TaxTMI 
TaxTMI 
2019 (9) TMI 1007
X X X X Extracts X X X X
X X X X Extracts X X X X
....te erection to M/s Madhya Pradesh Power Transmission Company. The price of said tower is inclusive of packing and freight charges for delivery at the stores to be set up by the assessee at the site, in addition to all costs relating to fabrication/galvanisation. Department formed an opinion that the ownership of goods remains with the assessee respondent till the delivery of the goods i.e till the stores at the site. Hence, the charges pertaining to transportation of goods to the said stores should have been included in the transaction value. Accordingly, they alleged that Central Excise duty has been short paid to an extent of Rs. 50,87,123/- during the period 2012-13 to 2016-17 (June, 2016). As a result, a show cause notice bearing No. 12554 dated 16.08.2010 was served upon the respondent proposing the recovery of said short paid amount of excise duty along with the interest at the appropriate rate and the proportionate penalties. The said proposal was confirmed vide the Order-in-Original bearing No. 03/2017 dated 31.08.2017. Being aggrieved an appeal was preferred before Commissioner (Appeals) which has been allowed vide the order-under-challenge (as mentioned above) holding tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rangabad Vs. Roofit Industries Ltd. reported as 2015 (319) E.L.T.221 (Supreme Court) and that it has wrongly been distinguished from another decision of Hon'ble Supreme Court in the case titled as Commissioner of Customs, Nagpur Vs. Ispat Industries Ltd. reported as 2015 (324) E.L.T 670 (Supreme Court) that the order-under-challenge is prayed to be set aside and the appeal is prayed to be allowed. . 6. While rebutting these arguments, it is impressed upon that Purchase Orders based whereupon the impugned show cause notice has been issued, clearly shows that rate of basic price and rate of delivery i.e. rate/transportation charges have been separately negotiated and found separately reflected in the relevant purchase order. Also the amount so recovered on account of transportation charges was paid to the transporter concerned.The said amount has to be excluded from the transaction value as has been settled by the Hon'ble Apex Court in the case of Ispat Industries Ltd (Supra). The impugned order-under-challenge, therefore, has no infirmity the transportation charges have rightly been excluded from the transaction value. The appeal is accordingly prayed to be dismissed. 7. Af....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ds, and such price-cum-duty, excluding sales tax and other taxes, if any, actually paid, shall be deemed to include the duty payable on such goods. 2.................... 3. For the purpose of this Section, - a. .................... b. ..................... (c) "place of removal" means - (i) a factory or any other place or premises of production or manufacture of the excisable goods; (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without [payment of duty;] [(iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory;] from where such goods are removed; [(cc) "time of removal", 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;] (d) "transaction value" means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is lia....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in respect of trade discount and the amount of duty payable at the time of the removal of the article chargeable with duty from the factory or other "premises aforesaid." (ii) By an amendment Act of 1973, which came into force on 1.10.1975, read as follows:- "Section 4. Valuation of excisable goods for purposes of charging of duty of excise. - (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value, shall, subject to the other provisions of this section, be deemed to be - a) The normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale: Provided that - i) Where, in accordance with the normal practice of the wholesale trade in such goods, such goods are sold by the assessee at different prices to different classes of buyers (not being related persons) each such price shall, subject to the existence of the other circumstances specified in clause ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2) above makes it clear that if the cost of transportation/delivery is paid at a place other than place of removal, the transaction value shall exclude the said transportation charges. The Hon'ble Supreme Court in Para 14 of Ispat case (Supra) has observed that in para 39 of Govt. of India Vs. Madras Rubber Factory Ltd. (1995) 4SCC 349 - Cost of transportation from factory gate to the place of removal not forming part of excise duty was conceded by the Revenue. The Section 4 again suffered amendment in 1996 w.e.f 28.09.1996 vide which new Sub-Section (ia) was added to Section 4 (1) which reads as follows: "(ia) Where the price at which such goods are ordinarily sold by the assessee is different for different places of removal, each such price shall, subject to the existence of other circumstances specified in clause (a), be deemed to be the normal price of such goods in relation to each such place of removal;" Also, for the first time, "the place of removal" had one more category added to it. Section 4(4)(b)(iii) and 4(4)(ba) state as follows:- "(4)(b)(iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods ar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d. 12. Further, Section 19 to 24 of the Sale of Goods Act clarifies as to when property in goods passes to the buyer, as is apparent from the following: Section 19 Property passes when intended to pass - (1) Where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. (2) For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the conduct of the parties and the circumstances of the case. (3) Unless a different intention appears, the rules contained in sections 20 to 24 are rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer. Section 20 Specific goods in a deliverable state - Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment of the price or the time of delivery of the goods, or both, is postponed. Section 21....