The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad set aside demand of duty on the ground that buyer’s premises is not included under place of removal under the Central Excise Act.
The appellants, Savita Oil Technologies Ltd 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 was 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. Revenue invoked Rule 6 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, which provides the valuation of excisable goods where price is not the sole consideration. 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.
Ramesh Nair, Judicial Member and Raju, Technical Member observed that “It is seen that the above decision of Hon’ble Apex Court covers all the aspects of this issue, holds that the buyer’s premises cannot, in law, be a “place of removal” under Section 4. 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.”
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