Customs, Excise and Gold Tribunal - Delhi
Filament India And K.G. Bajoria, ... vs Cce, Jaipur [Alongwith Appeal Nos. ... on 3 June, 2003
Equivalent citations: 2003(89)ECC212, 2003(160)ELT314(TRI-DEL)
JUDGMENT
K.K. Usha, J. (President)
1. The common issue arising in these appeals at the instance of the assessee for consideration is whether the equalized freight shown separately in the invoices are to be added to the assessable value of the goods when the sale takes place at the factory gate. The adjudicating authority and the appellate authority took the view in all these cases that by applying Rule 5 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (hereinafter referred to as the Valuation Rules) the equalized freight charges were includible in the assessable value of goods for the purpose of payment of duty. The appellants contend that the Commissioner's view is erroneous in view of the provisions contained under Section 4(1)(a) of the Central Excise Act as substituted by Section 94 of the Finance Act, 2000 w.e.f. 1.7.2000.
2. It is not disputed before us by the Revenue that in all the above cases sale has taken place at the factory gate. It is also not disputed that the assessee and buyer of the goods are not related and that price is the sole consideration for sale. In this factual background we will examine the correctness of the view taken in the impugned orders.
3. Relevant portion of Section 4 of the Central Excise Act, 1944, as amended w.e.f. 1.7.2000 reads as follow:
"4(1). Where under this Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, such value shall --
(a) in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods, are not related and the price is the sole consideration for the sale, be the transaction value.
(b) In any other case, including the case where the goods are not sold, be the value determined in such manner as may be prescribed".
The above would show that when the goods are sold by the assessee at the factory gate and when assessee and buyer of the goods are not related and when price is the sole consideration the assessable values of the goods would be the transaction value. Transaction value is defined as follow:
"4(3)(d). '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 that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other manner, 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."
4. The above provisions would make it clear that when there is a sale price at the factory gate and if the 3 conditions referred under Clause (a) are satisfied, no other ingredient has to be added to the sale price at the factory gate for arriving at the assessable value. Determination of the value by applying Valuation Rules would arise only when the value of the excisable goods has to be determined in cases coming under Clause (b) of Section 4(1). Rule 3 of the Valuation Rules provides that the value of any excisable goods shall, for the purposes of Clause (b) or Sub-section (1) of Section 4 of the Act, be determined in accordance with these rules. Therefore, there was no justification on the part of the Commissioner to apply Rule 5 to cases coming under Clause (a). Reliance placed by the adjudicating authority on the Board's Circular No. M.F.(D.R.) F.No 354/81/2000 (TRU) dated 30.6.2000 is totally misplaced. Paragraph 18 of the above Circular explaining salient features of the New Valuation Rules reads as follows:
"18. If the assessee and the buyer are not related persons and the price is also the sole consideration for sale but only the delivery of goods is made by the assessee at a place other than the factory/warehouse, then the assessable value shall be the 'transaction value' without the addition of the cost of transportation from the factory/warehouse upto the place of delivery. However, exclusion of cost of transportation is allowed only if the assessee has shown them separately in the invoice and the exclusion is permissible only for the actual cost so charged from his buyers. If the assessee has a system of pricing and sale at uniform prices inclusive of equated freight for delivery at factory gate or elsewhere, no deductions for freight element will be permissible".
It is relevant to note that in the facts of the cases before us the sale and delivery have taken place at the factory gate. The freight charges which is in relation to an independent transaction is separately shown in the invoices. It is not a case where the assessee is claiming deduction in respect of freight charges from a consolidated price. In these cases the assessees' contention is that the freight charges cannot be added to the assessable value of the goods. Since the above contention taken by the assesses is justified in the facts of the case, whether the freight charges were shown on an equalized basis or actual basis, is totally irrelevant for consideration.
5. We, therefore, hold that in spite the amendment brought to the statute w.e.f. 1.7.2000, and the New Valuation Rules, freight charges are not liable to be included in the assessable value of the goods concerned in these appeals.
6. In Appeal No. E/3003/2002-NB(A) at the instance of M/s Indian Glycols Ltd. demand relates to the period prior and subsequent to 1.7.2000. As far as demand prior to 1.7.2000 is concerned the issue is covered in favour of the appellant by the decision of the Hon'ble Supreme Court in the case of Escorts JCB Ltd v. CCE, 2002 (84) ECC 225 (SC): 2002 (145) ELT 31 (SC). Demand for the subsequent period is also not sustainable in the light of the view which we have taken on the common issued raised in these appeals.
7. In the light of the above, we set aside the orders impugned and allow the appeals.