TaxTMI 
TaxTMI 
2025 (8) TMI 492
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the amount of freight collected by the appellant over and above the assessable but the demand of duty on the clearance of scrap has been set aside. 2. The appellant is engaged in the business of manufacture of seating systems, various automobile parts and accessories [the goods]. The factory of the appellant is situated at Pithampur in District Dhar. In the said factory, the appellant undertakes manufacture of the goods. In the present case, the appellant arranged the delivery of the goods at premises of the buyer on Freight on Road [FOR] basis. 3. The appellant contends that the place of removal cannot be the premises of the buyer even though the sale on FOR destination basis may have been completed at the premises of the buyer. According to the appellant, the place of removal in such a situation would continue to be the factory gate. 4. During the course of audit of the records of the appellant for the period 2013-14 to 2017-18, it was found that the appellant had delivered the goods to customers at the designated locations/doorsteps as per the customers delivery condition. Thus, the supply was on FOR basis. It was also noticed that the amount of freight collected by t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....om their factory premises but had failed to reverse an amount as required under provisions of Rule 6(3) of the Cenvat Credit Rules 2004. The appellant submitted that the scrap being sold was in relation to the plastic packaging material received by the Appellant and has not arisen from the manufacturing activity as the company is engaged in manufacturing of Automobile Seats, Parts and accessories of four wheelers etc. only. xxxxxxxxxx 15. The ratio of the said order of Hon'ble CESTAT is squarely applicable to the facts of the case. In view of the above, I set aside the demand of Rs. 1,24,469/- along with interest and penalty." (emphasis supplied) 7. This appeal has been filed to assail that part of the order passed by the Commissioner (Appeals) that has upheld the demand of duty on the freight amount received by the appellant from the buyer when the sale was on FOR basis. 8. Shri Shrenik R. Gandhi, learned counsel for the appellant placed reliance upon the decision of the Tribunal in Jindal Tubular (India) Ltd. vs. Principal Commissioner, CGST and Central Excise, Ujjain [(2023) 4 Centax 3 (Tri.-Delhi)] to contend that the freight amount is not requi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "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. 16. Thus, in view of rule 2(t), the definition of 'place of removal' in section 4(3)(c) of the Central Excise Act would apply to the 2004 Rules also. 17. According to the appellant, since the 'place of removal' is the factory, the cost of transportation of the goods upto the premises of the buyer would not be included in determining the transaction value of the goods for the purpose of payment of excise duty. 18. The department, however, believes that since the 'place of removal' is the premises of the buyer, the cost of transportation of the goods upto the premises of the buyer would be included in determining the transaction value. 19. It also needs to be noted that the Central Board o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ied. Apex Court, in this case has upheld the principle laid down in M/s. Escorts JCB (supra) to the extent that 'place of removal' is required to be determined with reference to 'point of sale' with the condition that place of removal (premises) is to be referred with reference to the premises of the manufacturer. The observation of Hon'ble Court in para 16 in this regard is significant as reproduced below: "16. It will thus be seen 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 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 the premises is referable only the manufacturer and not to the buyer of excisable goods. The depot or the premises of the consignment agent of the manufacturer are obviously places which are referable to the manufacturer. Even the expression "any other place of premises" refers....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly whether it is on the factory gate or a later point of time when the delivery of goods is effected to the buyer at the premises of the buyer. The Supreme Court observed that the charges which are to be added have to be upto the stage of transfer of the ownership in as much as once the ownership in goods stands transferred to the buyer, any expenditure incurred, thereafter, has to be on the account of the buyer and cannot be a component which would be included while ascertaining the valuation of goods. In this connection the Supreme Court made the following observations: "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 da....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e buyer's premises as the place of removal. The Supreme Court noticed the earlier decision of the Supreme Court in Roofit Industries in paragraph 31 of the decision and made the following observations in paragraph 32. "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 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." (emphasis supplied) 24. However, the Supreme Court in paragraph 33 noticed that the factual position was different from the factual position emerging in Roofit Industries as the goods manufactured wer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce Tax paid on outward transportation of goods by the assessee even after 1-4-2008. The appellant-assessee would thus be entitled to such benefit for the period 1-4-2008 to 31-7-2008 which has been denied to it by the authorities below. 13. For the forgoing reasons, this appeal stands allowed. The question of law is answered in favour of the assessee and against the Revenue. The order of the Tribunal to the extent of disallowing Cenvat credit to the appellant for the period after 31-3-2008 is quashed." 17. The Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes and Customs, New Delhi, has issued Circular dated 8-6-2018 and clarified the definition, 'Place of Removal'. In Para 5 of the Circular, the Ministry has referred to the judgment in the case of CCE & ST v. Ultra Tech Cement Ltd. [Civil Appeal No. 11261 of 2016, dated 1-2-2018] [2018 (9) G.S.T.L. 337 (S.C.)] and stated that, in that case, the Apex Court has held that Cenvat credit on GTA Service from the place of removal to the buyer's premises is not admissible. 18. In the instant cases, the place of removal is buyer's premises. Therefore, the authority in the case of Ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the appellant had collected the amount towards freight from the customers but have not included the same in the transaction value and hence, no central excise duty was paid on the said amount. The ownership of the goods was to be transferred at the buyers' premises, where the sale actually took place and, therefore, the 'place of removal' for the purpose of valuation under Section 4 was the buyers' premises. It is also noticed that along with the ownership of the goods, risk in transit, remained with the appellant till goods were accepted by the buyer on delivery, until such time the delivery was made, the appellant remained the owner of the goods. These facts clearly show that the point of sale was where the ownership of goods was transferred to the buyers or customers, and, therefore, all the expenses incurred and collected by the appellant till the buyers' premises shall be part of the assessable value under Section 4 of the Act." (emphasis supplied) 29. The division bench also referred to the Circular dated 08.06.2018 and observed as follows: "13. xxxxxxxxxxxx. In the present case, it is an admitted position that the contract was on FOR basis and, therefo....