TMI Blog2022 (12) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... uyer of excisable goods. Hon ble Apex Court in the case of UNION OF INDIA ORS. ETC., ETC. VERSUS BOMBAY TYRE INTERNATIONAL LTD. ETC., ETC. [ 1983 (10) TMI 51 - SUPREME COURT ] held that cost of transportation from place of removal to the place of delivery is statutorily excluded. The harmonious reading of three of above provisions (Section 4 of Central Excise Act, Rule 5 of Valuation Rules and definition of place of removal under section 4 of Central Excise Act, 1944) makes it clear that buyer s premises can never be, by any law, can be called as the place of removal of excisable goods. The place of removal can never be equated with the place of delivery. Place of removal alone is relevant for the purpose of section 4 i.e. for the purpose of calculating the transaction value as it was held by Hon ble Apex Court in the case of ESCORTS JCB LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI-II [ 2002 (10) TMI 96 - SUPREME COURT ]. Undisputed fact remains is that appellants are mentioning the freight charges as separately in the invoices issued by them to the purchasers, there is nothing in the invoices or any other documents which shows that sales are on FOR dest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uct. Accordingly, vide show cause notice No. 06/2018-7358 dated 03.05.2018, Central Excise duty Rs.1,13,52,289/- was proposed to be recovered, as being short paid from the appellant along with interest and penalty. The said proposal was initially confirmed by the Original Adjudicating Authority vide Order-in-Original No. 06/2019 dated 05.02.2019. The appeal thereof has been dismissed by Commissioner (Appeals) vide Order-in-Appeal No. 1244/2018 dated 29.05.2019. Being still aggrieved by the Order, appellant is before this Tribunal. 2. We have heard Shri A K Prasad, learned Counsel for the appellant and Shri Rakesh Agarwal, learned Authorised Representative for the Revenue. 3. It is submitted on behalf of the appellant that appellants are manufacturing liquid CO 2 at their two units, one is in Gwalior, and another unit is located at Bhatinda, Punjab. Such manufactured product needs specialized tankers for transportation and the appellants have their own fleet of such specialized tankers. Accordingly, the appellants were selling the said liquid gas to various industrial buyers on the basis of purchase orders on the prices indicated in the purchase order. Further, they are charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as such, the buyer s place was the place of removal. Transportation charges up to such place have rightly been included in the assessable value of the liquid CO 2 manufactured by the appellant. The appeal is accordingly, prayed to be dismissed. 5. Having heard the rival contentions, we observe as follows: The issue involved herein is of the valuation and as to whether the freight charges recovered by the appellant manufacturer from the purchasers of manufactured product / liquid CO 2 for transporting the said product in its own specialized tankers to the buyers premises have to be included in the transaction /assessable value or not. 6. The relevant provision for the purpose is section 4 of Central Excise Act, 1944 and Rule 5 of Central Excise Valuation Rules, 2000. Section 4(1) reads as follows: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been permitted to be stored 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. From this definition, it is clear that in case of a factory gate sale from a non-duty paid warehouse, or from a duty paid depot (from where the excisable goods are sold, after their clearance from the factory), the determination of the place of removal does not pose much problem. However, there may be situations where the manufacturer /consignor may claim that the sale has taken place at the destination point because of following terms of the sale contract/agreement (i) the ownership of goods and the property in the goods remained with the seller of the goods till the delivery of the goods in acceptable condition to the purchaser at his door step; (ii) the seller bore the risk of loss of or damage to the goods during transit to the destination; and (iii) the freight charges were an integral part of the price of goods. However for place of sale to be the place of removal, it is the place from where the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ree of above provisions (Section 4 of Central Excise Act, Rule 5 of Valuation Rules and definition of place of removal under section 4 of Central Excise Act, 1944) makes it clear that buyer s premises can never be, by any law, can be called as the place of removal of excisable goods. The place of removal can never be equated with the place of delivery. Place of removal alone is relevant for the purpose of section 4 i.e. for the purpose of calculating the transaction value as it was held by Hon ble Apex Court in the case of Escorts JCB Ltd. vs CCE, Delhi reported as [2002 (146) ELT 31 (SC)]. In the Escorts case the price charged from the buyer was ex-work and was exclusive of freight insurance. The Hon ble Apex Court observed that since the transit insurance was arranged by the assessee, the Tribunal inferred with the ownership of the goods so retained by the assessee only. It was delivered to the buyers on the reasoning that otherwise there would be no occasion for seller namely the assessee to take the risk of any kind of damage to the goods during transportation. The Hon ble Supreme Court while relying upon Bombay Tyre International (supra) case has held that insurance of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch was at the premises of the buyer. From the aforesaid, it would be manifest that the sale of goods did not take place at the factory gate of the assessee but at the place of the buyer on the delivery of the goods in question. 