By TIOL News Service

HYDERABAD, FEB 18, 2017: THE appellants are engaged in the manufacture and clearances of "Battery chargers and allied products" falling under chapter sub-heading No.85044030 of the Central Excise Tariff Act, 1985. The appellants supplied the Battery chargers of various capacities to various customers particularly to Government agencies such as Indian Railways, BSNL etc., upon the agreement/supply order given by the customers. The departmental authorities observed that the purchase orders were for mainly manufacture, supply and erection of the goods supplied and the transportation clauses included in the purchase orders stipulated for F.O.R destination. It appeared to the Department that the sales invoices were raised when goods were cleared from the factory gate and after the goods were delivered separate invoices were raised for transport charges and Central Excise duty was calculated only on the cost of the goods mentioned in the first invoice, when goods were cleared and the duty was not discharged on the transportation charges mentioned in the subsequent invoices raised for claiming transportation charges. After adjudication, the adjudicating authority confirmed the duty, interest and penalty. On appeal, the Commissioner (Appeals) upheld the same. Hence the assessee is in appeal.

Revenue defended the demand by relying on the judgment of the Apex court in the case of Roofit Industries Ltd - 2015-TIOL-87-SC-CX where it has been held that when goods are delivered at the premises of the buyer, freight, insurance and unloading charges are to be included to the value.

After hearing both sides, the Tribunal held:

+ From the sample letter of advance acceptance, it is seen that while the appellant does have to arrange for transportation of the goods to the stores of Railways, the costs thereof is reimbursed by the latter. This being so, in our opinion the ratio of Roofit Industries case cited by Ld. AR will not apply since the facts are different. In the Roofit case, price of the goods was inclusive of transportation. Secondly it was manifest that sale of goods therein did not take place at factory gate of assessee but at the place of the buyer, on the delivery of the goods in question. However in the instant case, inspection of the goods was required to be done by Railways at appellant's factory, only after which the goods could be despatched .

+ Only after the goods are inspected and passed by Railways can the goods be in fact dispatched out of appellant's factory. Once such inspection is completed only the "last date of delivery" is specified. Again, once such inspection is completed at appellants factory, there is no further inspection at the time of delivery, only condition being that IPSs should be received in 'good and acceptable condition" at consignees end, after which balance 90% of the payment/reimbursement will be effected. Thus, the road transport to consignee's stores is merely for the sake of convenience and a standard requirement in the Railway Tender/contract, and in any case the transportation charges are reimbursed by Railways to the appellant. In such a situation, it is fallacious to hold that the place of removal has been shifted from factory gate to place of delivery.

Accordingly, the Tribunal allowed the appeal.

(See 2017-TIOL-498-CESTAT-HYD)