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TMI Blog2024 (5) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... o longer res-Integra. Thus, freight and/or insurance is not includable in the assessable value. Consequently, demand of duty on this count is not sustainable - the impugned order is set aside - appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... idered 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 30.06.2022, wherein the reliance was placed on the Hon'ble Supreme Court judgment in the case of Ispat Industries Ltd reported at 2015 324 ELT 670 (S.C). The tribunal in Savita Oil Technologies (supra) has passed the following order: "4. We have gone through rival submissions. We find that while the show cause notice alleged that the amount of freight recovered in the invoices is additional consideration, the Commissioner in the impugned order has held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 manufacturer's premises or premises referable to the manufacturer. If we are to accept the contention of the revenue, then these words will have to be substituted by the words "have been sold" which would then possibly have reference to the buyer's premises. 17. It is clear, therefore, that as a matter of law with effect from the Amendment Act of 28-9-1996, the place of removal only has reference to places from which the manufacturer is to sell goods manufactured by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 valuation of excisable goods. The actual price that is paid or payable on each removal of goods becomes the transaction value. Interestingly, it will be noticed that under Section 4(3)(c), the place of removal is defined as it had been defined in the substituted Section 4 (by the 1973 Amendment) before its further amendment in 1996. What is conspicuous by its absence in the present Section is Section 4(2) and sub-section (b)(iii) in the previous Section 4 (after its a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iding 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 substituted, with effect from 1-3-2003, to read 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 - one relating to the transaction of sale of the goods and the other arranging for the transit insurance for the buyer and charging the amount expended for the purpose from him separately." [at para 8] "From the above passage it is clear that ownership in the property may not have any relevance insofar as insurance of goods sold during transit is concerned. It would therefore not be lawful to draw an inference of retention of ownership in the property sold by the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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 the result was that only the transport charges from the place of removal to the place of delivery were to be excluded from the value. We have heard the parties at length. In our view, Section 4 has to be read as a whole. Under Section 4(1)(a), the normal price is the price at which goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and price is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, therefore, also holds that even in a depot sale, freight and insurance for delivery to customers from the depot to their premises cannot possibly be included, and followed the Escorts JCB case supra. 31. With this we come to two recent judgments of this Court. In CCE & Customs v. Roofit Industries Ltd., 2015 (319) E.L.T. 221 (S.C.), this Court, after distinguishing the Escorts JCB's case, stated :- "The principle of law, thus, is crystal clear. It is to be seen as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in the goods is to pass to the buyer." These are clear finding of facts on the aforesaid lines recorded by the Adjudicating Authority. However, CESTAT did not take into consideration all these aspects and allowed the appeal of the assessee by merely referring to the judgment in Escorts JCB Ltd. [(2003) 1 SCC 281 : (2002) 146 E.L.T. 31] Obviously the exact principle laid down in the judgment has not been appreciated by CESTAT." [at paras 12-15] 32. It will be seen tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. It was therefore held that freight charges are includible in the assessable value. In the present case, as discussed above the issue is covered by the decision in the case IDMC Limited (supra).
8. After appreciating the facts, evidences placed before us and after following the judgment in IDMC Limited case, we are of the view that the freight charges are not to be included in the assessable value. The demand cannot be sustained. Consequently, we set-aside the impugned orders and allow the appeals with consequential relief, as per law."
From the above decision of this Tribunal, it can be seen that the facts in the present case and the case referred above is identical. Accordingly, the ratio of the above judgment is directly applicable in the present case. Hence, issue is no longer res-Integra. Following the above decision and considering the fact of the present case, we are of the view that freight and/or insurance is not includable in the assessable value. Consequently, demand of duty on this count is not sustainable.
5. Hence, the impugned order is set aside. Appeals are allowed.
( Pronounced in the open court on 02. 05. 2024 ) X X X X Extracts X X X X X X X X Extracts X X X X
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