TaxTMI 
TaxTMI 
TaxTMI 
2024 (5) TMI 989
X X X X Extracts X X X X
X X X X Extracts X X X X
....rse of verification of refund claims, it was found that the appellant has incurred outward freight charges from their factory to the place of delivery and the same was included in the assessable value and the duty was paid. The appellant claim refund of duty paid thereon. The case of the revenue is that as the appellant was clearing goods from their factory gate, therefore, they are not required to pay duty on the transportation charges. Consequently, they are not entitled to claim refund of duty paid on outward freight charges. In these set of facts, the refund claims filed by the appellant were rejected. Against those orders, the appellant is before us. 3. The Ld. Counsel for the appellant submits that it is not disputed the fact that the appellant is selling their goods on FOR basis to their buyers and as per the terms between the buyers, the appellant is required to deliver the goods at the buyer's place. Therefore, they are rightly paid duty on 'Outward Transportation Charges' and claim refund. He submits that their case is squarely covered by the decision of the Hon'ble Apex court in the case of Commissioner of Customs & Central Excise, Aurangabad vs. Roofit Industries Ltd.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....included in the transaction value for the purpose of payment of duty such transportation takes place before actual sale of the goods. Since the transportation charges incurred before the possession of goods is transferred to the buyer, the same will from part of transaction value. Further, since the sales are effected on FOR destination basis the amount of freight is not deductible from the transaction value. 9. We further take a note of the fact that in the case of Roofit Industries Ltd. (supra), the facts of the case are as under:- "2. It is the case of the Revenue that on the basis of general intelligence collected, respondent/assessee was indulging in evasion of Central Excise duty by not computing the assessable value of finished goods properly to the extent that it was deducting the amount of freight, insurance and unloading charges from the price of excisable goods though the place of removal of finished goods was different from the factory gate. The preventive party visited the factory premises of the assessee on 25-3-2000, conducted enquiries and resumed the records for further scrutiny. After scrutiny of various records and documents, it was revealed that the assessee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....olicy were mentioned. All above excise invoices were prepared at the time of goods leaving factory in the name and address of customers of the respondents. When the goods were handed over to the transporter, the respondents had no right to deposal of goods nor did it reserve such rights inasmuch as title had already passed to its customers. On these facts, the Hon'ble Apex Court distinguished the case of Roofit Industries Ltd. (supra), and hold that in the said case, factory gate of the assessee was the place of removal of excisable goods, but, in the case in hand, it is an admitted fact that the invoice has been raised by the appellant in the name of buyer and the same is on FOR basis. A sample invoice is extracted herein below:- In the said invoices, no separate transportation charges have been mentioned. Moreover, these transportation charges have from part of the assessable value of the goods sold by the appellant on FOR basis. Moreover, the CBEC has also issued Circular vide Circular No. 1065/4/2018-CX dated 8.6.2018 wherein it has been clarified by the CBEC that place of removal has to be ascertain on the basis of the fact of each case and in this case, the appellant remain....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on 'Outward Transportation Charges'. 14. In these terms, we set-aside the impugned orders and allow the appeals filed by the appellants with consequential relief. (Pronounced on______________) (Ashok Jindal) Member (Judicial) (C. L. Mahar) Member (Technical) C.L. MAHAR :- 15. The main point involved in the case is valuation of excisable goods manufactured and cleared by the appellant /assessee from the state of J&K to other places and claiming refund of the central excise duty paid in cash under notification 56/2002-CE dated 14/11/2002. The appellants have paid outward freight and included the same in the assessable value. The appellants were selling their goods at transaction value and their place of removal is factory gate. Outward freight paid for movement of goods sold beyond place of removal does not form part of assessable value in terms of section 4 of Act read with Rule 5 of valuation (Determination of price of excisable goods) Rules, 2000. During the relevant period the appellant deliberately excess paid the duty and claimed refund. The adjudicating authority rejected the excess refund claimed on freight. In appeal the appellant made various argumen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....003 there will be no extended place of removal, the factory premises or the warehouse (in the circumstances mentioned in the Section), alone being places of removal. Under no circumstances can the buyer's premises, therefore, be the place of removal for the purpose of Section 4 on the facts of the present case. Further, the Hon'ble Supreme court has categorically observed in the Judgment that: 18. It is clear, therefore, that as a matter of law with effect from the Amendment Act of 28/09/1996, 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. 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he supplier, namely, the assessee, freight charges would have to be added as a component of excise duty. Further, as per the terms of the payment clause contained in the procurement order, payment was only to be made after receipt of goods at the premises of the buyer. On facts, therefore, it was held that the sale of goods did not take place at the factory 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. 23. 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 pre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ll thus be seen that where the price at which goods are ordinarily sold by the assessee is different for different places of removal, then each such price shall be deemed to be the normal value thereof. Sub-clause (b)(iii) is very important and makes it clear that a depot, the 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 are all places of removal. What is important to note is that each of these premises is referable only to the manufacturer and not to the buyer of excisable goods. The depot, or the premises of a consignment agent of the manufacturer are obviously places which are referable only to the manufacturer. Even the expression "any other place or premises" refers only to a manufacturer's place or premises because such place or premises is stated to be where excisable goods "are to be sold". These are the key words of the sub-section. The place or premises from where excisable goods are to be sold can only be the manufacturer's premises or premises referable to the manufacturer. If we are to accept the contention of the Revenue, then these words will have to be substituted....