Interpretation of term Place of Removal by Supreme Court
Recently Hon. Supreme Court in the case of Commissioner of Customs & Central Excise v. Ispat Industries Ltd. (2015) 62 taxmann.com 97 (SC) has held that a Place of removal can only be the premises of a manufacturer.As per Sec. 4 of Central Excise Act, 1944 and Rule 2 (qa) of CCR, 2004 "place of removal" means -
- a factory or any other place or premises of production or manufacture of the excisable good;
- a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty;
- a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory,
It was observed by the Supreme Court in the decision that the place of removal can only be the manufacturers premises because the words used in Rule 2 (qa) (iii) are are to be sold. These are the key words of the sub-section.
Until now the only test to determine the place of removal was the place of sale. If the place of sale was buyers premises, then buyers premises were taken as place of removal. In Ispats case (supra), a view is taken wherein the words are to be sold has been interpreted and held that such place where goods are to be sold can never be buyers premises even if sale takes place at the buyers premises, because it is a place where goods have been sold not where goods are to be sold.
Since Assessable value under Section 4 of Central Excise Act, 1944 is taken up to place of removal therefore on the basis of above case it is clear that the expenses incurred for transportation after clearance from manufacturers premises will not be included in calculation of Assessable value and hence Excise duty will not be levied on these expenses.
Also the CENVAT credit of all the input services availed after clearance from premises of manufacturer like In-transit insurance, GTA service etc. will not be available as definition of place of removal under Rule 2 of CCR,2004 is same as that in Sec 4 of Central Excise Act. Even if the insurance is taken in name of manufacturer then also it is neither excisable nor eligible for CENVAT credit.