2026 (4) TMI 513

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....lant had responsibility of the finished goods till these were handed over at the buyer's place. Considering the buyer's destination as place of removal, the appellant had paid the service tax on freight /transportation charges collected from the buyers and also availed the Cenvat credit of the same in their factory. 1.2 After conducting the investigation and collection of details of freight and insurance charges, Revenue issued a show cause notice dated 21.08.2019 to the appellant for demanding Central Excise duty of Rs.2,69,101/- (including Education Cess and Secondary & Higher Education Cess) under Section 11A(4) of the Central Excise Act,1944 along with interest under Section 11AA and penalty under Section 11AC of the said Act read with Rule 25 of the Central Excise Rules,2002. The show cause notice was adjudicated by the Assistant Commissioner vide order dated 20th December,2019, wherein he held that transportation and insurance charges so collected by the appellant from their buyers in respect of door delivery of goods are includable in the assessable value of the finished goods for payment of central Excise duty. He confirmed the above demand along with interest and also i....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....le in the assessable value. * The appellant relies upon the following decisions:- (i) Classic Polytubes Pvt. Ltd. Vs CCE, Lucknow- 2016 (336) E.L.T. 180 (Tri. - All.) (ii) CCE, Pondy Vs Wipro Acer Ltd.- 2015 (323) E.L. T. 158 (Tri. - Chennai). [Also upheld by Hon'ble Supreme Court as reported at 2016 (331) E.L.T. A37 (S.C.)] (iii) GSC Toughened Glass (P) Ltd, Vs CCE, Jammu & Kashmir- 2015 (329) E.L.Τ. 835 (Tri. - Del.) (iv) CCE, Noida Vs Accurate Meters Ltd.- 2009 (235) E.L.T. 581 (S.C.) (v) CCE, Raipur Vs Jaiswal steels enterprises Pvt. Ltd. -2016(338) E.L.T. 309 (vi) Sanjivani SSK Ltd. Vs. CCE, Aurangabad-2016 (333) E.L.T. 363 (vii) Sterlite Optical Technologies Ltd. Vs C.C.E. & C. Aurangabad- 2015 (329) E.L.T. 341 (viii) CCE, Nagpur Vs Mainmood Enterprises + Consultant- 2014 (303) E.L.T. 279 (ix) CCE, Nashik Vs Garware Enterprises Ltd. -2014 (301) E.L.T. 341 In view of above, the appellant prayed for allowing their appeal and set aside the impugned order. 3. During hearing, learned Advocate mentioned that the amount of freight collected from the buyer is nothing but reimbursement ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....(Ker.) * CCE, Chandigarh Vs. Punjab Tractors Ltd - 2010 (259) ELT 123 (Tri.) In view of the above, he pleads to sustain the order of the Appellate Authority by setting aside the appeal of the party. 5. We have heard the rival submissions. Before proceeding further, relevant provisions of Section 4 of the Central Excise Act, 1944, and 'place of removal' are as under:- * "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 their value, then, on each removal of the goods, such value shall - (a) in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the transaction value; (b) in any other case, including the case where the goods are not sold, be the value determined in such manner as may be prescribed." * "Place of removal" as defined under Section 4(3)(c) means: - (i) a factory or any other place or premises of production or ma....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....transportation of finished goods was taken by the assessee on behalf of the purchaser as was clear from the purchaser's letter dated 06.12.2001 addressed to the assessee. In Accurate Meters Ltd case, the buyer had entered into two separate contracts, i.e. one for sale of meter and the other one for transportation and transit insurance thereof. The transportation charges were on equalised freight basis. In both the cases, Hon'ble Apex Court held that freight and insurance charges do not constitute a part of value of the goods for charging Central Excise duty. (ii) In the case of Chamundi Explosives Pvt Ltd (cited supra), as relied upon by the appellant, the assessee was clearing goods at the factory gate and at the request of the customer, paying and insurance premium by separately mentioning in the invoice(s). On that reasoning, the Tribunal held that these charges are not includable in the value of finished goods. (iii) In the case of Associated Strips Ltd as relied upon by the appellant, we find that the party was supplying Steel Tubular Poles, Rectangular Poles and Pipes to Electricity Boards and Government departments who were floating tenders for inviting offer of su....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

...., 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 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 Valuation Rules. 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 or....