2018 (8) TMI 732 - AT - Central Excise

Valuation - inclusion of freight and insurance in the assessable value for the manufactured goods delivered at the buyers premises - place of removal taken as buyer s place - Held that - This issue is no more res-integra and covered by the judgment of Hon ble Supreme Court in the case of Commissioner of Customs & Central Excise, Nagpur vs. Ispat Industries Ltd. 2015 (10) TMI 613 - SUPREME COURT , where it was held that The actual cost of transportation from the place of removal up to the place of delivery of excisable goods is excluded from the computation of excise duty provided it is charged to the buyer in addition to the price of goods and shown separately in the invoices for such goods. Interestingly, despite the substituted Section 4 not providing for a depot or other premises as a place of removal, Rule 7 deals with the normal transaction value of goods transferred to a depot or other premises which is said to be at or about the same time or the time nearest to the time of removal of goods under assessment. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Inclusion of freight and insurance in the assessable value for manufactured goods delivered at the buyer's premises.

Analysis:
The appeal concerned the inclusion of freight and insurance in the assessable value for goods delivered at the buyer's premises. The Department sought to add these elements to the assessable value while asserting that the place of removal should be the buyer's place. The advocate for the appellant argued against this inclusion. The issue revolved around whether the insurance charges and freight should be considered in the assessable value, as some cases indicated that these charges were recovered from the buyer.

Upon hearing arguments from both sides and reviewing the appeal records, the Tribunal found that the issue was settled law as per the judgment of the Hon'ble Supreme Court in the case of Commissioner of Customs & Central Excise vs. Ispat Industries Ltd. The Supreme Court's judgment clarified that the place of removal refers to where the manufacturer sells the goods, not necessarily the buyer's premises. The concept of "transaction value" replaced the normative price for valuation of excisable goods. This meant that the actual price paid or payable on each removal of goods became the transaction value. Additionally, the definition of "transaction value" explicitly excluded freight or transportation expenses from calculating excise duty payable.

Based on the Supreme Court's ruling, which directly addressed the issue at hand, the Tribunal allowed the appeal, thereby overturning the lower adjudicating authority's decision to include freight and insurance in the assessable value. The judgment emphasized the importance of the transaction value concept and clarified the definition of the place of removal in excise valuation.