2011 (3) TMI 1181 - AT - Central Excise

Cost of transportation and transit insurance incurred for supply of goods up to the premises of the buyer - whether includable in the assessable value of the goods? - Held that - Merely because the assessee has transported the goods and insured the same up to the buyer s premises it does not mean that the place of removal is the buyer s premises. As in the case of Escorts JCB Ltd. (2002 (10) TMI 96 - SUPREME COURT OF INDIA) will apply squarely to the facts of the present case and accordingly the question of inclusion of freight and insurance charges in the assessable value does not arise. Also as per the Board s circular dated 03/03/2003 the assessable value cannot be loaded with freight and insurance charges. In favour of assessee.

Summary

Issues:
Interpretation of assessable value in relation to transportation and insurance charges incurred by the assessee for supply of goods up to the buyer's premises.

Analysis:
The appeal was directed against the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Mumbai - III, where it was held that the cost of transportation and transit insurance incurred by the assessee for supply of goods up to the premises of the buyer is not includable in the assessable value of the goods. The department contended that the cost of transportation and insurance charges up to the point of sale should be included in the assessable value, as the transfer of goods takes place at the buyer's place. The department relied on a fax/post confirmation copy and argued that the sale is effected only at the buyer's premises. The advocate for the respondent, however, argued that the demand of duty on the value inclusive of transportation and freight charges was based on figures in the party's ledger and not on documentary evidence proving the buyer's premises as the place of removal. The advocate cited relevant judgments to support their case.

Upon careful consideration of submissions and perusal of documentary evidence, the Tribunal found that the terms and conditions of sale were ex-works or ex-factory, indicating that the place of removal was not the buyer's premises. The Tribunal emphasized that transporting goods and insuring them up to the buyer's premises does not establish the buyer's premises as the place of removal. Relying on the judgment of the Hon'ble apex court in a similar case, the Tribunal concluded that the freight and insurance charges need not be included in the assessable value. Referring to a previous judgment in the assessee's own case, the Tribunal reiterated that as per the Board's circular and the apex court's decision, the assessable value cannot be burdened with freight and insurance charges. Consequently, the appeal filed by the department was rejected based on the above legal principles.

In conclusion, the Tribunal's decision was based on the interpretation of the assessable value concerning transportation and insurance charges incurred by the assessee for supplying goods up to the buyer's premises. The judgment highlighted the significance of the terms of sale, the place of removal, and relevant legal precedents in determining the assessable value in such cases.