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TMI Blog2024 (9) TMI 1168X X X X Extracts X X X X X X X X Extracts X X X X ..... pat Industries Limited [ 2015 (10) TMI 613 - SUPREME COURT] the Hon ble Supreme Court observed ' Further, for the period 1.7.2000 to 31.3.2003 there will be no extended place of removal, the factory premises or the warehouse (in the circumstances mentioned in the Section), alone being places of removal. Under no circumstances can the buyer's premises, therefore, be the place of removal for the purpose of Section 4 on the facts of the present case.' In view of the decision of Apex Court judgment in Ispat Industries Limited it is settled that in case of factory gate sale even though sale is on FOR basis the freight charges shown/ collected separately in the invoice shall not be included in the transaction value of excisable goods. Thus, demand on the said freight charges is not sustainable. The impugned order is set aside - Appeal allowed. - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. C L MAHAR, MEMBER (TECHNICAL) Shri Vinay Kansara, Advocate, Appeared for the Appellant Shri Ajay Kumar Samota, Superintendent (AR) Appeared for the Respondent ORDER The issue involved in the present case is that whether Central Excise duty is required to be paid on the freight charged separ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the goods and it is also undisputed that the bill clearly shows that the goods were sold directly to the customers without taking to depot or any other place from where the goods are sold, therefore, in this fact it is ex-factory sale and the freight charges is not includible in the assessable value. This issue has been considered time and again. In the case of Ispat Industries Limited (supra) the Hon ble Supreme Court observed as under: 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 (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emises or the warehouse (in the circumstances mentioned in the Section), alone being places of removal. Under no circumstances can the buyer's premises, therefore, be the place of removal for the purpose of Section 4 on the facts of the present case. 25. It now remains to deal with some of the judgments cited at the Bar. Escorts JCB Ltd. v. CCE, (2003) 1 SCC 281, 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 mis-declaring 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 ex-works 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 deliv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases where a manufacturer includes equalised freight in the price of the goods and sells the goods all over the country at a uniform price, the Department is entitled to compute value by including the cost of transportation 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 ELT 1896]. It was thereafter confirmed in the case of Govt. of India v. Madras Rubber Factory Ltd.[(1995) 4 SCC 349 : (1995) 77 ELT 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivery and at the place of removal. In cases of equalised freight it remains the same as per the judgments of this Court set out hereinabove. In our view, the amendments have made no difference 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. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was to be made by the purchaser after the receipt and verification of material. Thus, there was no money given earlier by the buyer to the assessee and the consideration 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds nor did it reserve such rights inasmuch as title had already passed to its customer. On facts, therefore, it is clear that Roofit's judgment is wholly distinguishable. Similarly in Commissioner Central Excise, Mumbai-III v. M/s. Emco Ltd, this Court re-stated its decision in the Roofit Industries' case but remanded the case to the Tribunal to determine whether on facts the factory gate of the assessee was the place of removal of excisable goods. This case again is wholly distinguishable on facts on the same lines as the Roofit Industries case. 34. In the view of the law that we have taken as well as the facts detailed above, the statement made by Shri S.P. Dahiwade pales into insignificance as has been correctly held by the Tribunal. We, therefore, dismiss this appeal with no order as to costs. Following the aforesaid Apex Court judgment this Tribunal in the case of Eimco Elecon India Ltd (supra) taken the same view as under:- 4. We have considered the rival submissions and perused the material available on record. The issue involved in the present case is that whether the freight charged separately in the sale invoices of excisable goods is includible in the assessable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tomer place. Therefore goods were sold for delivery not at the place of removal (i.e. factory gate) but at other place i.e. customer door step. We have perused copies of the purchase orders placed by the M/s Western Coalfields Ltd., Nagpur and M/s Bharat Coking Coal Ltd. and invoices issued by the Appellant. From the invoices it is seen that the freight shown in the invoices is in addition to basic price of the goods. It is clear from the terms of the purchase order that basic price and other components have to be indicated separately. Therefore, there is no dispute that basic price and the freight components are clearly indicated separately in the invoices and therefore criterion i.e. cost of transportation should be in addition to the basic price of the goods stand fulfilled. 4.4 In the light of these facts and legal provisions, we find no valid reason for disallowing the deduction for the freight paid inasmuch as the sales are FOR destination. We also find that a coordinate Bench of CESTAT in the case of Sterlite Optical Technologies Ltd. v. CCE C, Aurangabad - 2015 (329) E.L.T. 341 (Tri.-Mumbai) has taken a view in identical facts that freight will be allowable as a deduction f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be included in the assessable. CESTAT, West Zonal Bench, Mumbai in the case of CCE, Nagpur v. Ram Krishna Electrical Pvt. Ltd.2011 (272) E.L.T. 149 (Tribunal) (supra) has also held as follows : - 5.1 The Hon ble Apex Court in the case of Commissioner of Central Excise v. Accurate Meters Ltd. 2009 (235) E.L.T. 581 (S.C.) considered a similar situation wherein the goods were supplied by the assessee to the State Electricity Boards and two separate contracts were entered into, one for sale of meters and another for transportation and transit insurance thereof. As per the terms of the contract, the assessee was bound to transport the goods from the factory-gate to the place of State Electricity Boards at the rates specified in the tender. In the said case the Apex Court held that the place of removal remains the factory-gate and the cost of transportation from the place of removal to the place of delivery cannot be included in the assessable value even though the cost of transportation has been calculated on average basis and not on actual basis. The ratio of the said judgment apply squarely to the facts of the present case. 5.2 Similarly, this Tribunal in the case of Majestic A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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