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TMI Blog2025 (5) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... hown separately in the invoices issued by the appellant, a manufacture of railway construction materials like fish plates, metal lines etc. The appellant was served with two show cause notices dated 07.04.2011 and 10.10.2011 alleging short payment of duty to the extent of Rs.5,55,533/- and seeking its recovery along with interest besides making out a proposal for imposition of penalty under section 11AC of the Act. The department alleged that the appellant had contravened the provisions of Section 4 of the Central Excise Act, 1944 read with Rule 6 of the Central Excise Rules, 2000 and had willfully misstated the facts, realizing from its buyers a sum in excess of Rs.53.00 Lakh, in the guise of freight, but not paid Central Excise duty on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before me, I find that the basic rate on the factory gate price, freight etc. has been quoted separately and further subject to the condition that the delivery is on F.O.R. basis to the buyer's premises. Therefore the place of removal is at the factory gate and central excise duty has to be paid on the basic price which excludes transportation cost which is paid by the assessee and collected from buyers at the rates prescribed in the contract irrespective of the fact that the impugned goods are delivered at the buyers premises. 9. Section 4(3)(c) of the Central Excise Act, 1944 defines place of removal as - "place of removal" means - (i) a factory of any other place or premises of production or manufacture of excisable goods. (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal for the first time. The definition of place of removal including depot etc. by the amendment made by the Finance Act, 1996 appears to have given rise to the present demands. We find that the definition also has a qualifier indicating that the place of removal has to be a place from where the goods are removed. The Departmental Authorities seem to have lost sight of this qualifying clause while persisting in their efforts to include transport and insurance charges in the assessable value. In view of this qualifying clause, the place of delivery from which the goods are not further removed cannot be taken as the place of removal." 12. Further the Hon'ble CESTAT, West Zonal Bench, Mumbai in the case of Mercedes Benz India Pvt.Ltd. vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rts the impugned order confirming the amount of short levy on the said transportation charges not included in the factory gate price. 7. We have heard the two sides and perused the case records. 8. We find that the adjudicating authority disallowed the show cause notice based on a clear finding rendered in the appellant's own case by the Commissioner(Appeals) referred to above. There is no new fact that has been brought out in the impugned proceedings by the department to negate the findings of the Ld. Commissioner (Appeals) referred supra. When it is well accepted and not being contested by the Revenue that the property in the goods did actually got transferred to the buyers at the factory gate of the appellant, and the fact of supply of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The fact that the appellant arranged for transportation of the goods at the buyer's instance cannot be a ground for loading the factory gate price with the transportation charges and the outward freight cannot be incorporated in the assessable value. The Hon'ble Supreme Court in the case of Commr. of C.Ex., Chennai-II vs. Aeons Construction Products Ltd. [2015 (319) E.L.T. 548 (S.C.)] had held that transportation charges were not includible in the assessable value as property in the goods had changed hands from the assessee to the customer at the factory gate and had upheld the impugned order. The observation of the apex court in the said case is as follows: "Admitted fact which has come on record is that the goods which were cleared by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in this appeal which is accordingly, dismissed." 10. In addition, there are series of cases on the subject matter to hold non-inclusion of transportation charges in the assessable value in case of FOR factory gate sales. Excise being a tax on manufacture, it is settled proposition that the same cannot be charged to any transportation charges in excess of actuals, as no profit on transportation is envisionable under the Central Excise statute. The Apex Court in the case of Baroda Electric Meters Ltd. vs. Collector of Central Excise [1997 (94) E.L.T. 13 (S.C.)] in the context of equalized freight being charged from everyone (as also in the present matter) had held that differential amount of freight was not includible in the assessable va ..... X X X X Extracts X X X X X X X X Extracts X X X X
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