2023 (2) TMI 98 - AT - Central Excise

Demand of differential duty - place of removal - inclusion of freight charges in the assessable value for payment of central excise duty - It was observed by the Department that the sale of cement to few of the customers was on FOR basis that too in terms of an agreement/ the purchase order - HELD THAT:- Learned DR has laid emphasis upon clause 3 of the definition of place of removal as was relevant for the period in question because said clause includes the place from where the goods are to be sold in the definition of ‘place of removal’, the buyer’s place becomes the place of removal where sale gets concluded at buyer’s place. The said submission is not acceptable in the light of decision of Hon’ble Apex Court in COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE, NAGPUR VERSUS M/S ISPAT INDUSTRIES LTD. [2015 (10) TMI 613 - SUPREME COURT] only wherein the Hon’ble Apex Court has held that the words used in the provision are “goods are to be sold”. The contention of the Revenue would be correct if and only if the words in the provision would have been “goods have been sold”. Resultantly, the place of removal refers only to the place from where goods are to be sold by the manufacturer and thus it has no reference to the place of delivery which may be either the buyers premises or the premises as the buyer may direct the manufacturer to send his goods.

The earlier decision in the case of ESCORTS JCB LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI-II [2002 (10) TMI 96 - SUPREME COURT] was held to have similar facts as were there in the case of Ispat Industries Ltd. The Hon’ble Court also observed that in the case of COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, AURANGABAD VERSUS M/S ROOFIT INDUSTRIES LTD. [2015 (4) TMI 857 - SUPREME COURT] the Hon’ble Supreme Court had distinguished Escort’s JCB’s case. But based on the facts of that case (Roofit’s), it was held that the sale of goods in terms of Section 19 of sale of goods Act did not take place at the factory gate of assessee. The Court also observed that the Court’s attention was not drawn to Section 4 of Excise Act as originally enacted and as amended to demonstrate that the buyer’s premises cannot, in law, be “a place of removal” under the said section.

The value of freight charged by the appellant for delivering the cement to their buyers’ premises is not to be included while assessing the value for the purpose of payment of central excise duty - Appeal allowed.