CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

ALLAHABAD

REGIONAL BENCH - COURT NO.I

Excise Appeal No.70625 of 2019

(Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-139-19-20 dated

08.05.2019 passed by Commissioner (Appeals) Central Goods & Services Tax,
Noida)

Commissioner of Central Tax, GST &

Service Tax, Gautam Buddha Nagar …..Appellant
(C-56/42, Renu Tower, Sector-62, Noida-201301)
VERSUS
M/s Telecom Network Solutions Pvt. Ltd., ….Respondent
(A-10, UPSIDC Industrial Area,
Sikandrabad, Distt.-Bulandshahar)
APPEARANCE:
Shri Manish Raj, Authorized Representative for the Revenue
Absent on Call, for the Respondent

CORAM: HON’BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL)

HON’BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL)

FINAL ORDER NO.- 70061/2024

DATE OF HEARING : 17 October, 2023

DATE OF DECISION : 14 February, 2024

P. K. CHOUDHARY:

The Respondent is engaged in the manufacture of “M.S.

Fabricated Hot Dip Galvanized Steel Structures (Tower)”. The
Officers of AGUP, Lucknow visited the factory premises of the
Respondent from 13.12.2010 to 18.12.2010 and conducted audit
of Books of Accounts and Central Excise records for the period
from April, 2008 to March, 2010. During the course of Audit, it
was observed by the Audit party that the Respondent charged
freight from their buyers but did include the same in the
transaction value in terms of Section 4(3)(d) of the Central
Excise Act, 19441 which provides that “Transaction Value” means
the price actually paid or payable for the goods, when sold, and
includes, in addition to the amount charged as price, any amount

1
The Act
 2 Excise Appeal No.70625 of 2019

that the buyer is liable to pay, or on behalf of the assessee by

reason of, or in connection with the sale, whether payable at the
time of sale or at any other time, including, but not limited to,
any amount charged towards expenses, storage, outward
handling servicing, warranty, commission or any other matter,
but does not include the amount of duty of excise, sales tax and
other taxes, if any, actually paid or actually payable on such
goods. Further, Section 4(3)(c)(iii) ibid stipulates that the place
where delivery is given to buyer, will be the place of removal and
value will be price at that place include transport, handling and
insurance charges upto that place. Accordingly, Show Cause
Notice2 covering period up to October, 2015 demanding Central
Excise duty amounting to Rs.20,90,082/- has been issued under
C. No. IV(9)Adj/Telecom/N-II/186/2015/4824 dated 04.12.2015.
For the further period i.e. November, 2015 to June, 2017
statement of demand dated 30.11.2017 has been issued
demanding central excise duty amounting to Rs.51,81,676/-
alongwith applicable interest and also proposal to impose penalty
under the provisions of Rule 25 of Central Excise Rules, 20023
readwith Section 11AC of the Act. The Adjudicating Authority
vide Order-in-Original dated 25.04.2018 confirmed the demand
as proposed in the show cause notice and imposed penalty of
Rs.51,81,676/- under the provisions of Rule 25 of the Rules
readwith Section 11AC of the Act.
2. Being aggrieved, the assessee filed appeal before the first
Appellate Authority and the learned Commissioner (Appeals)
allowed the appeal before him by setting aside the Order-in-
Original.
3. Being aggrieved by the impugned Order-in-Appeal, the
Revenue has filed the present appeal before the Tribunal. When
the matter was called none appeared on behalf of the
Respondent-assessee.
4. Heard the learned Departmental Representative and
perused the appeal records.

2
The SCN
3
The Rules
 3 Excise Appeal No.70625 of 2019

5. The learned Departmental Representative reiterated the

grounds of appeal and relied on the discussions and findings of
the Additional Commissioner of Central Tax, GST, Central Excise,
Gautam Buddha Nagar in the Order-in-Original dated
25.04.2018. We find that the Respondent had entered into
contract with respective customers for manufacture and supply
of goods, thereafter goods were supplied on the terms and
conditions of contract. The customers carried out
inspection/testing of the goods in Respondent’s factory before
the same is discharged to the destination specified in the
purchase order. At the request of the customers, the
transporters were engaged by the Respondent and they were
always paid separately for the same. The price of goods depends
upon the transaction value of goods and the element of freight
has no bearing whatsoever on the value of goods. It is the case
of the Department that the excess of transportation (Freight
Element) of the excisable goods from the factory to the buyer’s
premises was liable to be included in the assessable value of the
goods for computation of duty. Further, in the delivery terms, it
is mentioned freight at actual. Accordingly, the place of removal
is the factory gate and not the premises of the buyers. We find
that the issue is no more res integra and is covered by the
decision of this Bench in the case of Flaktwoods ACS (India) Pvt.
Ltd. 2016 (341) E.L.T. 404 (Tri.-All.). We further find that the
issue has already been decided by the Hon’ble Supreme Court in
the following cases:-
“CCE, Shillong vs. India Carbon Ltd. [2011 (269) E.L.T. 6
(S.C.)], wherein it was held that transportation charges
after the sale of goods from the factory gate were not
includible in the assessable value.
CCE, Mumbai vs. Official Liquidator for Brimco Plastic
Machinery Pvt. Ltd. 2015 (324) E.L.T. 637 (S.C.), wherein
the Hon’ble Supreme Court in the case of the assessee,
manufacturing and clearing Plastic Machinery and installing
and commissioning it at the factory sites of their
customers, and most of the components of the machineries
 4 Excise Appeal No.70625 of 2019

were manufactured by them, including some components,

bought from market and brought to their factory. All such
components were taken in unassembled form for the
purpose of convenient transportation to the site of their
customers, where such machinery is assembled and
installed. The assessee has been supplying the machinery
in unassembled form and was assembling and not
installing at buyer’s place on contract basis and recovering
the contract price by raising invoice. The Revenue wanted
to add certain cost incurred towards installation, erection,
etc., for arriving at the transaction value. The Apex Court
held that the Tribunal was correct in holding that the
expenses of installation is not includible in the transaction
value, as it is obvious conclusion on reading of Section 4 of
the Act. As per which, the transaction value is to be arrived
at the time of clearance of the goods at the factory gate.
All the expenses which are incurred post clearance (that
too, after the supply of equipment) in respect of
installation, etc., could not have been taken into
consideration in the facts of the case.”
6. In view of the ratio as laid down by the Hon’ble Supreme
Court, it is our considered view that as per Rule 5 of the Central
Excise Valuation (Determination of Price of Excisable Goods)
Rules, 2000- wherein excisable value of goods are sold in the
circumstances specified in clause (a) of sub-section (1) of
Section (4) of the Act, except the circumstances in which the
excisable value of goods are sold for delivery at a place other
than the place of removal, then the value of such excisable value
shall be deemed to be the transaction value, excluding the cost
of transportation from the place of removal up to the place of
delivery of such excisable goods. We find that the Respondent
had arranged for the transport of goods to buyer’s addresses
and the freight charges were mentioned separately in the
invoices. The goods after manufacturing in the plant of the
Respondent were subject to pre-delivery inspection by the buyer
and were ascertained in favour of the particular buyer before the
 5 Excise Appeal No.70625 of 2019

delivery. In the invoices, the Respondent have charged sales tax

and have reflected freight separately in most of the cases. We
hold that transfer of ownership takes place at the factory gate
when the goods are delivered. Accordingly, we do not find any
reasons to interfere with the impugned Order-in-Appeal passed
by the learned Commissioner (Appeals) and the same is
sustained. The appeal filed by the Appellant Revenue is rejected.

(Order pronounced in open court on 14th February, 2024)

Sd/-
(P. K. CHOUDHARY)
MEMBER (JUDICIAL)

Sd/-
(SANJIV SRIVASTAVA)
MEMBER (TECHNICAL)
LKS