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ember for majority decision in this case. (Ashok Jindal) Member (Judicial) (C.L. Mahar) Member (Technical) Hon'ble President DATE OF HEARING: 15.02.2024 APPEARANCE: Present for the Appellant: Sh. Rajat Mittal, Advocate Present for the Respondent: Sh. Aneesh Dewan & Sh. Yashpal Singh, Authorized Representatives PER : S.S. GARG 25. The difference on the following issues recorded in two separate orders passed by two Members of the original Division Bench, has been placed before me to give my opinion as a Third Member: (i) Whether in the facts of the present matter where the sale of the goods have taken place at the buyer's premises at the factory gate whether it is correct to include the amount of the freight in the assessable value of goods ; (ii) Whether the appellant is entitled for refund of the central excise duty paid by him on the element of freight and other expenditures made beyond the point of clearance i.e. factory gate. Though the facts of the case have already been recorded by the Members of the original bench, but I still feel the necessity to record the facts once again in brief. 26. The appellant are located in the state of Jammu & Ka....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the Circular has been reproduced as follows: "Exception: (i) The principle referred in para 3 above would apply to all situations except where the contract for sale is FOR contract in the circumstances identical to the judgments in the case of CCE, Mumbai-III vs. Emco Ltd [2015 (322) ELT 394 (SC)] and CCE vs. M/s Roofit Industries Ltd [2015 (319) ELT 221 (SC)]. To summarise, in the case of FOR destination sale such as M/s Emco Ltd and M/s Roofit Industries where the ownership, risk in transit, remained with the seller till goods are accepted by the buyer on delivery and till such time of delivery, seller alone remained the owner of goods retaining right of disposal, benefit has been extended by the Apex Court on the basis of facts of the cases." 28.3 The learned Counsel has further submitted that the facts of the M/s Ispat Industries (supra)'s case are clearly distinguishable and have no bearing on the present case of the appellant. 28.4 He has further submitted that the decision of M/s Roofit Industries (supra) has neither been doubted nor overruled in M/s Ispat Industries (supra)'s case by the Hon'ble Supreme Court. In fact, the same has been distinguished as it was re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and circumstances, the appellant are entitled to get the refund of central excise duty paid by them on the element of freight or not? This question has been considered recently by the Larger Bench of the Tribunal in the case of M/s The Ramco Cements Limited vs. CCE, Puducherry and vide Interim Order No. 40020/2023 dated 21.12.2023, the Larger Bench of the Tribunal after considering all the judgments of the Hon'ble High Courts as well as of the Hon'ble Supreme Court on this issue, has held in para 31 onwards as under: "31. The Karnataka High Court in Bharat Fritz Werner considered the judgment of the Supreme Court in Ultratech Cements and also the Circular dated 08.06.2018 of the Board and held as follows: "13. The CESTAT, in the case of Bharat Fritz Werner Ltd. v. C.C., C.E. & S.T-Commissioner of Central Tax [CEA 56/2019], has recorded in paragraph No. 5 that as per the purchase orders, appellant was required to supply the goods at the buyer's premises and the price of goods would include 'outward freight. Similarly, in the case of MAPAL India Pvt. Ltd. [CEA 71/2019], the CESTAT has recorded a similar finding. ***** 16. This Court in the case of Madras Cement....
X X X X Extracts X X X X
X X X X Extracts X X X X
....EA No. 56/2019 is allowed and impugned order vide Final Order Nos. 21960-21962/2018, dated 31-12-2018 passed in Appeal Nos. E/21756/2017-SM, E/21757/2017-SM and E/21758/2017-SM are set aside, and (c) CEA No. 71/2019 is allowed and impugned order vide Final Order No. 20224/2019, dated 27-2- 2019 passed in Appeal No. E/20302/2018-SM is set aside" 32. The interpretation of the judgment of the Supreme Court by the High Courts as above throws light on the controversy. The Rajasthan High Court in Mangalam Cements simply referred to the judgment of the Supreme Court without analyzing its applicability in the context of the case in denying the credit on GTA service. The Supreme Court set aside the said judgment and remanded the case to examine the facts in the light of the judgment. On the other hand, in the judgment of the Karnataka High Court in Bharat Fritz Werner, all aspects of the case have been considered, including the Circular dated 08.06.2018 of the Board, and the judgments of Supreme Court in Emco Ltd. and Roofit Industries to conclude that the place of removal is the buyer's premises. 33. No evidence has been placed by either side that the said judgment of the Karna....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gate or at a later point of time i.e. when the delivery of the goods is effected to the buyer at his premises. This aspect is to be seen in the light of the provisions of the Sale of Goods Act by applying the same to the facts of each case to determine as to when the ownership in the goods is transferred from the seller to the buyer. The charges which are to be added have put 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. 14. 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 accepta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urt on the basis of facts of the cases. 32) This circular binds the respondents though it had been issued by the CBIC on 8.6.2018 after the decision was rendered in the instant case by the CESTAT on 27.2.2018. 33) In Ranadey Micronutrients etc. vs. Collector of Central Excise, the Supreme Court held that in view of Section 37B of the Central Excise & Salt Act, 1944, instructions issued by the Board in order to ensure uniform practice of assessment of excisable goods throughout the country get statutory status and significance, and they are binding on officers of the Central Excise Department. 34) Similar view was also taken by the Supreme Court in Commissioner of Customs, Calcutta and others vs M/s Indian Oil Corporation Ltd. & another, Commissioner Of Central Excise, Bolpur vs M/s Ratan Melting & Wire Industries. 35) We may also point out that the decisions of the Supreme Court in EMCO Ltd. (supra) and M/s Roofit Industries Ltd. (supra) which specifically dealt with FOR contract sales were not referred to or considered in Ultra Tech Cement Ltd. case (supra) and the said case was not a case of F.O.R contract. 36) Learned counsel for the respondent has also brought to ....