9911796707
TMI Blog2023 (3) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... y of goods is reduced by such sale on removal of goods from factory. The freight amount was charged separately in the invoice and the same does not part of integral part of sale price. The payment terms depend on case to case basis, in some case, the customers pay advance and remaining after delivery and in some case total amount is paid after delivery. The liability of VAT/CST is discharged as and when the goods are removed from factory gate considering it to be sale of goods at the same time. On this basis the place of removal is a factory gate and there is no other place of removal. Accordingly, the freight charges incurred beyond the place of removal is not includable in the assessable value. He submits that it was the observation of the respondent that since the sale of goods happens at the buyer's premises on delivery of goods in question and acceptance by buyers at site the place of removal for the purpose of determination of assessable value would be the buyer's premise. To support this observation, the respondent relied upon the decision of Hon'ble Supreme Court in the case of Commissioner of Customs & Central Excise, Aurangabad Vs. Roofit Industries Ltd.-2015 319 ELT 0221 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Representative) appearing on behalf of the revenue reiterates the finding of the impugned order. He placed reliance on the following judgments: * Commissioner of Central Excise, Bengaluru Vs. Srikumar Agencies- 2008 (232) ELT 577 (S.C) * Commissioner of Central Excise, Aurangabad Vs. Roofit Industries Ltd.- 2015 (319) ELT 221 (SC) * Commissioner of Central Excise, Nagpur Vs. Ispat Industries Ltd.-2015 (324) ELT 670 (S.C) 4. We have carefully considered the submissions made by both the sides and perused the records. We find that there is no dispute in the fact that the appellant have cleared the goods from their factory and delivered at the buyer's premises. In the invoice the freight was charged separately when the sell invoice was issued from the factory at the time of clearances of goods. The factory gate is the place of removal. Merely because the appellant is under obligation to deliver the goods at the buyer's premises, the place of removal which is a factory gate cannot be extended and buyer's premises cannot be made as place of removal. This issue has been considered by this Tribunal in the case of Savita Oil Technologies Ltd. vide order No. A/10755/2022 dated 30.06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ace of removal referred to in sub-clause (iii) of clause (b), shall be deemed to be the time at which such goods are cleared from the factory;" 16. It will thus be seen that where the price at which goods are ordinarily sold by the assessee is different for different places of removal, then each such price shall be deemed to be the normal value thereof. Sub-clause (b)(iii) is very important and makes it clear that a depot, the premises of a consignment agent, or any other place or premises from where the excisable goods are to be sold after their clearance from the factory are all places of removal. What is important to note is that each of these premises is referable only to the manufacturer and not to the buyer of excisable goods. The depot, or the premises of a consignment agent of the manufacturer are obviously places which are referable only to the manufacturer. Even the expression "any other place or premises" refers only to a manufacturer's place or premises because such place or premises is stated to be where excisable goods "are to be sold". These are the key words of the sub-section. The place or premises from where excisable goods are to be sold can only be the manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) a factory or any other place or premises of production or manufacture of the excisable goods; (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty, from where such goods are removed; (d) "transaction value" means the price actually paid or payable for the 'goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods." 19. A cursory reading of the substituted provision makes it clear that the concept of "normal value" has given way to the concept of "transaction value". Thus, no longer is there a normative price for purposes of valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere such goods are not sold at or about the same time, at the time nearest to the time of removal of goods under assessment." 21. The actual cost of transportation from the place of removal up to the place of delivery of excisable goods is excluded from the computation of excise duty provided it is charged to the buyer in addition to the price of goods and shown separately in the invoices for such goods. Interestingly, despite the substituted Section 4 not providing for a depot or other premises as a place of removal, Rule 7 deals with the normal transaction value of goods transferred to a depot or other premises which is said to be at or about the same time or the time nearest to the time of removal of goods under assessment. 