Customs, Excise and Gold Tribunal - Mumbai
Albright And Wilson Chemicals India ... vs Commissioner Of Central Excise on 28 May, 2007
Equivalent citations: 2007(214)ELT313(TRI-MUMBAI)
ORDER T.K. Jayaraman, Member (T)
1. The following appeals involve a common question of law and facts and therefore they are taken up together for disposal.
S. No. Appeal No. Period Date of SCN Duty (Rs.) Penalty (Rs.) OIO/OIA No. and date
1. E/1694/03 Mar.
1997 to Sep. 2001 28.3.02 21,72,451-00 21,72,451-00 9/CMM/09/2003 dated 26.3.03
2. E/1719/03 Mar.
1997 to Sep. 2001 28.3.02 NIL 5,00,000-00 9/CMM/09/2003 dated 26.3.03
3. E/2740/05 Oct.
2001 to Sep. 2002 and Oct. 2002 to June 2003 5.8.03 18.9.03 8,08,143-00 3,89,060-00 8,08,143-00 3,89,060-00 BR/119 TO 120/Th-1/2005 dated 17.6.05
4. E/2938/05 Oct.
2001 to Sep. 2002 and Oct. 2002 to June 2003 5.8.03 18.9.03 NIL 2,50,000-00 BR/119 TO 120/Th-1/2005 dated 17.6.05
5. E/3714/05 July 03 to Feb. 04 9.6.04 4,69, 918-00 4,69, 918-00 BR/184 & 185/Th-1/2005 dated 8.9.05
6. E/3533/05 July 03 to Feb. 04 9.6.04 NIL 1,00,000-00 BR/184 & 185/Th-1/2005 dated 8.9.05
7. E/1847/06 Mar.
04 to July 04 29.3.05 4,43,805-00 4,43,805-00 BR/240 & 241/Th-1/2006 dated 2.3.2006
8. E/1873/06 Mar.
04 to July 04 29.3.05 NIL 1,00,000-00 BR/240 & 241/Th-1/2006 dated 2.3.2006
2. The appellants manufacture phosphoric acid by reacting rock phosphate with sulphuric acid. In the said reaction gypsum emerges as by-product. The appellants have engaged M/s N.S. Shetty, a contractor to collect the slushy gypsum and transport the same to the appellant's yard. The contractor was issued work orders from time to time for handling of the gypsum. The work order indicated the quantity and the rate. The contractor takes care of transportation, loading, leveling etc. He employs Mathadi labour whose conditions of service arc regulated by the Mathadi Board. The contractor uses his own trucks, driver, fuel etc. for collecting the gypsum from the factory and transporting to the appellant's yard. The gypsum is sold by the appellant to cement companies on as-is-where-is basis. The buyers make their own arrangement for taking and transporting the gypsum from the appellant's yard to the cement factory. The buyers independently appointed M/s N.S. Shetty as their authorized transport contractor for moving the gypsum by road to their factory and informed the appellant of the same in their purchase orders. The buyers paid M/s N.S. Shetty for loading and transportation. The revenue proceeded against the appellants on the ground that the loading and leveling charges paid by the independent buyer of gypsum to M/s N.S. Shetty and also the amount incurred in shifting the gypsum within their factory are required to be included in the assessable value of the gypsum. The lower authority relying on the decision of the Hon'ble Supreme Court in the case of M/s Indian Oxygen Ltd. 1988 (36) ELT 723 (SC) held that the loading and leveling charges incurred prior to clearance of goods from the place of removal is includible in the assessable value of the gypsum. Consequently the demands were confirmed and equal penalties under Section 11AC have been imposed for the various period mentioned above. Interest under Section 11AB has also been demanded.
3. S/Shri D.B. Shroff and D.H. Nadkarni ld. Advocates appeared on behalf of the appellants. Shri Ajay Saxena, ld. SDR argued for the revenue. After hearing the ld. DR, we find that the revenue wants to add the loading and leveling charged incurred by the appellant in the premises of the factory and also the amount received by M/s N.S. Shetty from the cement manufacturers for loading, leveling, transportation and unloading of the gypsum to the premises of the cement manufacturers includible in the assessable value of the gypsum. The adjudicating authority's reliance on the decision of the Supreme Court in the case of M/s Indian Oxygen Ltd. is misplaced as the issue in that case involves a question of deduction of loading charges incurred within the factory from the price of the goods. Here the facts are different. Moreover, the ld. SDR was trying to impress upon us that Mr. N.S. Shetty is just the appellant's man and whatever is received by him should be included in the assessable value of the gypsum. He pointed out to the tripartite agreement between the appellant, M/s N.S. Shetty and also the Mathadi Board. He further made the point that whatever amount was received by M/s N.S. Shetty from the independent cement manufacturers is also includible in the assessable value because Shri N.S. Shetty is just a part of the set up of the appellants. In other words, according to the revenue, whatever amount is received by M/s N.S. Shetty would be considered as received by the appellant. There is no substance in revenue's contention that Shri N.S. Shetty if the appellant's man. As far as the appellant and M/s N.S. Shetty are concerned they have an agreement under which M/s N.S. Shetty has to carryout the task of transporting the gypsum from one place in the factory to another place and also do the leveling. No doubt the appellant incurs expenses for the above purpose. Definitely, the appellant would take in to account the expenses incurred while selling the gypsum to the cement manufacturer. As far as the removal of gypsum from the appellant's factory to the cement manufacturer's factory there is a contract between M/s N.S. Shetty and the cement manufacturers. The amount received by M/s N.S. Shetty for loading, unloading, transportation of gypsum from the appellant's factory by no stretch of imagination can be considered as an additional consideration received by the appellant. It is on record that the appellant sells the gypsum to the cement manufacturers for a particular price. That price should be the basis for assessment. Any amount received by M/s N.S. Shetty either from the appellant or from the cement manufacture cannot form part of the transaction value. This position will not change even before the concept of transaction value was introduced. For a proper understanding we reproduce the definition of transaction value as appear under Section 4(3)(d) of the Central Excise Act, 1944
(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 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.
It is clear that only amounts which the buyer is liable to pay to the assessee are includible in transaction value. In the present case, Revenue has not shown that any portion or all of amounts received by M/s N.S. Shetty flows back to the appellant. Hence these amounts can not be added to the assessable value of gypsum cleared by the appellant.
4. There are many decisions which hold that the cost of transportation from the factory to the buyer's premises is not includible in the assessable value so long as the factory get price exists. The appellants placed reliance on the following two decisions.
1. Reliance Cellulose Products Ltd. v. Commissioner of Central Excise, Hyderabad 2006 (205) ELT 750 (Tri. - Bang.)
2. Solaris Chemtech Ltd. v. Commissioner of Central Excise, Mangalore 2004 (178) ELT 966 (Tri. Bang.) Summing up we hold that the expenses incurred inside the factory for leveling and transporting the gypsum and also expenses incurred by the contractor for loading, unloading and transporting the gypsum to the cement manufacturer are not includible in the assessable value of the gypsum. Therefore, the demands confirmed cannot be upheld. There is no justification for imposition of any penalty and demand of interest. In fine we allow the appeal with consequential relief.
(Pronounced in Court)