12. These findings have been modified by Hon ble Apex Court in its recent decision in the case of CC CE, Nagpur vs Ispat Industries Ltd. (supra) while upholding 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 is to be referred with reference to the premises of the manufacturer. 12.1 In the case of Ispat Industries the Assessee was making the payment of duty by declaring that their factory gate was the place of removal, and not the buyer's premises. The period involved therein was from 28.9.1996 to 31.3.2003. Five show cause notices were issued to the assessees stating that the property in goods manufactured by them remained with the Assessee while the goods were in transit as Assessee had taken out an insurance policy to cover the risk of loss or damage to the goods while in transit. It was stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... livery at a place other than the place of removal, the cost of transportation from the place of removal to the place of delivery was statutorily excluded. It was further observed by the Hon'ble Supreme Court that Section 4 as substituted by the 1973 Amendment Act suffered a further amendment in 1996. 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. The important point which was noted was that each of these premises is referable only to the manufacturer and not to the buyer of excisable goods. Even the expression any other place or premises refers only to a manufacturer's place or premises because such place or premises is stated to be where excisable goods are to be sold . Further, it was observed that as a matter of law with effect from the Amendment Act of 28.9.1996, the place of removal only has reference to places from which the manufacturer is to sell goods manufactured by him, and can, in no circumstances, have reference to the place of delivery which may, on facts, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orter, the respondent had no right to the disposal of the goods nor did it reserve such rights inasmuch as title had already passed to its customer. 12.5 As far as Roofit (supra) decision is concerned, the Hon ble Court observed that This Court s attention was not drawn to section 4 as originally enacted and as amended to demonstrate that the buyer s premises cannot, in law, be a place of removal . However it was clarified that principle of place of removal will now be distinguishable based on facts of the case. 13. Subsequently Hon ble Apex Court in the case of CCE ST vs. Ultra Tech Cement Ltd. reported as [2018 (9) GSTL 337 (SC)] has held that the depot, or the premises of a consignment agent of the manufacturer are obviously places which are referable only to the manufacturer. Even the expression any other place or premises refers only to a manufacturer s place or premises because such place or premises is stated to be where excisable goods are to be sold . These are the key words of the sub-section. The place or premises from where excisable goods are to be sold can only be the manufacturer s premises or premises referable to the manufacturer. If we are to accept t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified tankers owned by the appellant. 16. With respect to the circular, as relied upon by the Adjudicating Authority we observe that the circular is contrary on the basis of its record. At one point of time it is citing the outcome of Ispat Industries (supra) decision and at another point of time, it is defining place of removal in terms of the place where sale gets completed in terms of Sales Act. Otherwise also Circular cannot supercede the Statute nor it can supercede even the finding of Hon ble Apex Court which becomes law of land in terms of article 141 of the Constitution of India. 17. In the light of entire above discussion, we hereby follow the outcome of Ispat Industries (supra) case and hold that, the freight charges are not includible in the assessable value of liquid CO 2 those being separately charged in the invoices and the gas was sold at the time of clearance from the factory of the appellant. The authorities below are held to have wrongly confirmed the duty demand against the appellant on the basis of inclusion of freight charges in assessable value. We, therefore, set aside the impugned Order-in-Appeal. Consequent thereto appeal stands allowed. (Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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