10 June 2024


Customs, Excise and Service Tax Appellate Tribunal

Savita Oil Technologies Ltd. Vs. C.C.E. and S.T. Daman




Buyer's premises cannot in law be a "place of removal" under Section 4 of Central Excise Act

The Appellants are engaged in manufacture of excisable goods. During the scrutiny of their records, it was noticed that the Appellants were recovering transportation/ freight from their buyers and mentioning the same separately on the correspondence invoices/ bills. The Appellant were not including the said freight collected from the buyer in the assessable value of the goods for the purpose of payment of duty. The agreement entered by the appellant with the buyers prescribed the terms as FOR destination. However, in all documents the value of goods and the amount of freight was separately indicated.

Revenue was of the view that, the amount of freight collected from the buyers should be included in the assessable value of the goods as the delivery was at the premises of the buyer and hence the place of removal would be the premises of the buyer. Revenue was of the opinion that, since freight is being collected along with the value of goods, the valuation of the goods cannot be done under sub section (1) of Section 4 of Central Excise Act, 1944.

The revenue treated freight amount collected by the Appellant from the buyers as additional consideration. Notice demanding Central Excise duty was issued to the Appellant and confirmed by the impugned order. 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 invoices for delivery upto the buyer's premises, the buyer's premises become the 'place of removal'.

In view of decision in case of Ispat Industries, after taking note of the decision of the Hon'ble Apex Court in the case of CCE & Customs v. Roofit Industries Ltd. and the case of Emco Ltd., the buyer's premises cannot, in law, be a "place of removal" under Section 4 of the Act. In this matrix of facts, the decision of Commissioner holding buyer's premises as "place of removal" cannot be upheld. The impugned order upholding the demand of duty is therefore set aside. Since the demand of duty is set aside, the demand of interest as well as penalty cannot be sustained. Appeal allowed.

Tags : Demand Confirmation Legality

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