TaxTMI 
TaxTMI 
2019 (3) TMI 848
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....upto the destination, which resulted in short payment of Central Excise duty. The Adjudicating Authority confirmed the payment of short paid Central Excise duty, but the Commissioner (Appeals) set aside the same subject to the condition that the Cenvat Credit of Service Tax paid on outward GTA service upto the place of delivery of goods, if availed by the Respondent, should be reversed/deposited with interest. In coming to this conclusion, the Commissioner (Appeals) relied upon the decision of the Supreme Court in CCE, Nagpur vs Ispat Industries Ltd, reported in 2015 (324) ELT 670 (SC). 3. In order to appreciate the contentions advanced by the learned Representative of the Department and the learned counsel for the Respondent, it would be appropriate to refer to Section 4(1) of the Central Excise & Salt Act, 1944 as it stood at the relevant time and Rule 5 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. Section 4 of the Act deals with valuation of excisable goods for purposes of charging of duty of excise and is reproduced below : "4. VALUATION OF EXCISABLE GOODS FOR PURPOSES OF CHARGING OF DUTY OF EXCISE - (1) Where under this Act, the dut....
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....sion for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods." in respect of the excisable goods removed from the place of removal referred to in sub-clause (iii) of clause (c), shall be deemed to be the time at which such goods are cleared from the factory" Rule 5 of the Valuation Rules (after its amendment w.e.f. 01 March, 2003) is also reproduced below : "5. Where any excisable goods are sold in the circumstances specified in clause (a) of sub-section (1) of section 4 of the Act except the circumstances in which the excisable goods are sold for delivery at a place other than the place of removal, then the value of such excisable goods shall be deemed to be the transaction value, excluding the cost of transportation from the place of removal up to the place of delivery of such excisable goods. Explanation 1. - "Cost of transportation" includes - (i) the actual cost of transportation; and (ii) in case where freight is averaged, the cost of tr....
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....-9-1996, the place of removal only has reference to places from which the manufacturer is to sell goods manufactured by him, and can, in no circumstances, have reference to the place of delivery which may, on facts, be the buyer's premises." (emphasis supplied) 5. The Supreme Court also examined the amendment made in Section 4 w.e.f 01 July, 2000 and observed as follows : "19. A cursory reading of the substituted provision makes it clear that the concept of "normal value" has given way to the concept of "transaction value". Thus, no longer is there a normative price for purposes of valuation of excisable goods. The actual price that is paid or payable on each removal of goods becomes the transaction value. Interestingly, it will be noticed that under Section 4(3)(c), the place of removal is defined as it had been defined in the substituted Section 4 (by the 1973 Amendment) before its further amendment in 1996. What is conspicuous by its absence in the present Section is Section 4(2) and sub-section (b)(iii) in the previous Section 4 (after its amendment in 1996). It is clear therefore, that for the second period in question in the present case, namely, 1-7-2000 to 31-3-2003, t....
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.... the factory premises. The Commissioner (Appeals) also observed that the amount of freight, sales tax etc. were charged separately and 'time of removal' was also mentioned to be when the goods left the factory premises. The Commissioner (Appeals) also noticed that the sale of goods were effected on ex-factory basis on payment of sales tax by the assessee itself and invoices were prepared at the factory directly in the name of customers at the time the goods left the factory and the freight amount was separately shown in the invoice. It is for this reason that the Commissioner (Appeals) observed that the factual position that emerged was similar to that before the Supreme Court in Ispat Industries Ltd. and, therefore, allowed the claim of the assessee by observing in paragraph 10 of the order that the place of removal was the factory gate and the place of delivery was the buyer's place. The said paragraph is reproduced below : "10. From the above, I find that the present appeals, as per conditions of contracts wherein the provisions on account of freight has separately and specifically been mentioned in the view of the contents declared in the invoice about date and time of removal....
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....certaining the valuation of the goods manufactured by the buyer. That is the plain meaning which has to be assigned to Section 4 read with Valuation Rules. 13. In the present case, we find that most of the orders placed with the respondent assessee were by the various Government authorities. One such order, i.e., order dated 24-6-1996 placed by Kerala Water Authority is on record. On going through the terms and conditions of the said order, it becomes clear that the goods were to be delivered at the place of the buyer and it is only at that place where the acceptance of supplies was to be effected. Price of the goods was inclusive of cost of material, Central Excise duty, loading, transportation, transit risk and unloading charges, etc. Even transit damage/breakage on the assessee account which would clearly imply that till the goods reach the destination, ownership in the goods remain with the supplier namely the assessee. As per the 'terms of payment' clause contained in the procurement order, 100% payment for the supplies was to be made by the purchaser after the receipt and verification of material. Thus, there was no money given earlier by the buyer to the assessee and the co....
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....gate of the assessee. Also, this Court's attention was not drawn to Section 4 as originally enacted and as amended to demonstrate that the buyer's premises cannot, in law, be "a place of removal" under the said Section. 33. As has been seen in the present case all prices were "ex-works", like the facts in Escorts JCB's case. Goods were cleared from the factory on payment of the appropriate sales tax by the assessee itself, thereby indicating that it had sold the goods manufactured by it at the factory gate. Sales were made against Letters of Credit and bank discounting facilities, sometimes in advance. Invoices were prepared only at the factory directly in the name of the customer in which the name of the Insurance Company as well as the number of the transit Insurance Policy were mentioned. Above all, excise invoices were prepared at the time of the goods leaving the factory in the name and address of the customers of the respondent. When the goods were handed over to the transporter, the respondent had no right to the disposal of the goods nor did it reserve such rights inasmuch as title had already passed to its customer. On facts, therefore, it is clear that Roofit's judgment....