount is not due to excess payment but is part of the exemption scheme, and therefore, only the excise duty actually paid should be deducted from the sale value when calculating value addition - Regarding freight and transit insurance, it is held that in cases where sales are made on a FOR (Free on Rail) destination basis, with the seller paying the freight and insurance, these costs should be included in the sale value. The appellant's invoices showed that freight and insurance were paid by the appellant, making these costs part of the sale value - freight and insurance costs are includible in the sale value for the purpose of determining value addition – the impugned order is set aside and appeal is allowed
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