India Cements Ltd Vs Commissioner of Central Excise & Service Tax (CESTAT Hyderabad)
CESTAT Hyderabad held that value of freight charged for delivering goods to buyers premises is not includible in the assessable value for the purpose of payment of central excise duty.
Facts- The appellants are engaged in manufacturing of cement. They are also registered under service tax in relation to taxable service i.e. transport of goods by road service.
Observing the terms and conditions of contract to sale, the place of delivery was the place of removal that Department alleged that the appellant has short paid central excise duty as it has not included the freight charges in assessable values in contravention of the provisions of Section 4 of the Central Excise Act, 1944 read with Rule 5 and 7 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 and the Rule 4, 6, 8, 11 and 12 of the Central Excise Rules 2002.
A show cause notice bearing No. 102/2878/2016 dated 11.07.2017 was served upon the appellant proposing a demand of Rs. 3,50,41,000/- for the period from 01.08.2015 to 31.03.2017 along with the proportionate interest and appropriate penalties. The proposal was confirmed initially vide the respective Orders-in-Original as mentioned in the table above. In Appeal No.E/30978/2018 the Order-in-Original has been upheld vide Order-in-Appeal as mentioned in the said table. Still being aggrieved the appellant is before this Tribunal.
Conclusion- Held that the place of removal referred to in Section 4 r/w Rule 5 and Rule 7 of Central Excise Valuation Rules, clearly indicates, that the place of removal refers to only the sellers premises (factory gate, warehouse, depot, consignees premises). It is nowhere stated that the buyer’s premises can be E/30031 & 30032 & 30164/2019 E/30214/2020 14 place of removal. Hon’ble Apex Court also observed that in the Roofit case, it did not have occasion to examine the provisions of Section 4, since it was enacted and amended from time to time in the Central Excise Act r/w the Valuation Rules. After examining Section 4 r/w the rules, the Apex Court observed that the cost of transportation from the place of removal up to the place of delivery of excisable goods is excluded from ‘Assessable value’ for the computation of excise duty.
Held that the value of freight charged by the appellant for delivering the cement to their buyers premises is not to be included while assessing the value for the purpose of payment of central excise duty. Appellant has rightly excluded the same. The differential duty confirmed by the order under challenge is therefore wrong.
FULL TEXT OF THE CESTAT HYDERABAD ORDER
Present order disposes of three appeals for the reason that appellant being common to three of the appeals and the issue involved is also the same.
