2024 (4) TMI 858 - AT - Central Excise

Levy of Excise Duty - appellant has retained certain portion of freight without paying the same to the transporters on such freight amounts retained - place of removal - Extended period of limitation - HELD THAT - It is seen from the record that the appellant is paying VAT at their factory gate as is evidenced by the invoices enclosed with the appeal papers. Therefore, the place of removal in this case would be the factory gate of the appellant. This issue is no more res integra. The Hon ble Supreme Court in the case of COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE, NAGPUR VERSUS M/S ISPAT INDUSTRIES LTD. 2015 (10) TMI 613 - SUPREME COURT has held The fact in the present case 'deliverable state of goods, arises only at the time of safe delivery of goods at the customers' premises specified in the purchase order However, with reference to section 24 of the Sales of Goods Act, it was observed that in the instant case the property in the goods have passed only at the site of buyer. Therefore such place constitutes the 'place of removal of goods for section 4 of the Central Excise Act. Extended period of Limitation - HELD THAT - There are substantial force in the appellant s contention that the issue was that of interpretation and was resolved only after the judgment of the Hon ble Supreme Court in Ispat Industries case. Therefore, the confirmed demand for the extended period is liable to be set aside on account of limitation also. The appeal is allowed both on merits as well as on account of limitation.

Summary

Issues involved:
The issues involved in the judgment are related to the appellant charging freight charges on customers, retaining a portion of the freight charges, Excise Duty demand, interpretation of 'place of removal,' and limitation on the confirmed demand.

Freight Charges and Excise Duty Demand:
The appellant charged freight charges on customers, paid a portion to transporters, and retained the balance. The Department issued a Show Cause Notice alleging retention of certain freight without payment, leading to Excise Duty demand. The appellant argued that as per the Supreme Court's decision in Commissioner v. Ispat Industries Ltd., the entire freight charges collected are eligible for abatement. They contended that since they paid most freight charges to transporters, Excise Duty should not apply. The appellant also raised a limitation defense, stating that the demand for the extended period should be set aside due to the settlement post the Supreme Court's judgment.

Interpretation of 'Place of Removal':
The Tribunal analyzed the 'place of removal' in the case, determining it to be the factory gate of the appellant based on VAT payment evidence. Citing the Supreme Court's ruling in Ispat Industries Ltd., the Tribunal concluded that the sale or clearance of goods did not occur at the factory gate but at the buyer's premises. The Tribunal referred to the Sale of Goods Act, emphasizing that property in goods passed to the buyer only at the buyer's premises upon delivery, making it the 'place of removal' for Central Excise Act purposes. The Tribunal noted a similar decision in Hindalco Industries Ltd. v. CCE (Kolkata), where the appeal was allowed based on the Ispat Industries judgment.

Decision:
After considering arguments and evidence, the Tribunal allowed the appeal on merits, stating that the appellant was not required to pay Excise Duty on the freight charges. Additionally, the Tribunal held that the confirmed demand for the extended period should be set aside due to the interpretation issue resolved post the Supreme Court's judgment in Ispat Industries case. Consequently, the appeal was allowed both on merits and limitation grounds, with the appellant eligible for consequential relief as per law.