Case Law Details
Koch Chemical Technology Group India Pvt Ltd Vs C.C.E. & S.T. (CESTAT Ahmedabad)
Introduction: Koch Chemical Technology Group India Private Limited recently secured relief from Central Excise duty demands in an appeal filed before the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) in Ahmedabad. The case revolved around the extraction of petroleum fuels goods and a dispute concerning the absence of a speaking order. In this article, we provide a comprehensive analysis of the case, including the background, key arguments presented, the tribunal’s decision, and its implications.
1. Background: The appellant, Koch Chemical Technology Group India Private Limited, was involved in the manufacturing of materials used in the erection of towers and the extraction of petroleum fuels. The central issue revolved around purchase orders obtained by the appellant for the supply of these goods. The terms of these purchase orders were essential to determine the liability for Central Excise duty. In particular, the focus was on whether freight charges were separately mentioned in the purchase orders and whether they should be included in the assessable value. The central question was whether the ‘place of removal’ was at the factory gate or at the buyer’s premises.
2. Arguments by the Appellant: The appellant’s Chartered Accountant contended that the inclusion of freight charges in the assessable value was incorrect, as the price quoted to customers was on a Free on Rail (FOR) basis. They argued that, under Rule 5 of the Central Excise (Valuation) Rules, the value of freight charged separately should be excluded from the assessable value. Additionally, the appellant maintained that the ‘place of removal’ was the factory gate and not the buyer’s premises.
3. Impugned Order and Conclusions: The impugned order, however, concluded that the premises of the buyer, where the appellant delivered the goods on an FOR basis, constituted the ‘place of removal.’ This conclusion was primarily based on the decision of the Supreme Court in the case of Roofit Industries Limited. The order pointed out differences in the terms of various purchase orders, with some quoting prices including freight and others separating freight charges. The order emphasized that ownership of the goods rested with the appellant until the goods were delivered, accepted, and inspected at the buyer’s site. The payment terms also reflected this arrangement, with the appellant being liable for any losses until final acceptance. The impugned order compared the case to the Supreme Court’s decision in M/s. Prabhat Zarda Factory Limited vs. CCE (2002 (146) ELT 497 (S.C)), which held that costs up to the depot are included in the assessable value.
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