2026-VIL-1305-CESTAT-HYD-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Determination of place of removal - Includability of freight and insurance charges in assessable value under FOR destination contracts - Appellant supplying PSCC poles to electricity distribution companies on FOR destination basis where contracts provided that price was inclusive of transportation charges, ownership remained with supplier till delivery at buyer's premises and supplier bore risk and responsibility for safe delivery at destination - Whether buyer's premises constitutes place of removal and freight and insurance charges form part of assessable value - HELD - The decisive test for determining place of removal is the point where transfer of property in goods occurs and where sale is completed. Where contracts expressly provide that ownership remains with supplier till delivery of goods in good condition at buyer's premises, sale is not concluded at factory gate but is completed only upon delivery at destination and therefore buyer's premises constitute place of removal. Freight and insurance charges are includable in assessable value when they are incurred and form integral component of supply contract and not optional or independent transport service - Explanation 2 to Rule 5 of CEVR, 2000 clarifies that cost of transportation from factory to place of removal where factory is not place of removal shall not be excluded for determining value of excisable goods. When delivery is on FOR destination basis and ownership remains with seller till destination, freight and insurance are includable in assessable value as established by Supreme Court judgments - Suppression is established as material purchase order clauses relating to FOR destination pricing and freight inclusion were not specifically disclosed to Department. Absence of disclosure of contractual terms coupled with exclusion of freight from assessable value despite contractual clauses clearly indicating destination sale constitutes suppression leading to short payment warranting invocation of extended period under Section 11A(4) of Central Excise Act. Bonafide belief lacks merit as mere self-serving assertion of belief without seeking legal opinion or departmental clarification cannot defeat statutory liability. Therefore, demand of excise duty along with interest and penalty is rightly confirmed - The impugned order is upheld and the appeal is dismissed
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