22. To complete the picture, by an Amendment Act with effect from 14-5-2003, Section 4 was again amended so as to re-include sub-clause (iii) of old Section 4(3)(b) (pre 2000) as Section 4(3)(c)(iii). This amendment reads as follows :- "(3)(c)(iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory;" Also, Rule 5 of the Central Excise Rules was s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gments cited at the Bar. Escorts JCB Ltd. v. CCE, (2003) 1 SCC 281 = 2002 (146) E.L.T. 31 (S.C.), was strongly relied upon by Shri Bagaria and sought to be distinguished by Shri Panda. The facts of Escorts JCB's case are similar to the facts in the present case. The show cause notice in that case alleged that freight and transit insurance were charged from buyers but no central excise duty was paid by misdeclaring the place of removal as the factory gate instead of the buyer's premises. It will be noted that just as in the present case, the price was "exworks" and exclusive of freight insurance, etc. After setting out Section 4 post its amendment in 1996, this Court held :- "A perusal of the orders passed by the authorities and CEGAT shows that since transit insurance was arranged by the assessee, therefore it was inferred and held that the ownership of the goods was retained by the assessee until it was delivered to the buyer on the reasoning that otherwise there would be no occasion for the seller, namely, the assessee to take risk of any kind of damage to the goods during transportation. To us, the whole reasoning seems to be untenable. The two aspects have been mixed up - on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on from the factory to the depot. This question was decided by this Court in the case of Union of India v. Bombay Tyre International Ltd. [(1984) 1 SCC 467 : 1984 SCC (Tax) 17 : 1983 (14) E.L.T. 1896] It was thereafter confirmed in the case of Govt. of India v. Madras Rubber Factory Ltd. [(1995) 4 SCC 349 : 1995 (77) E.L.T. 433]" [at para 3] 29. Like the Escorts JCB's case this judgment was also concerned with Section 4 as it stood after the amendment of 1996 but before the amendment of 2000. This Court held :- "After the amendment, the Department sought to include in the value the cost of transport from factory to the depot, even in case where the manufacturer sold the goods at a uniform price all over the country by including the element of equalised freight. The Tribunal has upheld the view of the Department on the reasoning that by this amendment the definition of the term "place of removal" has been extended to include the depot. The Tribunal has also held that Section 4(2) which excluded the cost of transportation from the place of removal to the place of delivery was not amended when the definition of the term "place of removal" was extended. According to the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence to the earlier position as settled by this Court. In this view of the matter, we are unable to uphold the judgments of the Tribunal. They are accordingly set aside. The appeals are allowed with consequential relief. There shall be no order as to costs." [paras 5 to 8] 30. In Prabhat Zarda Factory Limited v. CCE, 2002 (146) E.L.T. 497 (S.C.), this Court held :- "In these matters, the question is whether freight and insurance charges are to be included in the assessable value for the purposes of excise. This question is covered by the judgment of this Court in the case of Escorts JCB Ltd. v. Commissioner of Central Excise, Delhi-II [2002 (146) E.L.T. 31 (S.C.)]. The only difference which has been pointed out is that in the Escorts case (supra) the sale was at the factory gate whereas in these cases, the sale is from the depot. Learned counsel for the appellants admit that the freight and insurance charges up to the depot would be includible in the assessable value for the purposes of excise. However, the sale being at the depot, the freight and insurance for delivery to the customers from the depot would not be so includible as per the said judgment." This judgment, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration was to pass on only after the receipt of the goods which was at the premises of the buyer. From the aforesaid, it would be manifest that the sale of goods did not take place at the factory gate of the assessee but at the place of the buyer on the delivery of the goods in question. The clear intent of the aforesaid purchase order was to transfer the property in goods to the buyer at the premises of the buyer when the goods are delivered and by virtue of Section 19 of the Sale of Goods Act, the property in goods was transferred at that time only. Section 19 reads as under : "19. Property passes when intended to pass. - (1) Where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. (2) For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the conduct of the parties and the circumstances of the case. (3) Unless a different intention appears, the rules contained in Sections 20 to 24 are rules for ascertaining the intention of the parties as to the time at which the property ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
