2014 (7) TMI 226 - AT - Central Excise

Valuation - Freight and insurance charges - Held that - Goods have been sold ex-factory. However, at the request of the customers, the goods were delivered at the customers premises for which recovery of freight and insurance charges have been made from the customers. In the Order-in-Original, the adjudicating authority has given a clear finding that there is no dispute about the place of removal which is the factory. If there is no dispute about the place of removal, the question of invoking Rule 5 of Central Excise Valuation Rules, 2000 would not arise at all. In view of the above factual position, we do not find any infirmity in the impugned order passed by the lower appellate authority - Decided against Revenue.

Summary

Issues:
1. Liability of excise duty on freight and insurance charges collected by the respondent from buyers.
2. Interpretation of Rule 5 of the Central Excise Valuation Rules, 2000.
3. Determination of the place of removal for excise duty calculation.

Analysis:
1. The appeal in question concerns the liability of the respondent, a manufacturer of Metallised Paper/Paper products, to pay excise duty on freight and insurance charges collected from buyers. The Revenue contended that as the goods were delivered at the buyers' premises, excise duty should be levied on these charges. The lower appellate authority, however, ruled in favor of the respondent, stating that the place of removal remained the factory, thus exempting the respondent from paying excise duty on the charges. The Tribunal upheld this decision, emphasizing that if the place of removal is not in dispute and remains the factory, Rule 5 of the Central Excise Valuation Rules, 2000 does not apply. Consequently, the appeal by the Revenue was dismissed.

2. The Revenue argued that Rule 5 of the Central Excise Valuation Rules, 2000 should be applied to charge excise duty on the freight and insurance charges. The Additional Commissioner for the Revenue reiterated this stance, claiming that the impugned order was legally flawed. However, the respondent's counsel contended that the order was correctly decided as the place of removal was undisputedly the factory gate. The Tribunal concurred with the respondent, emphasizing that the goods were sold ex-factory, and any deliveries to customers' premises were exceptions, not altering the place of removal. Therefore, the application of Rule 5 was deemed unnecessary, and the impugned order was upheld.

3. The central issue revolved around determining the place of removal for excise duty calculation purposes. The Revenue argued that since goods were delivered at customers' premises, excise duty should be imposed on the associated charges. Conversely, the respondent maintained that the place of removal remained the factory gate, even in instances of delivery at customers' premises. The Tribunal examined the show cause notice and the adjudicating authority's order, affirming that the factory was indeed the place of removal. Consequently, the Tribunal found no fault in the lower appellate authority's decision and dismissed the Revenue's appeal for lacking merit.