destination freight can be included in assessable value under central excise rule

[Guest]

dear experts,

pls.clarify that if we sell dutiable goods to our buyer which is at PUNE .and price term & delivery is decided on FOR.

so now making an invoice freight from removal of factory to buyer's destination will be included in assessable value and duty will be calculated on whole ass. value ..and price term & delivery. term will be disclosed as a FOR in Invoice ?

2) or we can charge separate freight in invoice after calculating Duty and price term and delivery term will be shown as a FOR in Invoice... or price term will be : exw & del. term will be : FOR.

pls. clarify how to show freight and what will be price term & delivery term to be shown in Invoice?

regards,

manan

[Rajagopalan Ranganathan]

Sir,

If the price is FOR and possession is given to buyer only at destination, then 'Sale' takes place when delivery is given at destination and hence 'destination' is place of removal. Therefore freight upto the destination will be includible in assessable value.

[Ganeshan Kalyani]

Sir, the freight is to be considered for excise duty calculation as the term is FOR. Thanks.

[KASTURI SETHI]

Sh.Manan Ji,

Answer to your query no.2 is NO. How can you show freight after calculating duty ? As advised by Sh.Ranganathan Sir, freight has to be included into the assessable value for payment of CE duty, if destination is buyer's door step.

What is the status of VAT ?

[Ganeshan Kalyani]

Sir , the same rule applies to VAT as well. The expense incurred till the goods is delivered to customer if the ownership of the goods were to transfer upon delivery of goods forms part of sale price. VAT is applicable on frieght. Thanks.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

Just for discussion sake.

Suppose VAT is paid at factory gate, then place of removal will be factory gate as Supreme Court as well as Board's circular.

[Guest]

thank you experts,

(rajagopalan sir, kasturi sir, & ganeshanji) ...

i think my point is cleared now.....

AI Summary

Destination freight inclusion: freight to buyer's doorstep under FOR delivery forms part of assessable value and VAT. Freight to the buyer's destination under a FOR delivery term is includible in the assessable value for central excise because sale and transfer of possession occur at destination; freight cannot be charged separately after duty calculation. The same rule governs VAT, with expenses until ownership transfers forming part of the sale price. If VAT is treated as payable at factory gate, the place of removal is the factory gate, altering tax incidence.