2011 (7) TMI 976 - AT - Central Excise

Place of removal - Cost of freight - assessee had indicated the freight amounts separately but excise duty was paid on the value exclusive of freight. - held that - the place of removal remains the factory-gate and, therefore, the cost of transportation from the place of removal to the place of delivery cannot be included in the assessable value of the goods as per the provisions of Section 4 of the Central Excise Act, 1944. - Decided in favor of assessee.

Summary

Issues:
- Determination of the place of removal for excise duty liability calculation.
- Inclusion of transportation cost in the assessable value of goods.

Analysis:

Issue 1: Determination of the place of removal for excise duty liability calculation
The case involved a dispute regarding the determination of the place of removal for excise duty liability calculation. The department argued that the goods were delivered to the buyer at their stores, making the point of sale not the factory-gate but the stores of the Electricity Board. They contended that the cost of transportation from the factory-gate to the stores should be included in the assessable value. The department relied on the definition of 'place of removal' under the Central Excise Act and a clarification by the Central Board of Excise and Customs. However, the appellant argued that the sale took place at the factory-gate as per the purchase orders, and the property in the goods passed on to the buyer at the factory-gate. They emphasized that the transaction value should be accepted as the assessable value, considering the conditions of sale. The Tribunal analyzed the terms of the contract, the legal provisions, and previous judgments to determine the correct place of removal. The Tribunal concluded that the place of removal in this case was the factory-gate, and thus, the cost of transportation to the delivery point should not be included in the assessable value of the goods.

Issue 2: Inclusion of transportation cost in the assessable value of goods
The second issue revolved around whether the transportation cost should be included in the assessable value of the goods. The department argued for the inclusion of transportation cost based on the delivery point being the stores of the Electricity Board. They highlighted that the price indicated in the purchase orders included freight charges. On the other hand, the appellant contended that the sale occurred at the factory-gate, and the property in the goods passed on to the buyer at that point. They emphasized that the cost of transportation should not be included in the assessable value. The Tribunal referred to relevant legal provisions, contractual terms, and previous judgments to support its decision. The Tribunal held that since the place of removal was determined as the factory-gate, the transportation cost from the place of removal to the delivery point should not be considered in the assessable value of the goods.

In conclusion, the Tribunal upheld the order of the lower appellate authority, dismissing the departmental appeals. The judgment clarified the determination of the place of removal and the inclusion of transportation cost in the assessable value of goods, providing a detailed analysis based on legal provisions and precedents.