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d conjointly with above quoted provisions of Sale of Goods Act, the clarity, to our opinion is as follows: The amendment of 1973 clarifies that where sale is complete at the place of removal and the delivery charges either are not known at that time or are paid by the buyer subsequent to sale the delivery charges have to be excluded from the transaction value. However, in case the sale is not complete at the place of removal transaction value for purposes of accessing excise shall include the freight/transaction charges. The amendment of the year 1996 also clarifies that transportation of goods to any place till the goods still belong to manufacturer, the amount of freight is includable for assessee the Excise duty. In such circumstance even the place of delivery can be the place of removal, however, in case the sale is complete before transportation of the goods, the place of removal will be the place of clearance and shall be different from the place of delivery the transportation thereto shall not be included in the transaction value for accessing the Excise duty. 14. Similarly, the definition of transaction value itself as got inserted after the amendment of the year 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ses of a consignment agent or any other place or premises (hereinafter to as "such other place") from where the excisable goods are to be sold after their clearance from the place of removal and where the assessee and the buyer of the said goods are not related and the price is the sole consideration for the sale, the value shall be the normal transaction value of such goods sold from such other place at or about the same time and, where such goods are not sold at or about the same time, at the time nearest to the time of removal of goods under assessment. 17. No doubt Rule 5 talks about excluding the actual cost of transportation from the place of removal upto the place of the delivery of the excisable goods which otherwise is the finding of Supreme Court in Ultra Tech (Supra) case but the subsequent rider is sufficient to corroborate the above observations i.e. for excluding the transportation charges, the cost thereof is charged to the buyer in addition to the price of goods and is shown separately in the invoice for such excisable goods. The word "in addition to" is used in reference to the Act of sale of goods. Thus it stands reiterated that when the sale of excisable goods....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... deemed to be the normal price of such goods in relation to "such place of removal". Thus, if the place of removal was the factory, then the price would be the normal price at the factory. If the place of removal was some other place like a depot or the premises of a consignment agent and the price was different then that different price would be the price. It is because the newly added proviso (i-a) to Section 4(1)(a) was now providing for different prices at different places of removal that the definition of the term "place of removal" had to be enlarged. Thus the amendment was not negativing the judgments of this Court. If that had been the intention it would have been specifically provided that even where price was the same/uniform all over the country, the cost of transportation was to be added 19. Reverting to the facts of present case, as apparent from the Purchase Order issued by MPPTC Ltd. the price of 132 KV towers is: (i) Inclusive of packing & freight charges; (ii) Includes all costs relating to fabrication, galvanization and delivery at Stores (to be set up by the assessee-respondent). (iii) Includes works relating to fabrication, ga....
X X X X Extracts X X X X
X X X X Extracts X X X X
....324) E.L.T. 670 S.C : In this case a show cause notice was issued to the assessee/ Ispat Ltd. alleging that the property in goods manufactured by assessee remained with them while the goods were in transit as Ispat had taken up an insurance policy to cover the risk of loss or damage to the goods while in transit. The original adjudicating authority confirmed the demand holding that since Ispat had taken out an insurance policy to cover the risk to the loss or damage of the goods while in transit, the property in goods remained with Ispat and was not transferred to the buyer at the factory gate. The decision was set aside by the Tribunal holding that the question of ownership of goods in transit cannot be determined solely with reference to an insurance policy taken out by the manufacturer. The Hon'ble Apex Court in an appeal of the department against the said decision of Tribunal held that as a matter of law w.e.f Amendment Act of 28.09.1996, the place of removal only has a reference only to places from which manufacturer is to sell goods manufactured by him and can in no circumstance has the reference to the place of delivery which may, on facts, be the buyer's premises. Rel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....up to the stage of the transfer of that ownership inasmuch as once the ownership in goods stands transferred to the buyer, any expenditure incurred thereafter has to be on buyer's account and cannot be a component which would be included while ascertaining the valuation of the goods manufactured by the buyer. That is the plain meaning which has to be assigned to Section 4 read with the Valuation Rules. It was observed by the Hon'ble Apex case in that case that as per the terms of payment clause in procurement order therein, 100% payment for the supplies was to be made by the purchaser after the receipt and verification of material. Since the consideration was to pass on only after the receipt of goods which was at the premises of buyer, it would be manifest that sale of goods did not take place at factory gate of the assessee but at the place of buyer on the delivery of goods in question by virtue of Section 19 of Sale of Goods Act, 1930 (as reproduced above). The appeal was accordingly allowed. (3) Commissioner of Central Excise and S.T Vs. Ultra Tech Cement Ltd. [2018(19) GSTL 337(SC)] : The assessee in this case was involved in packing and clearing/forwarding of cem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s amendment has changed the entire scenario. The benefit which was admissible even beyond the place of removal now gets terminated at the place of removal and doors to the cenvat credit of input tax paid gets closed at that place. This credit cannot travel therefrom. It becomes clear from the bare reading of this amended Rule, which applies to the period in question that the Goods Transport Agency service used for the purpose of outward transportation of goods, i.e. from the factory to customer's premises, isnot covered within the ambit of Rule 2(l)(i) of Rules, 2004. Whereas the word 'from' is the indicator of starting point, the expression 'upto' signifies the terminating point, putting an end to the transport journey. Thus, the limited scope of this decision was as to whether the service tax paid on GTA service on the outward freight from the place of removal to the customer premises was eligible input service or not. There seems no difference of opinion about the place of removal to mean a place where the property in goods stands transferred to the buyer. . 21. In view of entire above discussion, we are of the firm opinion that factory gate or any other place as mentioned....