In 'FOR sale' transactions involving specialized goods where statutory mandates require delivery by the seller, the place of removal is the buyer's premises. However, conflicting judicial interpretations of 'place of removal' preclude the invocation of the extended period for demand.

[Order per: A.K. JYOTISHI ]

M/s Salvo Explosives & Chemicals Ltd (hereinafter referred to as the appellant) are in appeal against OIA dt.30.08.2017, whereby, the Commissioner (Appeals) has rejected the appeal of the appellant upholding the order of the adjudicating authority.

2. The brief facts of the case are that in the course of audit, the department noticed that the appellants have collected certain amount from their customers under the category of freight charges and have not paid Central Excise duty on the said amount. It was also noticed that as per the purchase orders, the prices adopted are on ex-works basis, however, due to sensitive nature of the goods, these goods have to be delivered invariably at the premises of their customer through a specialized vehicle and they also obtain acknowledgment from customers as per the norms of PESO (Petroleum and Explosives Safety Organization). It was also noted that insurance of these goods in transit also lies with the appellant and any risk of damage to goods during the transit also lies with the appellant only. Therefore, in the nature of the entire transaction and the nature of the goods, the sale is taking place at the premises of the customer and therefore, the transportation charges are includible in the assessable value for the purpose of discharging Central Excise duty.

3. On adjudication, the adjudicating authority has examined the factual matrix and certain case laws in order to decide whether transportation charges incurred up to the buyer’s premises is includible or otherwise. He has also distinguished various case laws cited by the appellant on the ground that factual matrix of this case is unique and is not comparable to the factual matrix of the cases cited. He has also relied on the judgment of Coordinate Bench in the case of Uflex Ltd Vs CCE & C, Jammu [2015 (327) ELT 359 (Tri-Del)], wherein, the issue of includibility of freight charges up to the place of removal was examined.

4. Learned Advocate for the appellant has mainly contested that the transportation in specialized vehicle and compliance of certain norms are due to statutory requirement and this does not in itself make it a case where sale has taken place at buyer’s premises and not at the factory gate. He has relied heavily on the judgment of Hon’ble Supreme Court in the case of CCE, Nagpur Vs Ispat Industries Ltd [2015 (324) ELT 670 (SC)] in support that only manufacturer’s premises can be considered as place of removal. He has also relied on various other judgments including Schneider Electric India Ltd Vs CCE & ST [Final Order No.11164-11165/2024 dt.16.05.2024] in support that in the case of ex-factory sale, the freight charges collected from customers over and above sale price is not includible in the assessable value. He has also relied on catena of judgments in support that buyer’s premises cannot be a place of removal. He has further submitted that merely because risk is being borne by the seller, it does not mean that he has retained the ownership. He has relied on the judgment of Hon’ble Supreme Court in the case of Escorts JCB Vs CCE [2002 (146) ELT 31 (SC)] and decision of Coordinate Bench in the case of Associated Strips Vs CCE, New Delhi [2002 (143) ELT 131 (Tri-Del)]. He has also pointed out that the goods are being cleared from the factory gate on payment of VAT which would tantamount to transfer of goods to the buyer. He has also submitted in the facts of the case that extended period is not invokable.