Order Date – 30 June 2022

Facts – 

• The appellants, M/s 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 freight from their buyers and mentioning the same separately on the correspondence invoices/ bills and they were not including the said freight collected from the buyer in the assessable value of the goods for the purpose of payment of duty.
• Revenue was of the opinion 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 would be considered as place of removal.
• The revenue treated freight amount collected by the appellant from the buyers as additional consideration. Show Cause Notice demanding Central Excise duty was issued to the appellant and confirmed by the impugned order.
• Aggrieved the appeal has been filed.

Issues – 

• Whether the premises of the buyer would be considered as a place of removal and freight amount collected by the appellant from the buyers would be considered as additional consideration?

Order –

• The Tribunal was of the opinion that the buyer’s premises cannot, in law, be a “place of removal” under Section 4. 
• Reliance placed on the case of Ispat Industries Ltd in which the Supreme Court held that till the goods reached their destination, ownership in the goods remained with the supplier, namely, the assessee, freight charges would have to be added as a component of excise duty payment was only to be made after receipt of goods at the premises of the buyer. On facts, it was held that the sale of goods did not take place at the factory gate of the assessee. Also, Section 4 as originally enacted and as amended to demonstrate that the buyer’s premises cannot, in law, be “a place of removal”.
• The Tribunal set aside the order of demand of duty, interest and penalty.