TMI Blog2020 (12) TMI 1056X X X X Extracts X X X X X X X X Extracts X X X X ..... ant would not mean that the place of removal would be the place of the buyer - the payment of transit insurance by the appellant is not a decisive factor for determining the place of removal. The Supreme Court in COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE, NAGPUR VERSUS M/S ISPAT INDUSTRIES LTD. [ 2015 (10) TMI 613 - SUPREME COURT] considered this situation in detail. According to the Department, the said Industry evaded Central Excise duty by mis-declaring that the factory gate was the place of removal and not the buyer's premises and, consequently, the freight charges were required to be added in determining the assessable value. The Commissioner held that the premises of the customer was actually the place of removal and not the factory gate of the Industry. In regard to the payment made by the appellant to the buyer for any transit loss, the appellant has submitted that such charges were paid only in cases where the transit loss was more than 30 kg and even these cases, the charges were recovered from the transporters. The Commissioner (Appeals) was not justified in holding that the value of freight charges was required to be added in the assessable value of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) The buyer recovered amount of shortages from the appellant, if found at the time of delivery and insurance expenses of goods in transit were also incurred by the appellant. Therefore, the title of goods remained with the appellant till the delivery of goods at the doorsteps of the buyer; (ii) The appellant made supply of Acid Slurry to buyers on FOR delivery basis. There is nothing in the invoices to suggest that prices contracted were ex works prices. The appellant admitted that transit risk insurance was taken to cover the transit risk of goods; ; (iii) The title of the goods is transferred to the buyer only when the buyer receives the goods and ownership lies with appellant till the destination; (iv) Reliance has been placed on Commissioner of Customs Central Excise, Aurangabad Vs. Roofit Industries Ltd. [2015 (319) ELT 221 (SC)] and the Circular dated June 8, 2018 that states that place of removal is the buyer s premises when possession of goods passes from the appellant; and (v) Non-inclusion of freight charges in the assessable value was nothing but suppression of facts and, therefore, the extended period of limitation is invokable and penalty is impossib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) The arrangement between the appellant and the buyer would suggest that the delivery of the goods were FOR on destination basis and the appellant has also taken transit insurance to cover the transit risk. Thus, as the goods were not cleared for sale at factory gate, the value of goods was required to be determined in accordance with section 4(1)(b) of the Excise Act; (ii) The cost of transportation from the factory to the place of removal (which is the buyer s place) shall not be excluded for the purpose of determining the value of excisable goods. This issue has been settled by the Supreme Court in M/s Roofit Industries Ltd.; (iii) The decision of the Supreme court in Escorts JCB and Ispat Industries relied upon by the appellant would not be applicable to the facts of the present case since in that case goods were sold at factory gate, whereas in the present case the goods have been sold on FOR destination basis at the door step of the buyer; and (iv) The Central Board of Indirect Taxes and Customs, New Delhi has also clarified by a Circular dated June 8, 2018 that the principles laid down by the Supreme Court in Ispat Industries would not apply in a case where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid on the price of the goods at the factory gate. 15. This contention of the appellant has force. The sale invoices raised by the appellant clearly mentioned at serial number 4 that our responsibility ceases when goods leave factory . Rule 5 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 also provides that the cost of transportation from the place of removal to the place of delivery is not includable in the assessable value. The cost of transportation has also been separately mentioned in invoices and this cost is paid by the buyer. It is, therefore, evident that the factory gate is the place of removal and duty is charged at the price of the goods charged at the factory gate. Merely, because the payment of transit insurance has been made by the appellant would not mean that the place of removal would be the place of the buyer. The Central Board of Excise and Customs in the Circular dated October 20, 2014 also clarified as follows: (6) It is reiterated that the place of removal needs to be ascertained in term of provisions of Central Excise Act, 1944 read with provisions of the Sale of Goods Act, 1930. Payment of transport, inclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the contention of the revenue, then these words will have to be substituted by the words have been sold which would then possibly have reference to the buyer s premises. 17. It is clear, therefore, 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, be the buyer s premises . (emphasis supplied) 18. The Supreme Court also considered its earlier decision in Roofit Industries and observed as follows: 32. It will be seen that this is a decision distinguishing the Escorts JCB s case on facts. It was found that goods were to be delivered only at the place of the buyer and the price of the goods was inclusive of transportation charges. As transit damage on the assessee s account would imply that till the goods reached their de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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