News Flash
  • CGST Rules, 2017 as amended upto 18/10/2017 have been uploaded.click here
  • Circular clarifying movement of goods on approval basis has been issued
  • Circular on Authorized officer for enrolment of Goods and Services Tax Practitioner has been issued
  • 3 CGST Notifications related to export package issued
  • Circular clarifying movement of goods on approval basis has been issued.click here
  • Circular on Authorized officer for enrollment of Goods and Services Tax Practitioner has been issued.click here
  • Notification 26/2017-Central Excise (NT) dated 17-10-2017 and circular 208/6/2017-Service Tax dated 17.10.2017 have been issued regarding redistribution of cases pending with Commissioner (Appeals) on 30-6-2017.click here
  • Results for THE DEPARTMENTAL EXAM FOR PROMOTION OF MINISTERIAL OFFICERS TO THE POST OF EXECUTIVE ASSISTANT (STA) / INSPECTORS OF CENTRAL EXCISE / INSPECTORS OF CUSTOMS (EOs & POs) held in the month of August 2017, have been declared and sent to the respective CC Zones & Commissionerates.
  • List of ports and ICDs wherein e-seal readers are to be provided by the vendors-.click here
  • New Notifications issued under CGST Act, 2017, IGST Act, 2017 and UTGST Act, 2017.click here
  • The Customs heritage Half Marathon to be held at Mumbai on 29.10.2017.The last date for registration is 22.10.2017.click here
  • Upkeep & Safety of equipment-UPS provided by CBEC.click here
  • No extension of last date for filing GSTR-1 for July, 2017.click here
  • Defence against Writ Petitions/PILs relating to GST-regclick here
  • Press realease on 22nd GST Council Meeting dated 06.10.2017.click here
  • GST rates approved by GST council on 06/10/2017.click here
  • Press note export packages.click here
  • Press note on decisions taken by GST council in 22nd meeting on 06/10/2017.click here
  • All CCs/DGs are requested to check online the "PPT on best practices on Swachhta"by the formations under CBEC.click here
  • Circular on Bond/Letter of Undertaking for exports issued.click here
  • Notification on extension of facility of LUT to all exporters issued.click here
  • Details of Vendors providing E-seals to exportersclick here
  • Eighth amendment to CGST Rules, 2017click here
  • Extension of time limit for intimation of details in FORM GST CMP-03click here
  • Incase of any LAN-WAN issues please call 18002662232/18001214560 or mail Saksham.Seva@icegate.gov.in
View all

Section 37B ORDER No. 59/1/2003-CX

F.No.6/6/2003-CX.I
Government of India
Ministry of Finance & Company affairs
Department of Revenue
Central Board of Excise & Customs

3rd March, 2003.

37B ORDER No. 59/1/2003-CX

Subject:- Inclusion of freight and insurance charges in the assessable value.

            In exercise of the powers conferred under Section 37B of the Central Excise Act, 1944, Central Board of Excise and Customs considers it necessary, for the purpose of uniformity in connection with valuation of excisable goods to issue the following instructions.

2.         Attention is invited to CBEC"s Circular No.533/29/2000-Cx dated 24.5.2000 regarding Central Excise Valuation - amended definition of "place of removal" decision of CEGAT.

3.         The said Circular had been issued with reference to CEGAT"s Order No.1222/99A dated 24.08.99 in case of M/s.Escorts JCB Limited vs. CCE, New Delhi. The said judgment of Tribunal was appealed against (CA No.7230/1999) by the assessee before the Hon"ble Supreme Court. Supreme Court have, vide its Order in Civil Appeal No.7230 of 1999 and C.A.No.1163 of 2000 reported in 2002(146)ELT31(SC) decided the issue on 24.10.2002 setting aside the order of Tribunal.

4.         While giving the judgment the Hon"ble bench of Supreme Court have observed (in para 13 of the said judgment) that

"in view of the discussions held above in our view the Commissioner of Central Excise and CEGAT erred in drawing an inference that the ownership in the property continued to be retained by the assessee till it was delivered to the buyer for the reason that the assessee had arranged for the transport and transit insurance. Such a conclusion is not sustainable".

        In this judgement Hon"ble Supreme Court also quoted section 39 of "Sales of Goods Act, 1930" and held that the machinery, handed over to the carrier/ transporter is as good as delivery to the buyer in term of section 39 of the Sales of Goods Act, apart from terms and conditions of sale .

5.         Similarly in Civil Appeal No.4808-4809 of 2000 with C.A.No.1858-1859 of 2001, 7898 of 2001 and 4221 of 2002 against the order of Tribunal in case of Prabhat Zarda Factory Limited Vs. Commissioner of Central Excise reported vide 2000(119)ELT191(T-LB), the Hon"ble Supreme Court have in their order reported vide 2002(146)ELT497(SC) held, on 14.11.2002, that :

"In these matters, the question is whether freight and insurance charges are to be included in the assessable value for the purposes of excise. This question is covered by the judgment of this Court in the case of Escort JCB Ltd. vs. Commissioner of Central Excise, Delhi 2002 (146)ELT31(SC). The only difference which has been pointed out is that in the case of Escorts case (Supra) the sale was at the factory gate whereas in this case the sale was from the depot. Learned Counsel for the appellants admit that the freight and insurance charges upto the Depot would be includible in the assessable value for the purposes of excise. However, the sale being at the Depot, the freight and insurance for delivery to the customers from the Depot would not be so includible as per the said judgment."

6.         The Central Board of Excise and Customs have in consultation with Additional Solicitor General, decided not to file review petition against the said Supreme Court judgements.

7.         "Assessable value" is to be determined at the "place of removal". Prior to 1.7.2000, "place of removal" [section 4 (4)(b)-sub clauses (i), (ii) and (iii)], was the factory gate, warehouse or the depot or any other premises from where the goods were to be sold. Though the definition of "place of removal" was amended with effect from 1.7.2000, the point of determination of the assessable value under section 4 remained substantially the same. Section 4 (3)(c)(i)[as on 1.7.2000] was identical to the earlier provision contained in section 4(4)(b)(i), section 4 (3)(c)(ii) was identical to the earlier provision in section 4(4)(b)(ii) and rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, took care of the situation covered by the earlier section 4(4)(b)(iii). In the Finance Bill, 2003 (clause 128), the definition "place of removal" is proposed to be restored, through amendment of section 4 to the position as it existed just prior to 1.7.2000.

8.         Thus, it would be essential in each case of removal of excisable goods to determine the point of "sale". As per the above two Apex Court decisions this will depend on the terms (or conditions of contract) of the sale. The 'insurance' of the goods during transit will, however, not be the sole consideration to decide the ownership or the point of sale of the goods.

9.         Based on the above clarifications, pending cases may be disposed off. Past instructions, circulars and orders of the Board on the issue may be considered as suitably modified.

10.         Suitable Trade Notice may be issued for the information and guidance of the trade.

11.         Receipt of this Order may please be acknowledged.

12.         Hindi version will follow.

Suraksha Katiyar
Under Secretary to the Govt. of India.