TaxTMI 
TaxTMI 
2011 (7) TMI 976
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....f this case are as follows: 2.1 M/s. Ramkrishna Electricals Pvt. Ltd., Nagpur ('assessee' for short) are manufacturers of electrical transformers and they supply the said goods to the State Electricity Boards. As per the purchase orders, the price charged by the assessee was on FOR basis inclusive of excise duty, sales tax, freight, etc. In the invoices issued for the supply, the assessee had indicated the freight amounts separately but excise duty was paid on the value exclusive of freight. Since the assessee had charged freight on equalised basis, as per the terms of the purchase orders and the sale of excisable goods was on FOR basis and the goods were cleared to various destinations as per the contract, the department was of the vie....
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..... vs. Commissioner of Central Excise, Meerut 2003 (57) RLT 19 and Filament India & Others vs. Commissioner of Central Excise, Jaipur 2003 RLT 750 (Cegat-Del.) while arriving at his conclusion. 2.3 The department is in appeal against the said order of the learned Commissioner (Appeals). 3. The arguments adduced by the learned SDR for the department is that the definition of 'place of removal' provided for in Section 4(4)(b) of the Central Excise Act, 1944 until 30/06/2000 and under Section 4(3)(c) of the Central Excise Act, 1944 effective from 01/07/2000 includes not only the factory or any other premises of production or manufacture of the excisable goods but also a depot, premises of a consignment agent or any other place or premis....
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....-works price plus excise duty and freight. This clearly shows that sale has taken place at the delivery point and not at the factory-gate. In view of the above, excise duty liability has to be discharged on the value inclusive of freight as the 'place of removal' is not the factory-gate but the stores of the Electricity Board where the goods have been delivered. The learned SDR also relies on the 37B order No. 59/01/2003 dated 03/03/2003 issued by the Central Board of Excise and Customs wherein it has been clarified that the assessable value has to be determined at the place of removal and as per the definition of 'place of removal' under Section 4(4)(b) prior to 01/07/2000 and under Section 4(3)(c) after 01/07/2000 the same includes ....
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....e factory-gate, the place of removal is the factory-gate and, therefore, the ex-factory price has to be taken to arrive at the transaction value. The learned counsel further argues that from the purchase orders it can be clearly seen that the State Electricity Board undertook testing of the samples of the goods to be supplied at the premises of the manufacturer in order to confirm the quality and workmanship of the goods and on such testing the goods stand appropriated to the State Electricity Board. In other words, property in the goods passed on to the State Electricity Board. Similarly, in the provisions relating to replacement of the rejected materials, it is provided that, if on inspection at the final testing, the State Electric....
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....if such cost is separately charged. In view of the above definition of the sale price in the Bombay Sales Tax Act, they have discharged sales tax liability on the price inclusive of freight charges. In any case, this does not affect the concept of transaction value as defined in Section 4 of the Central Excise Act, 1944. In the light of the above submissions, he contends that the order of the lower appellate authority has to be upheld and the departmental appeals ought to be rejected. 5. We have carefully considered the rival submissions. The purchase orders clearly indicates FOR destination price which consists of ex-works price including packing charges but excluding duties and taxes, freight charges, transit insurance charges, ....
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.... cost of transportation from the place of removal upto the delivery of such excisable goods."Explanation (1) to the said rule further clarifies that the cost of transportation includes the actual cost of transportation and in case where freight is averaged, the cost of transportation calculated in accordance with generally accepted principles of costing. From the terms of the contract as also from the legal provision cited above, it is absolutely clear that the place of removal in the instant case is factory though the place of delivery is the stores of the Electricity Board and, therefore, the cost transportation from the place of removal to the place of delivery cannot be included in the assessable value of the goods. 5.1 The Ho....