IDMC Limited Vs C.C.E. & C. Anand (CESTAT Ahmedabad)
CESTAT Ahmedabad held that demand of duty on freight by including the same in assessable value not sustainable as factory gate is the place of removal.
Facts- 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 value of such excisable goods and duty on the said freight is chargeable or otherwise.
Conclusion- 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.
Held that the freight cannot be included in the assessable value in the facts of the present case. Consequently, no demand of duty on freight would sustain. As a result, the impugned order is set aside, and appeal is allowed, with consequential relief.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
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 value of such excisable goods and duty on the said freight is chargeable or otherwise.
2. Shri Kumar Parekh, Learned Chartered Accountant appearing on behalf of the appellant submits that as per the facts of the case the goods are to be delivered at buyer’s premises from the factory of the appellant on FOR destination basis. The excise invoices have been prepared at factory directly in the name of customers with date and time of removal of goods from factory. The transactions are entered in sales register and the stock or imerntory of goods is reduced by such sale on removal of goods from factory. The freight amount was charged separately in the invoice and the same does not part of integral part of sale price. The payment terms depend on case to case basis, in some case, the customers pay advance and remaining after delivery and in some case total amount is paid after delivery. The liability of VAT/CST is discharged as and when the goods are removed from factory gate considering it to be sale of goods at the same time. On this basis the place of removal is a factory gate and there is no other place of removal. Accordingly, the freight charges incurred beyond the place of removal is not includable in the assessable value. He submits that it was the observation of the respondent that since the sale of goods happens at the buyer’s premises on delivery of goods in question and acceptance by buyers at site the place of removal for the purpose of determination of assessable value would be the buyer’s premise. To support this observation, the respondent relied upon the decision of Hon’ble Supreme Court in the case of Commissioner of Customs & Central Excise, Aurangabad Vs. Roofit Industries Ltd.-2015 319 ELT 0221 (S.C). He submits that the facts in Roofit Industries Ltd are not identical to the facts in the appellant’s case. The distinguishing factors in the present case is that no sale was effected till the goods reached the project location i.e. buyer’s premises and the ownership remained with the seller till goods are accepted by buyer on delivery at buyers premises. On this distinguishing factor, the Hon’ble Supreme Court in the judgment of Commissioner of Customs Vs. Ispat Industries Ltd.-2015-TIOL-238-SC-CX held that the place of removal is the suppliers factory premises and in this position there can be no other place of removal other than factory gate of the seller of goods and in this circumstances there cannot be other place of removal. He submits that in the Ispat Industries Ltd case the Roofit Industries Ltd was also considered, therefore the judgments of Ispat Industries shall prevail. He further submits that the identical 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, whereby it was held that the buyer’s premises, cannot in law, be a place of removal under Section 4 and consequently no duty can be levied on portion of freight. He also submits that the demand was raised for extended period which was not invokable. In fact of the present case, it was made out on the basis on audit observation from the audits of the records. Therefore, there is no suppression of fact on the part of the appellant. The issue involved is of interpretation of value of the provision and there are various judgments on this issue. The issue is that whether freight is includable in the assessable value or otherwise. Therefore, no mala fide intention can be attributed to the appellant, hence the demand of the extended period is not sustainable on limitation also. He placed reliance on the following judgments:
