2024 (5) TMI 194 - AT - Central Excise

Freight and insurance charges excluded from assessable value for excise duty on ex-factory sales

Sayaji Senthness Ltd Versus Principal Commissioner, CGST & Central Excise, Ahmedabad

CESTAT Ahmedabad held that freight and insurance charges are not includable in assessable value of excisable goods when sale is on ex-factory basis. The ... Valuation - inclusion of freight and/or insurance charges is includable in the assessable value of excisable goods - sale of goods is on ex-factory basis - HELD THAT:- It is observed from the sale invoices of the appellant that the sale is ex-factory as clearly mentioned in the invoice and freight and /or insurance were charged separately. In this fact the freight and /or insurance is not includable in the assessable value as held by this Tribunal in the case of Gujarat Fluorochemicals Ltd [2024 (1) TMI 883 - CESTAT AHMEDABAD] wherein this Tribunal has held that 'freight charges are not to be included in the assessable value.' From the above decision of this Tribunal, it can be seen that the facts in the present case and the case referred above is identical. Accordingly, the ratio of the above judgment is directly applicable in the present case. Hence, issue is no longer res-Integra. Thus, freight and/or insurance is not includable in the assessable value. Consequently, demand of duty on this count is not sustainable - the impugned order is set aside - appeal allowed. Issues Involved:1. Whether freight and/or insurance charges are includable in the assessable value of excisable goods when the sale is on an ex-factory basis.Summary:1. Includability of Freight and/or Insurance Charges in Assessable Value:The issue involved in the present case is whether the freight and/or insurance charges are includable in the assessable value of excisable goods when the sale of goods is on an ex-factory basis. Shri Amal Dave, Learned Counsel for the appellant, submits that the issue is no longer res-integra as it has been decided by the Tribunal in the case of Gujarat Fluorochemicals Ltd Vs. Commissioner of Central Excise and Service Tax, Vadodara- 2024 (1) TMI 883 - CESTAT Ahmedabad.Shri H P Shrimali, Learned Superintendent (AR) for the Revenue, reiterates the findings of the impugned order.On careful consideration of the submissions and perusal of records, it is observed that the sale is ex-factory as clearly mentioned in the invoice, and freight and/or insurance were charged separately. The Tribunal held that in such a scenario, the freight and/or insurance is not includable in the assessable value, as decided in the case of Gujarat Fluorochemicals Ltd.The Tribunal referred to several judgments, including Commissioner of Customs & Central Excise vs. Ispat Industries Limited, which clarified that the place of removal is to be determined on the facts of each case, and the payment of insurance charges or freight charges cannot be criteria for deciding the place of removal. The Tribunal also referenced Circulars issued by the Board, which clarified that handing over the goods to the transporter for delivery to the buyer without reserving the right of disposal of goods would be the place of removal.In the present case, goods are handed over to the transporter only for carrying the goods up to the buyer's premise. The price is determined as ex-factory price, and therefore, the goods are at the disposal of the buyer after they leave the factory gate. The decision rendered by the Tribunal in the case of IDMC Limited was also considered, which held that insurance charges borne by the manufacturer cannot be the sole reason to decide the ownership of the goods.The Tribunal concluded that the freight cannot be included in the assessable value in the facts of the present case. Consequently, no demand of duty on freight would sustain. The impugned order is set aside, and the appeal is allowed with consequential relief.The decision relied upon by the learned AR in the case of Principal Commissioner, Raipur vs. M/s. Unique Structures and Towers Limited was found to be of no assistance to the Revenue because, in that case, the price was inclusive of freight charges as agreed to between the parties. In the present case, the issue is covered by the decision in the case of IDMC Limited.After appreciating the facts and evidences, and following the judgment in the IDMC Limited case, the Tribunal held that the freight charges are not to be included in the assessable value. Consequently, the demand cannot be sustained. The impugned orders are set aside, and the appeals are allowed with consequential relief as per law.From the above decision of this Tribunal, it can be seen that the facts in the present case and the case referred above are identical. Hence, the issue is no longer res-integra. Following the above decision and considering the facts of the present case, the Tribunal concluded that freight and/or insurance is not includable in the assessable value. Consequently, the demand of duty on this count is not sustainable.The impugned order is set aside. Appeals are allowed.(Pronounced in the open court on 02.05.2024)