Custom, Excise & Service Tax Tribunal
The Paper Products Ltd vs Cce, Mumbai-Iii on 10 December, 2015
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. E/2107/05 (Arising out of Order-in-Original No. 17/KKS/2004-2005 dated 11.04.2005 passed by the Commissioner of Central Excise & Customs Mumbai-III.) For approval and signature: Honbl Shri P.S. Pruthi, Member (Technical) Honble Shri S.S. Garg, Member (Judicial) =====================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy : Seen
of the order?
4. Whether order is to be circulated to the Departmental : Yes
authorities?
=====================================================
The Paper Products Ltd.
: Appellant
Versus
CCE, Mumbai-III
: Respondent
Appearance
Shri Prasad Paranjape, Advocate
: For Appellant
Shri Ajay Kumar Jain, Commissioner (A.R.)
: For Respondent
CORAM:
HONBLE SHRI P.S. PRUTHI, MEMBER (TECHNICAL)
HONBLE SHRI S.S. GARG, MEMBER (JUDICIAL)
Date of Hearing : 10.12.2015 Date of Decision: 10.12.2015
ORDER NO.......................................................
Per: P.S. Pruthi:
Heard both sides.
2. The appellant is in appeal against the impugned order passed by the Commissioner of Central Excise & Customs, Mumbai-III confirming the demand of Rs. 53,13,522/- on account of the transportation and insurance charges which were not shown separately in the invoice in term of Rule 5 of the Central Excise Valuation Rules, 2000.
3. The appellant are manufacturer of paper products, mainly packaging products. The purchase order received by them, a sample which is placed at page 35 of the Appeal, shows the total value of the goods and the Central Excise duty payable thereon. Separately it is mentioned in the purchase order that the freight and insurance are to the account of the buyer i.e. M/s Glaxo Smith Kline.
4. Revenues case is that the sale is not a factory gate sale. The delivery not being at the factory gate, valuation is to be done as per the provisions of Section 4(1)(b) read with Valuation Rules. Rule 5, which is the applicable Rule, provides that where any excisable goods are sold in the circumstances specified in clause (a) of sub-Section (1) of Section 4 of the Act except the circumstance in which the excisable goods are sold for delivery at a place other than the place of removal, then the value of such excisable goods shall be deemed to be the transaction value, excluding the actual cost of transportation from the place of removal upto the place of delivery of such excisable goods provided the cost of transportation is charged to the buyer in addition to the price for the goods and shown separately in the invoice for such excisable goods. And, according to learned A.R., the transportation charges are not shown separately in the invoice.
5. The only question that needs determination is whether the sale of goods was completed at the factory gate in order to consider the transaction value as per invoices. We find from the purchase order that the freight charges are to the buyers account. Merely because these are not mentioned separately is no reason to conclude that sale is not complete at the factory gate. The Commissioner in his Order did not reach any conclusion as to the fact of sale at the factory gate. The Commissioner only held that ......... Presuming that the sale of goods is complete at the factory gate, then there was no necessity for the assessee to recover any separate charges on account of transportation and insurance cost. By recovering the amount separately from their buyers it is conclusively proved that the sale is not complete at the factory gate.............. The only reasoning given by the Commissioner is that there was no necessity to recover freight charges separately on account of transportation. We do not agree with this reasoning because, effectively, the payment for purchase in this case has been split into invoice value (for goods) and debit notes for charging transportation costs. Merely because the transport has been arranged by appellant on buyers request and recovered from buyer through debit notes cannot be a ground for denying substantial benefit under the law laid down in Section 4. The law requires that duty is not to be paid on the transportation charges which are borne by the buyers. In any case the freight is mentioned as To our Account in the purchase order. Reliance is placed on the judgment in the following cases -
(i) Commissioner of Central Excise, Nashik Vs. Garware Enterprises Ltd. 2014 (301) ELT 349 (Tri.-Mumbai).
(ii) Commissioner of Central Excise, Nashik Vs. General Metallisers Ltd. 2014 (300) ELT 534 (Tri.-Mumbai).
(iii) Commissioner of Central Excise, Nashik Vs. Techno Force (I) Pvt. Ltd. 2014 (310) ELT 951 (Tri.-Mumbai).
(iv) Goodyear India Ltd. Vs. Commissioner of Central Excise, Delhi-IV 2014 (301) ELT 410 (Tri.-Del.).
The learned A.R. placed reliance on the Hon'ble Apex Court judgment in the case of Commissioner of Customs & Central Excise, Aurangabad Vs. M/s Roofit Industries Ltd. 2015-TIOL-87-SC-CX. We have seen the judgment. We find that in this case the goods were to be delivered at the place of the buyer and it is only at that place that the acceptance of supplies was to be affected. In the present case, circumstances are different. Revenue has not been able to show that the sale did not take place at the factory gate.
6. In view of the above, the impugned order is set aside and appeal is allowed.
(Pronounced in open Court) (S.S. Garg) (P.S. Pruthi) Member (Judicial) Member (Technical) Sp 4