2019 (5) TMI 1018 - AT - Central Excise

Valuation - inclusion of transportation cost in assessable value - place of removal/ delivery of the finished goods was the premises of their customers - recovery of cost of transportation from the buyers and had taken insurance under open marine policy to cover the loss in transit and safe delivery of goods up to the customer s place - HELD THAT - There is no dispute as regards the facts of the present case according to which the appellant have charged transportation charges in the invoices showing separately from their customers. The goods were cleared for sale from the factory premises of the appellant. The insurance of the goods was covered by the appellant up to the place of delivery of the goods. As per the impugned order, the entire emphasis was given that the place of removal is the place of delivery, which is the premises of the buyer of the goods therefore, all the expenses including the insurance, freight etc are includable in the transaction value. When the facts were clear that goods cleared from the factory for sale, even though on FOR basis, the place of buyer cannot be the place of removal in such case the factory from where the goods were cleared for sale is the place of removal. Accordingly, the freight charges is not includable in the assessable value in terms of Rule 5 of Central Excise Valuation (Determination of Price of Excisable goods) Rules, 2000. The transportation charges is not includable in the assessable value - appeal allowed - decided in favor of appellant.

Summary

Issues:
Determination of place of removal for excisable goods and inclusion of transportation charges in the assessable value.

Analysis:
The case involved a dispute regarding the determination of the place of removal for excisable goods and the inclusion of transportation charges in the assessable value for levy of excise duty. The appellant, engaged in the manufacture of Lubricant Oil, had recovered the cost of transportation from buyers but had not included it in the transaction value. The department contended that the goods were sold at the premises of buyers, making those premises the place of removal as per Section 4(3)(c) of the Central Excise Act, 1944. The differential duty demand was confirmed, leading to the appeal.

The appellant argued that the goods were cleared for sale from the factory, making the factory gate the place of removal, as per a Supreme Court judgment. They emphasized that transportation charges should be excluded from the transaction value, citing relevant case laws and circulars. The appellant also challenged the invocation of the extended period for the demand, stating that the law regarding the point of sale was clarified by the Apex Court in 2015, absolving them of any intent to evade duty payment.

Upon considering the submissions, the Tribunal analyzed the definition of "place of removal" under Section 4(3)(c) and referred to the Supreme Court's interpretation in a similar case. The Tribunal concluded that the place of removal for the goods was the factory premises of the appellant, not the premises of the buyers. Therefore, the transportation charges were deemed not includable in the assessable value as per Rule 5 of the Central Excise Valuation Rules. Citing the Supreme Court's previous judgment, the Tribunal set aside the impugned order and allowed the appeal, ruling in favor of the appellant.

In summary, the judgment clarified the legal position regarding the place of removal for excisable goods and the inclusion of transportation charges in the assessable value. The Tribunal's decision aligned with the Supreme Court's interpretation, emphasizing that the factory premises where the goods were cleared for sale constituted the place of removal, thereby excluding transportation charges from the assessable value.