2009 (6) TMI 302 - AT - Central Excise

Whether the freight and transit insurance charges form part of the assessable value or not - The Circular No. 251/85/96-CX, dated 14-10-1996 placed before us does not indicate that the place of removal is buyer s place. The Circular only indicates that if the seller or manufacturer are having different places for removal of the goods for sale, these different places are to be considered as place of removal. - The Officer, who authorised to file this appeal before tribunal, herself has given the findings that the place of removal is the factory gate in the Order-in-Original in the case of the respondents themselves. Therefore, there remains nothing for tribunal to decide - In view of the above, we hold that in the facts and circumstances of the case, the place of removal is the factory gate of the respondents and the freight and transit insurance will not form part of the assessable value. Accordingly, the appeal of the Revenue is devoid of any merit and is rejected.

Summary

Issues:
Whether freight and transit insurance charges form part of the assessable value for excise duty calculation.

Analysis:
The appeal was filed by the Revenue against the Order-in-Appeal passed by the Commissioner of Central Excise, Mumbai-II, where the Commissioner set aside the order of the adjudicating authority. The main issue in this appeal was whether the freight and transit insurance charges should be included in the assessable value for charging excise duty. The respondents were engaged in the manufacture of various goods and were discharging excise duty at the factory gate, declared as the 'place of removal'. The appellant alleged that the transfer of goods actually occurred at the buyer's premises, based on the terms of purchase orders and insurance policies.

The Circular No. 251/85/96-CX defined the "place of removal" to include depot, consignment agents, or any other place from where goods are sold. It raised a doubt regarding whether transport costs to such places of removal should be included in the assessable value. The circular clarified that sale price at places of removal other than the factory gate should consider all transport expenses, including freight and insurance, to determine the assessable value. The amendments declared depots as places of removal, and the sale price at such locations, including transport charges, should be considered for assessable value determination.

The respondents presented purchase orders indicating that insurance would cover goods in transit until reaching the customer's premises. They argued that the sale took place at the factory gate, not the buyer's premises, citing previous case laws to support their position. The Order-in-Original in the respondent's case also confirmed that the place of removal was the factory gate. The Tribunal concluded that the sale occurred at the factory gate, where possession of goods was handed over to the buyer, and thus, freight and transit insurance charges should not be included in the assessable value for excise duty calculation.

In light of the evidence and legal precedents, the Tribunal rejected the Revenue's appeal, holding that the place of removal was the factory gate, and freight and transit insurance charges should not be considered in the assessable value for excise duty calculation.