Hemambika R. Priya DECISION
Dr. Rachna Gupta, Member (J)
1. Present order disposes of an appeal filed to assail the Order-in-Appeal No. 72/2022 dated 27.12.2022 vide which the amount of freight and insurance paid by the appellant are held to be the part of assessable value by holding that place of delivery of goods, since the goods have been supplied on FOR destination bases, is the buyer's place. Being aggrieved of the said order, appeal is before this Tribunal. The facts in brief relevant for the purpose are as follows:
1.1 The appellant is engaged in manufacture of transformer, aluminium, cables etc. During the audit of appellant's records, department observed that appellant has been awarded contracts by various companies for supply of transformers from their office at Jaipur, Rajasthan. From the purchase order/agreement between the appellant and its various buyers, the department observed that the freight and insurance were agreed to be inclusive in the transaction value. However, the appellant while discharging the tax liability, on those invoices, was found to had not included the cost of freight while assessing the said value. Resultantly, excise duty amounting to Rs.65,15,338/- on the freight value of Rs.5,21,22,700/-received by the appellant during the period from March 2016 to March 2017 is alleged to have been short paid by not including the same into the assessable value. The same is alleged to be the violation of Section 4 of Central Excise Act, 1944 read with Rule 4,6 and 8 of Central Excise Act, 2002. The said amount of Rs.65,15,338/- therefore is proposed to be recovered from the appellant along with the interest vide Show Cause Notice No. 35/2017/51 dated 16.04.2018. Penalty is also proposed to be imposed. The said proposal was initially confirmed vide Order-in-Original No. 01/2021-22 dated 17.05.2021. The appeal against the said order has been dismissed vide the order under challenge. Being aggrieved the appellant is before this Tribunal.
2. We have heard Ms. Sukriti Das, learned Advocate for the appellant and Shri Manish Kumar Chawda, learned Authorized Representative for the department.
3. Learned counsel for the appellant has mentioned that the purchase orders clearly indicate that the price for supply of finished product would be ex work price and the freight charges for transportation of goods from the appellant's factory to the buyer's premises would be charged separately in the invoice and paid accordingly by the buyers. Thus charges on account of freight are recovered by the appellant from the buyers separately. It is after the invoices were prepared, the Goods Transport Agency was engaged for transportation of goods up to buyer's premises. The lorry receipts issued by GTA indicate buyers as the consignee therefore it stands established that the property in goods had passed in favour of buyers prior transportation thereof, resulting, sale of said goods to complete at the factory gate of the appellant. Thus, including the value of freight into the assessable value are not the correct findings. The amount of duty which has been confirmed against the appellant is therefore liable to be set aside.
3.1 The learned counsel further mentioned that the issue in dispute is no more res integra as decided by Hon'ble Supreme Court in the case titled as CC & CCE, Nagpur Vs. Ispat Industries Ltd. reported as MANU/SC/1151/2015 : 2015:INSC:742 : 2015 (324) ELT 670 (SC). It has been categorically held in the said decision that the buyer's premises can never be the place of removal. It is submitted that decision of Roofit Industries Ltd. Vs. CCE reported as MANU/SC/0483/2015 : 2015:INSC:347 : 2015 (319) ELT 221 (SC)has wrongly been relied upon by Commissioner (Appeals). The said decision has been considered by Hon'ble Apex Court in Ispat Indu........