TMI Blog2024 (1) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be accepted. The Circular issued by the Board vide F.No. 988/12/2014-CX dated 20.10.2014 as well as F.No. 999/6/2015-CX dated 28.02.2015 has clarified that handing over the goods to the transporter for the purpose of delivery to the buyer without reserving the right of disposal of goods would be the place of removal. In the present case goods are handed over to the transporter only for carrying the goods up to buyer s premise. As per mutual understanding the price is determined as ex-factory price and therefore, the goods are at the disposal of the buyer after it leaves the factory gate. The decision rendered by the Tribunal in the case of IDMC Limited [ 2023 (3) TMI 735 - CESTAT AHMEDABAD ] would be clearly applicable to the facts of the present case. In the said case, it was held that insurance charges borne by manufacturer cannot be the sole reason to decide the ownership of the goods. The decision relied by learned AR in the case of Principal Commissioner, Raipur vs. M/s. Unique Structures and Towers Limited [ 2019 (9) TMI 1007 - CESTAT NEW DELHI ] is of no assistance to the Revenue for the reasons that in the said case the fact shows that the price was inclusive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excise invoices. Learned Counsel adverted to the Purchase Order and submitted that the price agreed is Ex-works . The place of removal has to be determined on the basis of the facts of each case. Merely because the appellant has collected the freight charges for delivery at buyers premises, the same cannot be included in the assessable value when the transaction agreed by both the parties is that the price is to be on sale at factory gate. The department has alleged that freight charges are to be included for the reason that the insurance upto buyer s premises is covered by the appellant. The insurance charges borne by the assessee cannot be criteria to decide the place of removal as has been held by the Hon ble Apex Court in the case of Commissioner of Customs, Nagpur vs. Ispat Industries 2015-TIOL-238-SC-CX. So also the Board vide Circular No. 988/12/2014 dated 20.10.2014 has clarified that the place of removal has to be ascertained in terms of provisions of Central Excise Act, 1944 read with Sale of Goods Act, 1930. Payment of transport and payment of insurance charges are not relevant to ascertain the place of removal. The place where sale has taken place or when the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he goods has not been passed on to buyer at the factory gate, cannot be accepted. The Circular issued by the Board vide F.No. 988/12/2014-CX dated 20.10.2014 as well as F.No. 999/6/2015-CX dated 28.02.2015 has clarified that handing over the goods to the transporter for the purpose of delivery to the buyer without reserving the right of disposal of goods would be the place of removal. In the present case goods are handed over to the transporter only for carrying the goods up to buyer s premise. As per mutual understanding the price is determined as ex-factory price and therefore, the goods are at the disposal of the buyer after it leaves the factory gate. The decision rendered by the Tribunal in the case of IDMC Limited (supra) would be clearly applicable to the facts of the present case. In the said case, it was held that insurance charges borne by manufacturer cannot be the sole reason to decide the ownership of the goods. The relevant paragraphs read as under:- 4 . We have carefully considered the submissions made by both the sides and perused the records. We find that there is no dispute in the fact that the appellant have cleared the goods from their factory and delivered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall, subject to the existence of other circumstances specified in clause (a), be deemed to be the normal price of such goods in relation to each such place of removal; Also, for the first time, the place of removal had one more category added to it. Section 4(4)(b)(iii) and 4(4)(ba) state as follows :- (4)(b)(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 and, (4)(ba) time of removal , in respect of goods removed from the place of removal referred to in sub-clause (iii) of clause (b), shall be deemed to be the time at which such goods are cleared from the factory; 16 . It will thus be seen that where the price at which goods are ordinarily sold by the assessee is different for different places of removal, then each such price shall be deemed to be the normal value thereof. 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. What is import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ves; (iii) amongst them the buyer is a relative and a distributor of the assessee, or a sub-distributor of such distributor; or (iv) they are so associated that they have interest, directly or indirectly in the business of each other. Explanation. - In this clause (i) inter-connected undertakings shall have the meaning assigned to it in clause (g) of section 2 of the Monopolies and Restrictive Trade Practices Act, 1969 (64 of 1969); and (ii) relative shall have the meaning assigned to it in clause (41) of section 2 of the Companies Act, 1956 (1 of 1956); (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, from where such goods are removed; (d) transaction value means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods and shown separately in the invoice for such excisable goods. Rule 7. Where the excisable goods are not sold by the assessee at the time and place of removal but are transferred to a depot, premises of a consignment agent or any other place or premises (hereinafter referred to as such other place ) from where the excisable goods are to be sold after their clearance from the place of removal and where the assessee and the buyer of the said goods are not related and the price is the sole consideration for the sale, the value shall be the normal transaction value of such goods sold from such other place at or about the same time and, where such goods are not sold at or about the same time, at the time nearest to the time of removal of goods under assessment. 