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2020 (3) TMI 1430 - AT - Central ExciseValuation - inclusion in the assessable value, the cost of transportation from the sellers premises to the buyers premises in the assessable value of the goods, where the goods are sold on FOR destination basis - Place of removal - Section 4 of the Central Excise Act, 1944 - HELD THAT - After examining several previous judgments, the Hon ble Apex Court has in the case of COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE, NAGPUR VERSUS M/S ISPAT INDUSTRIES LTD. 2015 (10) TMI 613 - SUPREME COURT held very categorically that the place of removal has to be related to the seller of the goods such as factory or any other place or premises of production or warehouse or a place of consignment agent which is relatable to the seller and it cannot be the buyer s premises. Once the goods reach the buyer s premises, there is nothing to be removed or sold and the sale is already complete. Therefore place of removal has to be seller s premises. For the purpose of valuation under Section 4, the value has to be the transaction value at which the goods are sold by the assessee for delivery at the time and place of removal. Therefore, there is no scope for charging excise duty on the cost of transportation from the seller s premises to the buyers premises. The demands are not sustainable and impugned orders need to be set aside - Appeal allowed.
Issues:
1. Whether the cost of transportation from the seller's premises to the buyer's premises can be included in the assessable value of goods sold on FOR destination basis? 2. Whether penalties imposed under Rule 23(1)(a) of the Central Excise Rules, 2002 were correctly imposed? Issue 1: The case involved the appellant, engaged in cement manufacturing, selling goods to various customers on FOR destination basis. The department contended that the cost of transportation to the buyer's premises should be included in the assessable value for excise duty. The appellant argued that as per the Supreme Court's decision in Commissioner of Customs & Central Excise Nagpur v. Ispat Industries Ltd., the place of removal is the seller's premises, not the buyer's. The Tribunal agreed with the appellant, citing that once goods reach the buyer's premises, the sale is complete, and the place of removal should be the seller's premises. Therefore, excise duty cannot be charged on transportation costs to the buyer's premises. The impugned orders were set aside, and the appeals were allowed. Issue 2: Regarding the penalties imposed under Rule 23(1)(a) of the Central Excise Rules, 2002, the Tribunal did not delve into specific details in the provided summary. However, it can be inferred that since the main issue of including transportation costs in the assessable value was decided in favor of the appellant, the penalties imposed would likely be set aside as well. The Tribunal's decision to allow the appeals and set aside the impugned orders would encompass relief from any associated penalties, as mentioned in the summary. In conclusion, the judgment by the Appellate Tribunal CESTAT HYDERABAD clarified that in cases of goods sold on FOR destination basis, the place of removal for valuation under Section 4 of the Central Excise Act, 1944 remains the seller's premises, not the buyer's premises. Following the precedent set by the Supreme Court, the Tribunal ruled that excise duty cannot be charged on transportation costs to the buyer's premises. The decision favored the appellant, setting aside the demands and impugned orders, likely including any associated penalties.
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