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TMI Blog2024 (9) TMI 1073X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant Shri P Ganesan, Superintendent (AR) appeared for the Respondent ORDER RAMESH NAIR The issue involved in the present case is that whether the freight and/or insurance charge is includible in the assessable value of excisable goods in the fact that the sale of the goods is on ex-factory basis. 2. Shri Amal Dave, Learned Counsel appearing on behalf of the appellant at the outset submits that under the same set of facts in the appellant s own case, this Tribunal has already decided the matter vide Final Order No.10989-10990/2024 dated 02.05.2024. Therefore, the impugned order is not sustainable. 3. Shri P Ganesan, Learned Superintendent (AR) appearing on behalf of the Revenue, reiterates the findings of the impugned order. 4. On careful consideration of the submissions made by both the sides and perusal of the record, we find that the issue involved in the present case is no longer res-integra as the same has been decided for the earlier period in the appellant s own case on the same nature of transaction of excisable goods.The Tribunal s order dated 02.05.2024 is reproduced below : - 4. On careful considered of the submission made by both the sides and perusal of record, we f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 when the freight is collected in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 him, and can, in no circumstances, have reference to the place of deliv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing, 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 amendment in 1996). It is clear therefore, that for the second period in question in the present case, namely, 1-7-2000 to 31-3-2003, the depot, premises of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the place of delivery of such excisable goods. Explanation 1. - Cost of transportation includes (i) the actual cost of transportation; and (ii) in case where freight is averaged, the cost of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 seller merely by reason of the fact that the seller had insured such goods during transit to the buyer. It is not necessary that insurance of the goods and the ownership of the property insured must always go together. It may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry 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 sole consideration for sale. Therefore, the normal price is the price at the time of delivery and at the place of removal . Before the amendment, the place of removal was only the factory or any other place or premises where the excisable goods were produced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra) 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 to whether as to at what point of time sale is effected, namely, whether it is on factory gate or at a later point of time, i.e., when the delivery of the goods is effected to the buyer at his premises. This aspect is to be seen in the light of the provisions of the Sale of Goods Act by applying the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties 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 that this is a decision distinguishing the Escorts JCB s case on facts. It was found that goods were to be delivered only at the place of the buyer and the price of the goods was inclusive of transportation charges. As transit damage on the assessee s account would imply that till the goods reached their destination, ownership in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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