Place of removal determines excise valuation where title passes at buyer's premises and freight becomes part of assessable value.

Under the post-amendment excise valuation scheme, assessable value depends on the place of removal, and freight is includible where transportation is incurred up to that point. On the purchase orders, delivery was required at the buyer's premises, no separate freight was shown, and the seller retained responsibility for non-conforming goods; applying Section 19 of the Sale of Goods Act, title passed at the buyer's premises. That premises was therefore the place of removal, so the factory-to-buyer freight formed part of assessable value. Contrary authorities were distinguished on their facts because they involved ex-works sales and transfer of title at the factory gate.

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Issues: Whether, on the terms of the purchase orders, the cost of transportation from the factory to the buyer's premises was required to be included in the assessable value for payment of central excise duty.

Analysis: The amended valuation scheme under Section 4 of the Central Excise Act, 1944 and Rule 5 of the Central Excise (Valuation) Rules, 2000 turns on the identification of the place of removal. Explanation 2 to Rule 5 clarifies that transportation cost from the factory to the place of removal is not to be excluded where the factory is not the place of removal. On the purchase orders, the goods were to be delivered at the buyers' premises, the price was for delivery there, no separate freight was shown, and the seller retained the obligation to take back non-conforming goods. Applying Section 19 of the Sale of Goods Act, 1930, property in the goods passed at the buyers' premises, making that the place of removal on the facts. The reliance on contrary authorities was rejected because those cases turned on different factual settings where sales were ex-works and title had passed at the factory gate.

Conclusion: The buyer's premises constituted the place of removal on the facts, and the transportation cost was includible in value. The impugned order was not sustainable and was set aside, resulting in allowance of the appeal.

Ratio Decidendi: Where the contractual terms show that title in the goods passes at the buyer's premises, that premises becomes the place of removal and freight from the factory to that place forms part of the assessable value under the post-amendment excise valuation provisions.

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