Buyer premise can't be considered as Place of Removal and therefore bulk sum is to be barred from assessable worth

  • GST
  • Caselaw
  • Financeseva

Fact of the case 

  • In the current case the assessee was occupied with the assembling of Caustic Soda Lye, Liquid Chlorine and partnered products on which Central Excise Duty was appropriately paid.
  • The assessee’s contracts with its buyers were at FOR prices and the goods were handed over to customers at its premises. The Central Excise Department disputed that as the sale in such cases has taken place when the delivery was given to the destination, the destination would be considered as the 'place of removal'.
  • Accordingly, the amount of freight charged from the customer shall also be included in the transaction value and assessee was liable to pay exercise duty on the same.
  • Based on the above argument, the Department raised the demand for Central Excise Duty along with penalty and applicable interest in the assessee. This demand raised by the Department was also confirmed by the first appellate authority. Aggrieved from the impugned order, assessee filed an appeal before the CESTAT.

Judgement 

  • In its analysis, the Hon’ble CESTAT referred to the legal position held by the Hon'ble Supreme Court in the case of M/s Ispat Industries [2015] Whereas it was held that the place of removal only has reference to places from which manufacturer must sell goods made by it.
  • It can under no circumstances, have reference to the place of delivery or buyer's premises; thus, buyer's premises cannot, in law, be ‘a place of removal’.
  • The Hon’ble CESTAT also relied on Rule 5 of the relevant Valuation Rules which deducts the cost of transport from removal to a place of delivery. Based on the above, the CESTAT set aside the order of Department and allowed in favor of the assessee.