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2019 (7) TMI 55 - AT - Central ExciseValuation - inclusion of freight incurred for transporting the goods to the buyers premises by the assessee when the goods are sold for delivery at the buyers premises - section 4 of Central Excise Act, 1944 - place of removal - HELD THAT - The place of removal is before the goods are sold, not when the goods have been sold. Further, there is no removal of the goods at the buyer s premises because the place of removal requires the goods to be removed from that place. Thirdly, the description of the place of removal are the depot, consignment agent etc. which can only be referred to the seller and not to the buyer. Hon ble Apex Court in the case of COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, AURANGABAD VERSUS M/S ROOFIT INDUSTRIES LTD. 2015 (4) TMI 857 - SUPREME COURT has categorically held that under no circumstances can the buyer s premises be the place of removal. It also made it clear that this fact was not brought to the attention of the Court when the earlier orders were passed - it is now well settled that the buyers premises can never be the place of removal, therefore the freight from the factory/depot/consignment agent up to the buyers premises cannot be included in the assessable value, even if the goods are sold or delivered at the buyer s premises. The settled legal position is in favor of the appellants and against Revenue and the demands are unsustainable on merits and need to be set aside - appeal allowed - decided in favor of appellant.
Issues:
Whether the freight incurred for transporting goods to the buyers' premises is includable in the assessable value under Section 4 of the Central Excise Act, 1944. Analysis: The judgment involved multiple appeals addressing the issue of whether freight costs for transporting goods to buyers' premises should be included in the assessable value under the Central Excise Act. The core question was whether the place of removal is at the buyer's premises or at the factory/depot/consignment agent's premises. The department contended that all expenses up to the buyer's premises, including transportation costs, should be part of the assessable value. However, the appellants argued that the buyer's premises cannot be the place of removal, as clarified by the Hon'ble Apex Court in previous judgments. The judgment extensively referred to legal interpretations, including the Sale of Goods Act, to determine when the ownership of goods transfers to the buyer. It highlighted that until ownership is transferred, all expenses up to the place of removal must be included in the assessable value. The judgment emphasized that the buyer's premises cannot be the place of removal, as it belongs to the seller, and the goods are not to be sold but have already been sold upon reaching the buyer's premises. The Hon'ble Apex Court's landmark judgment in Ispat Industries Limited was crucial in establishing that the buyer's premises cannot be the place of removal. The judgment clarified that the expression "goods are to be sold" refers to the seller's premises or premises referable to the seller, not the buyer's premises. Therefore, the freight incurred up to the buyer's premises cannot be part of the assessable value, even if the goods are sold or delivered at the buyer's premises. The judgment concluded that the settled legal position favors the appellants, and demands for including freight costs in the assessable value were deemed unsustainable. The impugned orders were set aside, and the appeals by the appellants were allowed, providing consequential relief. The Revenue's appeal was rejected based on the established legal principles regarding the place of removal and assessable value under the Central Excise Act. In summary, the judgment clarified the legal position that freight costs for transporting goods to the buyer's premises cannot be included in the assessable value under the Central Excise Act, as the buyer's premises cannot be considered the place of removal based on established legal interpretations and precedents set by the Hon'ble Apex Court.
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