TaxTMI 
TaxTMI 
2024 (9) TMI 1168
X X X X Extracts X X X X
X X X X Extracts X X X X
....y sale, therefore in the light of the various judgments the freight shown separately in the invoice is not includible in the assessable value. He placed reliance on the following judgments:- • CCE V/s Ispat Industries Ltd. - 2015 (324) E.L.Τ. 670 (S.C.) • Jindal Tubular (India) Ltd. V/s CCE-(2023) 4 Centax 3 (Tri-Del) • Eimco Elecon India Ltd. V/s CCE-2024 (4) TMI 62 CESTAT Ahmedabad • Mira Industries V/s CCE-2023 (4) TMI 655 CESTAT Ahmedabad • Panama Petrochem Ltd. V/s CCE-2024 (4) TMI 325- CESTAT Ahmedabad • Gujarat Fluorochemicals Limited V/s CCE-2024 (1) TMI 883 - CESTAT Ahmedabad • Sayaji Senthness Ltd. V/s CCE- 2024 (5) TMI 194 CESTAT Ahmedabad • Graphite India Ltd V/s CCE-2017 (358) E.L.T. 263 (Tri - Mumbai) • Jost's Engineering Co. Ltd. V/s CCE-2017 (7) G.ST.L. 344 (Tri. - Mumbai) • Emerson Network Power (I) Pvt. Ltd. V/s CCE-2017 (6) G.S.T.L. 321 (Tri. Mumbai) • Sanjivani Ssk Ltd. V/s CCE-2016 (333) E.L.T. 363 (Tri. - Mumbai) • CCE V/s Accurate Meters Ltd.-2009 (3) TMI 1-Supreme Court • Escorts JCB ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., Rule 5 of the Central Excise Rules was substituted, with effect from 1.3.2003, to read as follows: "Rule 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 upto 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 transportation calculated in accordance with generally accepted principles of costing. Explanation 2 - For removal of doubts, it is clarified that the cost of transportation from the factory to the place of removal, where the factory is not the place of removal, shall not be excluded for the purposes of determining the value of the excisable goods." 23. It is clear, therefore, that on and after 14.5.2003, the position as it obtained from 28.9.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... To us, the whole reasoning seems to be untenable. The two aspects have been mixed up -- one relating to the transaction of sale of the goods and the other arranging for the transit insurance for the buyer and charging the amount expended for the purpose from him separately." [at para 8] "From the above passage it is clear that ownership in the property may not have any relevance insofar as insurance of goods sold during transit is concerned. It would therefore not be lawful to draw an inference of retention of ownership in the property sold by the seller merely by reason of the fact that the seller had insured such goods during transit to the buyer. It is not necessary that insurance of the goods and the ownership of the property insured must always go together. It may be depending upon various facts and circumstances of a particular transaction and terms and conditions of sale. A reference has also been made to Colinvauz's Law of Insurance, 6th Edn. by Robert Merkin to indicate that there may be insurance to cover the interest of others, that is to say, not necessarily the person insuring the interest must be the owner of the property." [at para 10] 26. This....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not amended when the definition of the term "place of removal" was extended. According to the Tribunal the result was that only the transport charges from the place of removal to the place of delivery were to be excluded from the value. We have heard the parties at length. In our view, Section 4 has to be read as a whole. Under Section 4(1)(a), the normal price is the price at which 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 price is the sole consideration for sale. Therefore, the normal price is the price at the "time of delivery" and "at the place of removal". Before the amendment, the place of removal was only the factory or any other place or premises where the excisable goods were produced or manufactured or a warehouse or any other place or premises where any excisable goods have been permitted to be deposited without payment of duty. Thus, the price would be the price at that place. By the amendment proviso (i-a) to Section 4(1)(a) has been added. Under Section 4(1)(a)(i-a) where the price of the goods is different for different place....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd insurance for delivery to the customers from the depot would not be so includible as per the said judgment." This judgment, therefore, also holds that even in a depot sale, freight and insurance for delivery to customers from the depot to their premises cannot possibly be included, and followed the Escorts JCB case supra. 