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TMI Blog2018 (12) TMI 1783X X X X Extracts X X X X X X X X Extracts X X X X ..... g the terms of the purchase orders, it is noted that in terms of such purchase orders, the transfer of property in the goods, is taking place at the premises of the buyers and as such by virtue of Section 19 of the Sale of Goods Act, 1930, the sale takes place at that time. Accordingly, the place of removal is considered as the buyer s premises under the given circumstances. Consequently, as per Explanation 2 to Rule 5 ibid, cost of transportation is to be included. Appeal allowed - decided in favor of appellant. X X X X Extracts X X X X X X X X Extracts X X X X ..... accept or reject the supplied goods, after undertaking testing. In view of the specific terms in the purchase order, she submitted that, in respect of supply of goods made for delivery at the buyer's premises, the place of removal is to be considered as buyer's premises in terms of Rule 5 of the Central Excise (Valuation) Rules, 2000 and the cost of transportation is to be included. (ii) In this regard, she specifically referred to the amendments carried out in Section 4 of the Central Excise Act w.e.f. 01/03/2003. Concurrently, amendments were also carried out in Rule 5 ibid by introducing "Explanation-2" which clarified that the cost of transportation from the factory to place of removal, where the factory is not the place of removal, shall not be excluded for the purpose of determining the value of excisable goods. (iii) In view of the above amended provisions, she argued that appellant had rightly included the cost of transportation for payment of Central Excise Duty and was entitled to the consequential claim of refund under Notification No. 32/99. She also relied on various case laws in support of her arguments. Specifically, she referred to the findings of the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase orders issued by the appellant. Since, the dispute pertains to the period 2004-05, we refer to the provisions of Section 4 ibid as well as Rule 5 of the Central Excise (Valuation) Rules, 2000, existing after the amendment w.e.f. 01/03/2003, Section 4(3) (c) has defined the 'place of removal'. The Rule 5 of the Central Excise (Valuation) Rules reads as follows:- "Rule 5. Where any excisable goods are sold in the circumstances specified in clause (a) of sub-section "(1) of section 4 of the Act except the circumstances in which the excisable goods are sold for delivery at a place other than the place of removal, then the value of such excisable goods shall be deemed to be the transaction value, excluding the cost of transportation from the place of removal upto the place of delivery of such excisable goods. Explanation1- "Cost of transporation" includes- (i) The actual cost of transportation; and (ii) In case where freight is averaged, the cost of transportation calculated in accordance with generally accepted principles of costing. Explanation2- For removal of doubts, it is clarified that the cost of transportation from the factory to the place of removal, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for the sale : Provided that - (i) Where, in accordance with the normal practice of the wholesale trade in such goods, such goods are sold by the assessee at different prices to different classes of buyers (not being related persons) each such price shall, subject to the existence of the other circumstances specified in clause (a), be deemed to be the normal price of such goods in relation to each such class of buyers; (ii) Where such goods are sold by the assessee in the course of wholesale trade for delivery at the time and place of removal at a price fixed under any law for the time being in force or at a price, being the maximum, fixed under any such law, then, notwithstanding anything contained in clause (iii) of this proviso, the price or the maximum price, as the case may be, so fixed, shall, in relation to the goods so sold, be deemed to be the normal price thereof; (iii) Where the assessee so arranges that the goods are generally not sold by him in the course of wholesale trade except to or through a related person, the normal price of the goods sold by the assessee to or through such related person shall be deemed to be the price at which they are ordinarily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not known, and the value is determined with reference to the price for delivery at a place other than the place of removal, the cost of transportation from the place of removal to the place of delivery is statutorily excluded. As the law stood thus, this Court in Union of India v. Bombay Tyre International Ltd., (1984) 1 SCC 467 = 1983 (14) E.L.T. 1896 (S.C.), after extracting the substituted Section 4 by the Amendment Act of 1973, held :- "Where the excisable article or an article of the like kind and quality is not sold in wholesale trade at the place of removal, that is, at the factory gate, but is sold in the wholesale trade at a place outside the factory gate, the value should be determined as the price at which the excisable article is sold in the wholesale trade at such place, after deducting therefrom the cost of transportation of the excisable article from the factory gate to such place. The claim to other deductions will be dealt with later." [at para 27] The Court further went on to say : "Where the sale in the course of wholesale trade is effected by the assessee through its sales organisation at a place or places outside the factory gate, the expenses incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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