2020 (10) TMI 674 - AT - Central Excise

Valuation - inclusion of transportation charges received by the appellant in the assessable value - proviso to sub-section (4)(b) of section 11A of the Central Excise Act, 1944 - HELD THAT - This Bench in a number of cases has, after following the decision of the Hon ble Apex Court in the case of COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE, NAGPUR VERSUS M/S ISPAT INDUSTRIES LTD. 2015 (10) TMI 613 - SUPREME COURT , consistently decided identical issue and held that , Hon ble Apex 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. In view of the above, we find that it is now well settled that the buyer s premises can never be the place of removal, therefore the freight from the factory/depot/consignment agent up to the buyer s premises cannot be included in the assessable value, even if the goods are sold or delivered at the buyer s premises. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Inclusion of transportation charges in assessable value under Central Excise Act, 1944.

Detailed Analysis:

1. Inclusion of Transportation Charges in Assessable Value:
The main issue in this appeal was the includibility of transportation charges in the assessable value under the proviso to sub-section (4)(b) of section 11A of the Central Excise Act, 1944. The appellant, a manufacturer of 'Caps and Closures of bottles,' was collecting freight charges from customers in addition to the cost of goods sold. The dispute arose regarding whether the transportation charges needed to be loaded to the assessable value for the purpose of duty payment. The appellant contended that they were not retaining ownership or bearing risk during transit, selling goods at the factory gate, and the property in goods was transferred at the factory gate. They argued that the transportation was on the customer's request and not connected to the sale of goods. Reference was made to Section 4(3)(d) of the Central Excise Act, 1944 and Rule 5 of Central Excise Valuation Rules, 2000, along with CBEC Circular No. 988/12/2014-CX for clarification on the place of removal.

2. Interpretation of Legal Precedents:
The Tribunal considered legal precedents, including the decision of the Hon'ble Apex Court in the case of Ispat Industries Limited and Roofit Industries Limited. It was noted that the issue of including freight charges from the seller's premises to the buyer's premises had been settled by the Apex Court. The Court held that the buyer's premises could never be the place of removal, emphasizing that the place of removal is before the goods are sold, not when they are sold. The Tribunal reiterated that the freight up to the buyer's premises is includable in the assessable value where the sale is for delivery at the buyer's premises. Based on the settled legal position, the Tribunal found in favor of the appellants, setting aside the demands as unsustainable on merits.

3. Decision and Conclusion:
After considering the arguments and legal precedents, the Tribunal set aside the impugned order and allowed the appeal with consequential benefits, if any, as per law. The Tribunal emphasized that the settled legal position favored the appellants and rejected the Revenue's appeal. The decision was based on the established principle that the buyer's premises cannot be considered the place of removal, leading to the exclusion of transportation charges from the assessable value.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved, the legal arguments presented, the interpretation of legal precedents, and the final decision rendered by the Appellate Tribunal CESTAT HYDERABAD.