31. With this we come to two recent judgments of this Court. In CCE & Customs v. Roofit Industries Ltd., (2015) 319 E.L.T. 221 (S.C.), this Court, after distinguishing the Escorts JCB's case, stated:- "The principle of law, thus, is crystal clear. It is to be seen as to whether as to at what point of time sale is effected, namely, whether it is on factory 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 transfer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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." These are clear finding of facts on the aforesaid lines recorded by the Adjudicating Authority. However, CESTAT did not take into consideration all these aspects and allowed the appeal of the assessee by merely referring to the judgment in Escorts JCB Ltd. [(2003) 1 SCC 281 : (2002) 146 ELT 31] Obviously the exact principle laid down in the judgment has not been appreciated by CESTAT." [at paras 12 - 15] 32. It will be seen that this is a decision distinguishing the Escorts JCB's case on facts. It was found that goods were to be delivered only at the place of the buyer and the price of the goods was inclusive of transportation charges. As transit damage on the assessee's account would imply that till the goods reached their destination, ownership in the goods remained with the 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 procu....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... separately in the sale invoices of excisable goods is includible in the assessable value of such excisable goods. 4.1 Having considered the rival contention we find that freight have been charged separately and received separately. We also take notice that the buyers of the goods-Western Coalfields Ltd., Nagpur and M/s Bharart Coking Coal Ltd. (A Subsidiary of Coal India Ltd.) have issued purchase order specifying the price for the goods separately and also specifying the transportation cost for the supply of goods. Accordingly, appellant have supplied the goods and raised invoices for the price of goods and the transportation. Thus, it amounts to showing the cost of transport separately in the invoices. 4.2 The relevant Rule 5 of the Valuation Rules is reproduced below:- "Rule 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 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h of CESTAT in the case of Sterlite Optical Technologies Ltd. v. CCE & C, Aurangabad - 2015 (329) E.L.T. 341 (Tri.-Mumbai) has taken a view in identical facts that freight will be allowable as a deduction from the composite price. Thus, the contention of the Department to include the freight amount in the assessable value does not meet the test of law and hence not legally sustainable. Hence, we find no merit in order passed by the appellate authority. 4.5 We also find that in view of the various judgments cited by the Ld. Advocates, freight amount is not includable in the assessable value of the goods for charging excise duty. Since we have decided the matter on merits of the case, we are not going to the issue of limitation raised by Ld. Advocate. 5. Accordingly, the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law." In another case of Mira industries (supra) this Tribunal passed the following order:- "04. We have carefully considered the submission made by both sides and perused the records. The issue required to be decided in this matter is that whether the amount shown separately as freight and ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the assessable value even though the cost of transportation has been calculated on average basis and not on actual basis. The ratio of the said judgment apply squarely to the facts of the present case. 5.2 Similarly, this Tribunal in the case of Majestic Auto v. CCE cited supra, had held that the equalised cost of freight shown separately in the invoices cannot be included in the assessable value even after 1-7-2000 when the place of removal remains the factory-gate." 4.2 We also find that in the matter of Lamina Suspension Products Pvt. Ltd. Vs. Commissioner of C.Ex. Mangalore - 2018 (17) G.S.T.L. 296 (Tri. - Bang.) the tribunal dealing with the identical issue held as under : - "4. By considering the total facts of the case, it appears that the appellant is a manufacturer of leaf spring which attracts the Central Excise duty under the heading 85 of CETA, 1985. The appellant clears the goods from their factory and through their depots situated in different parts of the country. The appellant has shown the handling charges collected @ 1% of the value as a part of the transaction cost by raising separate bills. So, the Department has demanded the duty of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... NO-VILLAGE PRANGUT TALUKA MULSH DIST-PUNE 412108 Pin Code: Reg No & Date Req Name Quote No 061 NALCO 06-2015 ATUL SWADI Payment Terms 80 DAYS FROM THE INVOICE DATE Quote Date Currency Purchase Order No must be quoted on at Advices invoce, Challans and correspondence The Order is subject to Terms & Conditions set out below and reverse of this form Delivery & Invoice must be accompanied by documsan iated on the reverse of form For Overseas shipment documents can te sent to Bark Address mendoned on the reverse of this form INDIAN RUPEES S/N Description 001 R-5042 ALUMINUM CHLOROHYDRATE Country of origin IN INDIA Inco Terms EXW EX WORKS LABEL DETAILS Manufacturer Name Product Name Gross Weight Net Weight Batch No. Manufacturing Date RATE ARE EX-WORKS Special Instructions: BD 3.75% EXTRA ED 12.5% EXTRA CST 2% EXTRA AGAINST FORM C FREIGHT EXTRA AT ACTUAL ws VATE 1920067202 De01.04.2005 CIN NALCO: U2222PN137PLC140332 wa CST 1820072278 0 29.07.19 JNA JSTA JU 2455(L) D 27.08.2004 MH-VAT: 27334 JHA CST: JU 2052c) 0 27.08.2004 MH-CST 27390 31.31.44.230 DU:01.06.....