2020 (7) TMI 318 - AT - Central Excise

Valuation - electrical transformers - inclusion of cost of transportation and transit insurance from the factory to the buyer s premises in assessable value - place of removal - whether place of removal is buyers premises or not - HELD THAT - It is clear that for the period from 28-9-1996 up to 1-7-2000, the place of removal has reference only to places from which goods are to be sold by the manufacturer, and has no reference to the place of delivery which may be either the buyer s premises or such other premises as the buyer may direct the manufacturer to send his goods. As a matter of law therefore, the Commissioner s order and Revenue s argument based on that order that freight charges must be included as the sale in the present facts took place at the buyer s premises is incorrect. Further, for the period 1-7-2000 to 31-3-2003 there will be no extended place of removal, the factory premises or the warehouse (in the circumstances mentioned in the Section), alone being places of removal. Under no circumstances can the buyer s premises, therefore, be the place of removal for the purpose of Section 4 on the facts of the present case. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Valuation of excisable goods for duty calculation based on place of removal - seller's premises or buyer's premises.

Detailed Analysis:
The case involved a dispute regarding the valuation of excisable goods for duty calculation based on the place of removal, whether it should be the seller's premises or the buyer's premises. The appellant, a manufacturer of electrical transformers, sold goods on Ex-works/Ex-factory basis, with separate amounts for freight and transit insurance mentioned in tender documents, purchase orders, and invoices. The Revenue contended that since the sale was on Free at Destination Stores (FADS) basis, the property transferred only at the buyer's premises, making it the place of removal and necessitating inclusion of transportation and insurance costs in the assessable value.

The crux of the issue was determining the "place of removal" under Section 4(3)(c)(iii) of the Central Excise Act, 1944. The Hon'ble Supreme Court's precedents in Roofit Industries Ltd. and Commissioner of Customs and Central Excise, Nagpur Vs Ispat Industries Ltd. were cited, emphasizing that the place of removal shifts from the seller's premises to the buyer's premises only when the property passes to the buyer, which happens at the buyer's premises in FOR destination sales. The legal amendments reinstated the exclusion of transportation costs from the place of removal to the place of delivery, clarifying that the buyer's premises cannot be the place of removal for duty calculation purposes.

The Tribunal upheld its previous decision in favor of the appellant, citing the Supreme Court's judgment that the buyer's premises cannot be considered the place of removal. Therefore, the appeal was allowed, setting aside the impugned order with any consequential relief.

In conclusion, the judgment clarified the legal position regarding the place of removal for excisable goods' valuation, reaffirming that the seller's premises should be considered the place of removal for duty calculation, even if the place of delivery is the buyer's premises. The decision aligned with established legal principles and precedents, providing clarity on the valuation of goods for excise duty purposes based on the place of removal.