2019 (11) TMI 301 - AT - Central Excise

Valuation - inclusion of freight and insurance in the assessable value - whether the freight and insurance charges have to be included in the assessable value when the goods are delivered at the buyers premises? - HELD THAT - The facts show that freight and insurance charges are separately quoted in purchase orders and price of goods is agreed to be Ex-Works price - The Hon ble Apex Court in the case of M/s Ispat Industries Limited 2015 (10) TMI 613 - SUPREME COURT has considered the very same issue and held that the buyers premises can never be the place of removal. The issue is settled in favor of the assessee and the freight and insurance charges is not required to be included in the assessable value - The demand of duty by including freight and insurance charges cannot sustain - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether freight and insurance charges should be included in the assessable value.

Analysis:
The appeal dealt with the issue of whether freight and insurance charges should be included in the assessable value when goods are delivered at the buyers' premises. The appellant, engaged in manufacturing electrical transformers, argued that as per tender documents, the value of transformers is quoted at Ex-works/Ex-factory price, with freight and insurance quoted separately. The appellant contended that the place of sale is the factory gate, and excise duty should be calculated on the Ex-works/Ex-factory price. The appellant relied on the decision of the Hon'ble Apex Court in Ispat Industries Limited. The respondent, however, argued that freight and insurance charges must be included in the assessable value based on the decision in Roofit Industries Limited.

The Tribunal considered the arguments and referred to the decision in Ispat Industries Limited, where it was held that the buyers' premises cannot be the place of removal. Additionally, the Tribunal cited the case of KJV Alloy Conductors Pvt. Ltd., which further supported the position that freight and insurance charges need not be included in the assessable value, even if goods are sold or delivered at the buyers' premises. The Tribunal concluded that the settled legal position favored the appellant, and the demand for duty including freight and insurance charges was unsustainable. Therefore, the impugned order was set aside, and the appeal was allowed with consequential reliefs.

In summary, the judgment clarified that freight and insurance charges do not have to be included in the assessable value when goods are delivered at the buyers' premises. The decision was based on established legal principles and previous court rulings, ultimately ruling in favor of the appellant and setting aside the demand for duty including such charges.