TaxTMI 
TaxTMI 
2024 (6) TMI 376
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....tracts by various companies for supply of transformers from their office at Jaipur, Rajasthan. From the purchase order/agreement between the appellant and its various buyers, the department observed that the freight and insurance were agreed to be inclusive in the transaction value. However, the appellant while discharging the tax liability, on those invoices, was found to had not included the cost of freight while assessing the said value. Resultantly, excise duty amounting to Rs.65,15,338/- on the freight value of Rs.5,21,22,700/-received by the appellant during the period from March 2016 to March 2017 is alleged to have been short paid by not including the same into the assessable value. The same is alleged to be the violation of Section 4 of Central Excise Act, 1944 read with Rule 4,6 and 8 of Central Excise Act, 2002. The said amount of Rs.65,15,338/- therefore is proposed to be recovered from the appellant along with the interest vide Show Cause Notice No. 35/2017/51 dated 16.04.2018. Penalty is also proposed to be imposed. The said proposal was initially confirmed vide Order-in-Original No. 01/2021-22 dated 17.05.2021. The appeal against the said order has been dismissed vid....
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....ight is required to be included in the assessable value. Learned Departmental Representative brought to notice the CBEC Circular No. 6/6/2003 dated 03.03.2003 wherein it has been clarified that "it would be essential in each case of removal of excisable goods to determine the point of sale". The another Circular No. 988/12/2014 dated October 20,2014 is also impressed upon wherein it has been clarified that place of removal needs to be ascertained in terms of provisions of Central Excise Act, 1944 read with provisions of Sale of Goods Act, 1930. Payment of transportation, inclusion of transport charges in value, payment of insurance or who bears the risk are clarified to not to be the relevant considerations to ascertain the place of removal. Resultantly, the place of sale is clarified to be the place of removal. Since in delivery on FOR destination basis, the sale gets concluded at buyer's place; buyer's place is the place of removal. The cost of freight while delivering the goods to the said place of sale has to be included in the assessable value as has been held by Commissioner (Appeals). Impressing upon no infirmity in the order under challenge, the appeal is prayed to be dismi....
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....of outward transportation of goods from the factory to customer premises is held to be not covered within the definition of input services. 7. The principle laid down in this decision is that the factory gate is the place of removal. This decision has subsequently been followed by Hon'ble Supreme Court in the case of Ispat Industries (supra)which has squarely covered the controversy before us. It has been held that freight and transit insurance should not be included in the assessable value for the purpose of payment of excise duty because the term "any other place" under the definition of "place of removal" has reference only to the places from which goods are to be sold by the manufacturer. It has no reference to the place of delivery which may be the buyer's location. This decision has overruled its earlier decision in the case of Roofit Industries Ltd.(supra) by appreciating that attention to Section 4 as originally enacted and as amended demonstrating that buyer's premise cannot be the place of removal, was not drawn before the court. 8. Reverting to the facts of the present appeal, we observe that there was an agreement between the appellant and its buyers according to whic....
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....thorized or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer, or delivery of the goods to a wharfinger for safe custody, is prima facie deemed to be a delivery of the goods to the buyer." 11. These provisions are sufficient to hold that the findings in the order under challenge, that delivery on FOR destination basis has changed the place of removal from factory to the buyers place are apparently wrong and are contrary to the decision of hon'ble Supreme Court. The Hon'ble Supreme Court earlier also in the case of Escort JCB Ltd. Vs. Commissioner of Central Excise, Delhi reported as 2002 (146) ELT 31 (SC) had held that since the sale of goods is at the ex works of the assessee and handing over such goods to the transporter is deemed to be the delivery to the buyer in terms of provisions of Sale of Goods Act, the transaction between the assesse and its buyer got completed at the factory gate of the assessee and the place of removal would be the factory premises only. Based on these observations, the freight as well as transit insurance amount shown and charged separately in t....