2015 (9) TMI 461 - AT - Central Excise

Valuation - inclusion of freight where goods delivered at the customer s premises at pre-agreed freight - transaction value under section 4 - freight charges were shown in the invoices and collected by the appellant from his customers - determination of place of removal. Held that - Claim of the ld. Advocate therefore, needs detailed examination with reference to purchase orders, invoices, L.R.s transit insurance policy, etc., to arrive at the place of sale or place of transfer of possession from appellant to customer as per Section 2(h) of the Central Excise Act. Learned Advocate has also pointed out differences in category (b) and category (c) sale. For example name of consignor/consignees, transit insurance/risk, etc. These claims will have to be first verified, particularly when no such claim was made by the appellant in the two cases referred above. After factually verifying above claim of the appellant, matter will have to be examined with reference to Sections 4 and 2(h) of the Central Excise Act. We do not consider it necessary to go into other issues such as limitation, etc., at this point of time, as the result of above exercise may have bearing on the same. - matter remanded back.

Summary

Issues Involved:
1. Inclusion of freight charges in the assessable value under Section 4 of the Central Excise Act, 1944.
2. Determination of the place of sale or transfer of possession of goods.
3. Verification of factual claims regarding different categories of sales.
4. Impact of VAT payment on the determination of the place of sale.
5. Examination of relevant case laws and circulars.

Issue-Wise Detailed Analysis:

1. Inclusion of Freight Charges in Assessable Value:
The primary dispute revolves around whether the freight charges, shown separately in the invoice and reimbursed by the customer, should be included in the assessable value of the goods under Section 4 of the Central Excise Act, 1944. The Revenue contends that since the goods are delivered at the customer's premises, the transaction value should include the freight element. The appellant argues that the goods are sold at the factory gate, and the freight charges should not be included in the assessable value.

2. Determination of Place of Sale or Transfer of Possession:
The determination of the place of sale or transfer of possession is crucial. The appellant claims that the goods are sold at the factory gate and the transportation is merely arranged at the customer's request. The Revenue, however, asserts that the sale occurs at the customer's premises, thus necessitating the inclusion of freight charges in the assessable value. The legal definition of 'sale' under Section 2(h) of the Central Excise Act, 1944, which considers the transfer of possession, is pivotal in this context.

3. Verification of Factual Claims Regarding Different Categories of Sales:
The case involves different categories of sales, particularly category (b) and category (c). The appellant contends that for category (b) sales, the goods are delivered at the customer's premises with the appellant bearing the risk during transit, while for category (c) sales, the goods are sold at the factory gate with the customer bearing the transit risk. The Revenue argues that both categories involve delivery at the customer's premises. The factual claims regarding the names on the LRs, transit insurance, and risk bearing need thorough verification.

4. Impact of VAT Payment on Determination of Place of Sale:
The appellant argues that the inclusion of freight charges for VAT purposes does not imply that the sale occurs at the customer's premises. According to the Maharashtra VAT Act, VAT is paid inclusive of the freight element up to the place of delivery, even if the sale is at the factory gate. This argument is supported by Section 2(25) of the Maharashtra VAT Act, 2002. The Revenue's contention that VAT payment indicates the place of sale needs careful consideration in light of this provision.

5. Examination of Relevant Case Laws and Circulars:
Both parties have cited various case laws and circulars to support their arguments. The appellant relies on judgments such as Commissioner of C. Ex., Nagpur v. Ramkrishna Electricals Pvt. Ltd., Mercedes Benz India Pvt. Ltd. v. Commr. of C. Ex. Pune-I, and Baroda Electric Meters Ltd. v. Collector of Central Excise. The Revenue cites cases like Ambuja Cements Ltd. v. Union of India and Bhushan Steels Ltd. v. Commissioner of Central Excise, Ghazibad. The Tribunal's judgment in the appellant's own case and the Board's 37B Order No. 59/1/2003-CX are also significant.

Conclusion and Remand:
The Tribunal noted discrepancies in the appellant's factual claims and previous cases. The matter is remanded for de novo examination, requiring the appellant to produce relevant documents for verification. The adjudicating authority will consider Sections 4 and 2(h) of the Central Excise Act, 1944, and follow principles of natural justice before arriving at a conclusion. All issues remain open for reconsideration, including the impact on limitation and other related matters.