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2018 (12) TMI 1783 - AT - Central ExciseValuation - inclusion of transportation cost in the assessable value - place of removal - period 2004-05 - Section 4 ibid as well as Rule 5 of the Central Excise (Valuation) Rules, 2000 - HELD THAT - Explanation 2 to the Rule 5 makes it clear that the cost of Transportation from the factory to the place of removal, where the factory is not the place of removal, shall not be excluded for the purpose of determining the value of excisable goods. To apply the above Rule, it is required to determine which is the place of removal whether it is the factory gate or the buyer s premises. Hon ble Supreme Court in the case of COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, AURANGABAD VERSUS M/S ROOFIT INDUSTRIES LTD. 2015 (4) TMI 857 - SUPREME COURT where the Hon ble Supreme Court has considered an identical question in a case where the purchase order was to transfer the property of goods to the buyer at the premises of the buyer. After carefully considering the terms of the purchase orders, it is noted that in terms of such purchase orders, the transfer of property in the goods, is taking place at the premises of the buyers and as such by virtue of Section 19 of the Sale of Goods Act, 1930, the sale takes place at that time. Accordingly, the place of removal is considered as the buyer s premises under the given circumstances. Consequently, as per Explanation 2 to Rule 5 ibid, cost of transportation is to be included. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Restoration of appeal and re-hearing due to ex-parte decision. 2. Inclusion of transportation cost in the assessable value for Central Excise Duty. 3. Determination of the place of removal. Issue-wise Detailed Analysis: 1. Restoration of Appeal and Re-hearing Due to Ex-parte Decision: The appellant's initial appeal against the Order-in-Appeal No. 55/CE(A)/GHY/07 dated 11/09/2007 was rejected by the Tribunal in Final Order No. 76107/2018 dated 12/03/2018, which was passed ex-parte. The appellant sought restoration of the appeal and re-hearing, but the Tribunal rejected this request in Miscellaneous Order No. 75706/2018 dated 9/07/2018. Subsequently, the Hon’ble High Court of Meghalaya set aside the Tribunal's order and remitted the matter back for fresh decision. 2. Inclusion of Transportation Cost in the Assessable Value for Central Excise Duty: The appellant, engaged in manufacturing Ferro Silicon products, claimed refunds under Notification No. 32/99-CE dated 08/07/1999. During an audit for the period 2004-05, it was observed that the appellant included transportation costs in the assessable value of goods for duty payment. The Revenue contended that the place of removal was the factory gate, and thus, transportation costs should not be included. The Adjudicating Authority confirmed the demand within the normal time limit, which was upheld by the Commissioner (Appeals). 3. Determination of the Place of Removal: The appellant argued that the buyer’s premises should be considered the place of removal as per Rule 5 of the Central Excise (Valuation) Rules, 2000, and the amendments to Section 4 of the Central Excise Act effective from 01/03/2003. The appellant relied on the Supreme Court's decision in Commissioner Aurangabad vs. Roofit Industries Ltd., which stated that the cost of transportation should be included when the sale occurs at the buyer’s premises. The Revenue countered with the Supreme Court's decision in Commr. of Cus. & C. EX., Nagpur vs. Ispat Industries Ltd., which held that the buyer’s premises cannot be considered the place of removal. The Tribunal noted that the Supreme Court in Ispat Industries had distinguished the Roofit Industries case based on specific facts. Tribunal's Decision: The Tribunal examined purchase orders indicating delivery at the buyer’s premises without specific freight charges and a clause allowing buyers to reject goods upon testing. It concluded that the transfer of property occurred at the buyer’s premises, making it the place of removal as per Section 19 of the Sale of Goods Act, 1930. Consequently, the cost of transportation should be included in the assessable value under Explanation 2 to Rule 5 of the Central Excise (Valuation) Rules, 2000. The Tribunal found the Revenue's reliance on Ispat Industries distinguishable and ruled that the appellant was correct in including transportation costs. Thus, the impugned order was set aside, and the appeal was allowed. Conclusion: The Tribunal allowed the appeal, holding that the cost of transportation should be included in the assessable value for Central Excise Duty when the place of removal is the buyer’s premises. The decision was based on the specific terms of the purchase orders and relevant legal provisions, distinguishing it from the Ispat Industries case.
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