News Flash
  • Tender For Supplying Of A Fountain With Installation & Commissioning.. Click Here
  • Training on Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, through Video Conferencing on 16th September from NACIN, Faridabad . Click Here
  • Corringendum dated 06.09.2019 for waiver from mentioning UIN on invoices extended upto 31st March 2020
  • Adjudication of Show Cause Notices issued by DRI, DGCEI, SIIB, Preventive etc in light of the judgment in the case of M/s Mangali Impex. Click Here
  • Prospective Training Report to be conducted by NACIN and its Zonal Campuses for the month of September, 2019 Click Here
  • The Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019,(SVLDRS) application has been made available online at https://cbic-gst.gov.in from 1-9-19. The declaration under Section 125 of the Finance (No. 2) Act, 2019 can now be made electronically in Form SVLDRS-1 by the declarant
  • Revision of the existing guidelines for grant of financial assistance for setting up/ refurbishing of Departmental Canteen/ Kitchenette - reg. Click Here
  • Request for Proposal for running Service Centers at various Customs EDI locations is available on http://eprocure.gov.in/eprocure/app Last date for submitting the bids is 18th October 2019. Click Here
  • One-Day Training on "Right to Information Act, 2005" for Group 'A' officers of CBIC on 27th September, 2019 at NACIN, Faridabad Click Here
  • Three-days training on Audit in GST from 18th to 20th September, 2019 at NACIN, Faridabad for Group 'A' and 'B' officers of CBIC . Click Here
  • Launching of Awareness of GST awareness Campaign - Manthan Programme for GST Click Here
  • Removal of difficulty order regarding extension of due date for filing of Annual return (in FORMs GSTR-9, GSTR-9A) and reconciliation statement (in FORM GSTR-9C) for FY 2017-18 till 30th November, 2019 issued.
  • Scheme for Grant of Cash Award to Meritorious Children of Departmental Officers/Staff for their performance in Board Examination -2019 Click Here
  • Recruitment Rules for the post of Superintendent of Central Excise under CBIC Click Here
  • Tender notice for replacement of false ceiling alongwith lights. Click Here
  • Notice regarding Customs Brokers Examination, 2020. Click Here
  • Two-Days' Training Programme on "Preservation of Heritage Buildings" on 16th & 17th September, 2019 for Group 'A' officers of CBIC at INTACH Heritage Academy, (INTACH Headquarters), 71 Lodhi Estate, New Delhi. Click Here
  • The central government notifies that the Sabka Vishwas (Legacy Dispute Resolution) Scheme (SVLDRS), 2019 will come into effect w.e.f 1st September, 2019 till 31st December, 2019. Click Here
  • The Central Government notifies the Sabka Vishwas (Legacy Dispute Resolution) Scheme (SVLDRS) Rules, 2019 Click Here
  • CBIC enhances monetary limits for filing departmental appeals in legacy matters in CESTAT, High Courts and Supreme Court. Click Here
  • CBIC has started issuing Generic Icegate Email Ids to field formations. For more information, Please Click Here
  • Reversion of the posts of Principal Commissioner/Commissioner of CBIC- For details Click Here
  • Updated versions of GST - Concept and Status, and GST - An Update as on 01/08/2019 have been uploaded
  • Residential Course on "Financial Intelligence and Investigations" for Officers of CBIC at IIM,Bengaluru from 16th to 27th September, 2019Click Here
  • DG's letter on the identification and execution of the Swachhta Projects for the financial year 2019-20.Click Here
  • To decide eligibility of candidates appearing for Departmental Exams to be conducted by NACIN in 2019-2020, CCAs may refer Recruitment Rules and Annual Examination Calendar 2019-2020. This clarification can be viewed through this linkClick Here
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.