21 . The actual cost of transportation from the place of removal up to the place of delivery of excisable goods is excluded from the computation of excise duty provided it is charged to the buyer in addition to the price of goods and shown separately in the invoices for such goods. Interestingly, despite the substituted Section 4 not providing for a depot or other premises as a place of removal, R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mises or such other premises as the buyer may direct the manufacturer to send his goods. As a matter of law therefore, the Commissioner s order and Revenue s argument based on that order that freight charges must be included as the sale in the present facts took place at the buyer s premises is incorrect. Further, for the period 1-7-2000 to 31-3-2003 there will be no extended place of removal, the factory premises or the warehouse (in the circumstances mentioned in the Section), alone being places of removal. Under no circumstances can the buyer s premises, therefore, be the place of removal for the purpose of Section 4 on the facts of the present case. 25 . It now remains to deal with some of the judgments cited at the Bar. Escorts JCB Ltd. v. CCE, (2003) 1 SCC 281 = 2002 (146) E.L.T. 31 (S.C.), was strongly relied upon by Shri Bagaria and sought to be distinguished by Shri Panda. The facts of Escorts JCB s case are similar to the facts in the present case. The show cause notice in that case alleged that freight and transit insurance were charged from buyers but no central excise duty was paid by misdeclaring the place of removal as the factory gate instead of the buyer s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the facts in the present case and on the Circular dated 3-3-2003, which specifically stated, following the said judgment, that insurance of goods during transit cannot possibly be the sole consideration to decide ownership or the point of sale of goods. 28 . Similarly in VIP Industries Ltd. v. Commissioner of Customs Central Excise, (2003) 5 SCC 507 = 2003 (155) E.L.T. 8 (S.C.), this Court was faced with the following question :- The question for consideration in both these appeals is whether in cases where a manufacturer includes equalised freight in the price of the goods and sells the goods all over the country at a uniform price, the Department is entitled to compute value by including the cost of transportation from the factory to the depot. This question was decided by this Court in the case of Union of India v. Bombay Tyre International Ltd. [(1984) 1 SCC 467 : 1984 SCC (Tax) 17 : 1983 (14) E.L.T. 1896] It was thereafter confirmed in the case of Govt. of India v. Madras Rubber Factory Ltd. [(1995) 4 SCC 349 : 1995 (77) E.L.T. 433] [at para 3] 29 . Like the Escorts JCB s case this judgment was also concerned with Section 4 as it stood after th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the term place of removal had to be enlarged. Thus the amendment was not negativing the judgments of this Court. If that had been the intention it would have been specifically provided that even where price was the same/uniform all over the country, the cost of transportation was to be added. Thus in cases where the price remains uniform or constant all over the country, it does not follow that value for the purpose of excise changes merely because the definition of the term place of removal is extended. The normal price remains the price at the time of delivery and at the place of removal. In cases of equalised freight it remains the same as per the judgments of this Court set out hereinabove. In our view, the amendments have made no difference to the earlier position as settled by this Court. In this view of the matter, we are unable to uphold the judgments of the Tribunal. They are accordingly set aside. The appeals are allowed with consequential relief. There shall be no order as to costs. [paras 5 to 8] 30 . In Prabhat Zarda Factory Limited v. CCE, 2002 (146) E.L.T. 497 (S.C.), this Court held :- In these matters, the question is whether fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d conditions of the said order, it becomes clear that the goods were to be delivered at the place of the buyer and it is only at that place where the acceptance of supplies was to be effected. Price of the goods was inclusive of cost of material, Central excise duty, loading, transportation, transit risk and unloading charges, etc. Even transit damage/breakage on the assessee account which would clearly imply that till the goods reach the destination, ownership in the goods remain with the supplier, namely, the assessee. As per the terms of payment clause contained in the procurement order, 100% payment for the supplies was to be made by the purchaser after the receipt and verification of material. Thus, there was no money given earlier by the buyer to the assessee and the consideration was to pass on only after the receipt of the goods which 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. The clear intent of the aforesaid purchase order was to transfer the property in goods to the buyer at the premi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 4. In this matrix of facts, the decision of Commissioner holding buyer s premises as place of removal cannot be upheld. The impugned order upholding the demand of duty is therefore set aside. Since the demand of duty is set aside, the demand of interest as well as penalty cannot be sustained. 6.2 In view of discussion above, the appeal is allowed. From the above decision of the tribunal based on Hon ble Supreme Court judgment in the case of Ispat Industries Ltd (supra), the issue is no longer res integra. Therefore, we are of the view that the freight cannot be included in the assessable value in the facts of the present case. Consequently, no demand of duty on freight would sustain. As a result, the impugned order is set aside, and appeal is allowed, with consequential relief. 7. The decision relied by learned AR in the case of Principal Commissioner, Raipur vs. M/s. Unique Structures and Towers Limited (supra) is of no assistance to the Revenue for the reasons that in the said case the fact shows that the price was inclusive of freight charges as agreed to between the parties. In Para-19 of the said order it is stated that Purchase Order issued by M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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