The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi has held that no central excise duty on freight charges paid for the transport of goods from factory premises to buyer’s premises.
The appellant, M/s Jindal Tubular (India) Limited has supplied the goods on which it paid excise duty to the customers on FOR destination basis i.e., the appellant was required to deliver the goods at the buyer’s premises and not its factory gate.
The Principal Commissioner holds that the cost of freight from the factory/depot of the appellant to the customer’s premises is includible in the assessable value for calculating the central excise duty and confirmed the demand of Rs. 3,95,550/-. The aggrieved appellant filed an appeal before the CESTAT. The Counsel for the appellant submitted that regardless of the fact that the sale of goods is on FOR basis, central excise duty cannot be charged on the cost of freight from their premises to the premises of the buyer.
The Tribunal by relying on the decision of the Supreme Court in Ispat Industries observed that the place of removal in every case has to be only the place relatable to the seller and it cannot be the buyer’s premises even though the sale may be completed at the buyer’s premises when goods are sold on FOR destination basis. The “place of removal” continues to be the seller’s premises whether it be the factory gate or depot or any other place relatable to the seller.
The Coram of Mr. Justice Dilip Gupta, President, and Mr. P.V. Subba Rao, Member (Technical) set aside the demand and held that “in terms of section 4 of the Central Excise Act, the value of the goods is the transaction value of the goods for delivery at the time and place of removal. The freight incurred from the place of removal to the buyer’s premises cannot, therefore, be includible in the assessable value”.
Mr. R. Santhanam and Mr. Sanjay Kumar Singh appeared on behalf of the appellant and respondent respectively.
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