FOR destination valuation includes freight to buyer's premises, and later legal change cannot by itself make a prior refund erroneous.

FOR destination contracts with door delivery, where the buyer inspects goods at its premises, bears transit risk, and accepts delivery there, freight and transportation up to that point form part of the assessable value for Central Excise. The place of removal is therefore the buyer's premises when sale is completed only on delivery, so valuation follows the price at the place of sale under the relevant valuation rules. Refunds sanctioned on the legal position and departmental clarification prevailing at the time cannot later be recovered as erroneous merely because the law is subsequently viewed differently. Recovery of the refunded amounts was therefore not sustainable.

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Issues: (i) Whether, on the facts of FOR destination contracts with door delivery, freight and other transportation charges up to the buyers' premises formed part of the assessable value for Central Excise valuation; (ii) Whether refund already sanctioned under the exemption notification could be recovered as an erroneous refund under Section 11A of the Central Excise Act, 1944.

Issue (i): Whether, on the facts of FOR destination contracts with door delivery, freight and other transportation charges up to the buyers' premises formed part of the assessable value for Central Excise valuation.

Analysis: The contracts and purchase orders were FOR destination arrangements with delivery at the buyers' premises, the buyers retained inspection rights, the assessee bore transit risk, and the goods were accepted only after delivery in acceptable condition. The invoices did not separately recover freight. On these facts, sale within the meaning of Section 2(h) of the Sale of Goods Act, 1930 occurred only upon transfer of possession at the buyers' premises. The place of removal was therefore the place where sale was completed, and the Revenue's reliance on Rule 5 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 was misplaced. The value had to be determined in accordance with the price at the place of sale under Rule 7 read with Rule 11.

Conclusion: Freight and transportation charges up to the buyers' premises were includible in the assessable value, and the assessee's valuation was correct.

Issue (ii): Whether refund already sanctioned under the exemption notification could be recovered as an erroneous refund under Section 11A of the Central Excise Act, 1944.

Analysis: The refunds had been granted on the basis of the legal position and departmental clarifications prevailing at the relevant time. A subsequent change in the legal position could not, by itself, render the earlier refunds erroneous. Since the refunds were sanctioned in accordance with the law then in force, the amounts could not be recovered merely because a later view was taken on includibility of freight. The plea of limitation was not examined in view of the merits.

Conclusion: Recovery of the sanctioned refunds as erroneous refunds was not sustainable.

Final Conclusion: The appeals of the assessees succeeded on merits, while the Revenue appeals stood withdrawn. The demand for recovery of the refunded amounts was not sustained.

Ratio Decidendi: In a FOR destination sale where property in the goods passes only at the buyer's premises, freight up to that point forms part of assessable value, and a refund lawfully granted on the then-prevailing legal position cannot later be treated as erroneous merely because of a subsequent change in law.

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