LexCOMMISSIONER CENTRAL EXCISE, MUMBAI-ILL versus MIS. EMCO LTD.
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[2015] 9 S.C.R. 925 COMMISSIONER CENTRAL EXCISE, MUMBAI-Ill A v. MIS. EMCO LTD. (Civil Appeal No. 3418 of2004) · JULY 31, 2015 [A. K. SIKRI AND N. V. RAMANA, JJ.] Central Excise Act, 1944...:. s.4(3)(d) [as substituted by B s. 94 of Finance Act, 2000] - Transaction value - c Ascertainment of- Payment of excise duty by assessee on the price at which the goods were sold to its consumers - Demand of Revenue at the price by including the transportation cost and transit insurance cost - Whether the cost of freight and transit insurance is to be· included in the 0 'transaction value' - Held: Inclusion of cost of freight and insurance cost, depends upon the place of removal of the goods - If the goods are cleared at the factory gate, then the freight and insurance cost are not to be included in the valuation of the goods - In the present case, plea of revenue that place of removal of the goods in question were not at E factory gate of assessee but at the buyer's premises - The Tribunal without discussing this aspect, in a cryptic non- reasoned order, allowed the appeal of the assessee - Hence, the matter remitted to the Tribunal for considering the matter afresh - Central Excise (Valuation) Rules, 1975 - Central F Excise (Determination of Price of Excisable Goods)Rules, 2000. Allowing the appeals and remitting the matter to Customs Excise and Gold (Control) Appellate Tribunal, G the Court HELD: 1. Section 4 of Central Excise Act was substituted by new Section 4 with effect from 01.07 .2000 by Section 94 of the Finance Act, 2000, whereby the H 925 926 SUPREME COURT REPORTS [2015] 9 S.C.R. A concept of 'transaction value' was introduced. From the same day, the Central Excise (Valuation) Rules, 1975 were also substituted by the Central Excise (Determination of Prices of Excisable Goods) Rules, 2000. Therefore, in the present case, the assessment B period from 28.09.1996 to 30.06.2000 shall be covered by the old provisions and the a~sessment period from 01.07 .2000 to 31.12.2000 shall be covered by the amended provisions. [Para 7] [930-G-H; 931-A] C 2. Under old Section 4, the basis of value was the normal price at which the goods were ordinarily sold in the course of wholesale trade, under the new provision, the value is to be calculated at the time of removal of the goods and it has to be on the value of the goods. Further, D this value has to be 'transaction value'. [Para 9] [933-H; 934-A, 8-C] 3. The issue as to whether the cost of freight and transit insurance is to be included or not depends upon E the place of removal. 'Place of removal' is the place or premises from where the excisable goods are to be sold after their clearance from the factory and Jrom where such goods are removed. If the goods are cleared at the factory gate, then the excise duty has to be charged on F the valuation of the goods to be arrived at the factory gate as that would be the place of removal of goods. It would mean that the expenses which are incurred after the removal of goods from the factory gate namely freight, insurance and unloading charges etc. are not to G be included in the valuation of the goods for the purposes of excise duty. The reason is that the.sale of goods to the buyer is at the factory gate when the property passes to the buyer and the aforesaid H expenditure are thereafter incurred by the buyer. [Paras 10, 11and12] [934-D-E, H; 935-A-B] COMMISSIONER CENTRAL EXCISE, MUMBAI-Ill v. M/S. 927 EMCOLTD . . . ,; ,.. Escorts JCB Ltd. v. Collector of Central Excise A 2002· (146) ELT 31 (SC); Commissioner of Central Excise, Noida v. Accurate Meters Ltd. 2009 (3) SCR 1146: (2009) 6 SCC 52; Commissioner, Customs and Central Excise, Aurangabad v. M/s. Roofit Industries Ltd. (2015) 5 SCALE 470 - B relied on. 4. There is a detailed discussion in the order of the Commissioner on the facts of the case. The Tribunal without going into any of the aspects and/or discussing C the same, in a cryptic non-reasoned order, allowed the appeal. Therefore, the order of th~ Tribunal is set aside and the case is remitted to it for fresh consideration after looking into the facts of the present case, namely, the terms and conditions of the sale with the buyer and D determination on that basis as to which was the place of removal, that is whether it was the factory gate of the assessee or the place of delivery. As per the Commissioner, place of removal was the pl
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