TaxTMI 
TaxTMI 
2026 (7) TMI 1534
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.... to Andhra Pradesh Eastern Power Distribution Company Ltd (APEPDCL) and Southern Electricity Supply Company of Orissa Ltd (SOUTHCO) under various purchase orders. The department noticed from the purchase orders that supply was on FOR destination basis and the contract price included transportation charges, loading/unloading, insurance and local taxes. The purchase orders further stipulated that safe delivery at buyer's site was supplier's responsibility; risk of loss/damage remained with supplier during transit; and ownership in goods remained with supplier till delivery at destination in good condition. 3. The department, therefore, formed a view that the place of removal was buyer's premises and not factory gate and hence freight charges up to buyer's premises were includable in transaction value. 4. Accordingly, Show Cause Notice was issued proposing recovery of differential duty of Rs.25,66,062/- (including cess), along with interest and penalty by invoking extended period. 5. The Adjudicating Authority confirmed the demand with interest and penalty. The Commissioner (Appeals) upheld the said OIO. Aggrieved, the appellant filed the present appeal. 6. Learned Counsel....
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....nternal defects, damage or shortages or any internal parts which cannot ordinarily be detected on a superficial visual examination though due to bad handling in transit or receipt of these articles. In either case the damaged or defective materials should be replaced by you free of cost to the APEPDCL. c. If no steps are taken within 15 days of receipt of intimation of defects or such other reasonable time as may deem proper to afford, APEPDCL may without prejudice to its other rights and remedies arrange for repairs/rectification of the defective materials or replace the same and recover the expenditure incurred from the deposits such as EMD, SD and performance or other monies available with APEPDCL or by resorting to legal action and also decline to accept further delivery of materials/equipment. d. Where any plant/machinery or other materials supplied by you is found to be defective in whole or in part within the guarantee period you will be intimated of the same. You should take immediate steps to rectify the defect or to replace the defective materials free of the cost within 30 days from the date of receipt of information. e. The defective portions ....
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....rchase order, it appears that the contract is on FOR basis and price is inclusive of all taxes, transit insurance, loading at factory, transportation and unloading at site, and the appellant/supplier are required to deliver the goods in good condition at buyer's site and ownership of the materials will be transferred to buyer on delivery of goods at buyer's premises in good condition. 14. These clauses unmistakably indicate FOR destination contracts. The freight was not optional or independent transport service. It formed an integral component of supply. 15. Section 4(3)(c) of the Central Excise Act defines 'Place of removal' as follows. (c) "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. Therefore, place of removal include a....
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....Court in the case of Ispat Industries (supra), whereas, another set of judgments has relied on the judgment of Hon'ble Supreme Court in the case of Roofit Industries (supra) and Emco Ltd (supra). While, as per Ispat Industries (supra) judgment, buyer's premises can never be the place of removal but as per the judgment in Roofit Industries and Emco Ltd (supra), the place of removal has to be determined on the basis of factual matrix including the point at which sale has actually taken place. Therefore, when the sale is clearly on FOR basis, following the judgments in the case of Roofit Industries and Emco Ltd (supra), the place of removal will be at the buyer's premises and obviously the cost of transportation, insurance, etc., if any, incurred by the assessee are required to be included in the assessable value. However, it is always important to decide as to what shall be the place of removal having regards to the factual matrix and relevant documents. Therefore, in case it is clearly established that the sale has not taken place at the factory and it has been effected only at the buyer's premises then such costs would be includable in the assessable value. We find that in the case....
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....ransportation charges and therefore, Hon'ble Apex Court, after observing that delivery of goods in this case was post sale, the value paid for transportation including the cost of insurance cannot be part of the transaction value. Thus, placing reliance on these judgments, we find that the Commissioner (Appeals) has rightly held that in the given factual matrix, the judgments in the case of Roofit Industries (supra) and Emco Ltd (supra) are relevant and not that of Ispat Industries (supra) as clearly the price is not ex-works. We, therefore, do not find any infirmity in the impugned order passed by the Commissioner (Appeals) insofar as merit is concerned." 21. Thus, the ratio squarely applies to the present factual matrix. 22. The appellant has argued the absence of suppression. We are unable to accept this contention. The material purchase orders clauses relating to FOR destination pricing, transfer of ownership, risk retention and freight inclusion were never specifically disclosed to the department. The department could ascertain undervaluation only on detailed scrutiny of contractual documents. Under self-assessment regime, greater responsibility lies upon the assessee to....
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.... service tax. It is needless to say that the belief can be said to be bona fide only when it is formed after all the reasonable consideration are taken into account. In the present case, we do not find any such consideration having been taken by the appellant. We are, therefore, of the view that the department has rightly invoked the extended period of limitation." ⮚ Lakhan Sing & Co - "10. ... By simple understanding of the definition if the service is covered it is necessary that the service provider discloses the facts to the department and seeks clarification. If the person concerned just waits for the department to come and knock at his door it is a mental state demonstrating suppression with intention to evade. ..." 24. We also note that the Tribunal in the case of Prathyusha Associates Shipping (P) Ltd Vs CCE, Visakhapatnam-I [2015 (1) TMI 1092 - CESTAT Bangalore] held as under. "7. The learned counsel submitted that they had entertained a bona fide belief and had assumed that since cargo handling service did not include cargo handling of export goods, it would not be taxable and therefore cannot be considered as an exempted service. When....