Custom, Excise & Service Tax Tribunal
Cce, Chandigarh vs M/S Prs Rolling Mills Pvt. Ltd on 16 April, 2012
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench. COURT NO. I DATE OF HEARING /DECISION: 16/04/2012. Honble Sh. Justice Ajit Bharihoke, President Honble Sh. Rakesh Kumar, Member (Technical) 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982. 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether Their Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? Excise Appeal No. 862 of 2006 [Arising out of the Order-in-Appeal No. 432/CE/CHD/2005 dated 30.11.2005 passed by The Commissioner (Appeals) Central Excise, Chandigarh] CCE, Chandigarh Appellants Versus M/s PRS Rolling Mills Pvt. Ltd. Respondent
Appearance Present Sh. Nagesh Pathak, AR for the Appellant.
None for the Respondent.
CORAM : Honble Shri Justice Ajit Bharihoke, President
Honble Shri Rakesh Kumar, Member (Technical)
Order No. ________________
Per. Justice Ajit Bharihoke :
This appeal is directed against the impugned order of Commissioner (Appeals), Customs and Central Excise, Chandigarh whereby he allowed the appeal of the assessee and set aside the order-in-original passed by the adjudicating authority confirming the central excise duty demand amounting to Rs. 6,81,428/- with interest and also imposed penalty of equal amount.
2. The respondent is manufacturer of CTD bars falling under chapter sub-heading 7214.90 of the first schedule to the Central Excise Tariff Act, 1985. During the period January, 2001 to 31.03.2003, the appellant had supplied goods to their customer and charged transportation charges over and above the price of the goods mentioned in the respective invoices.
3. The department was of the view that the transportation cost/ freight charges from the place of removal to the place of delivery ought to have been included in the value of the goods for assessing the excise duty payable. Thus, a show cause notice dated 3.11.2004 was served upon the respondent. Respondent contested the show cause notice after giving due opportunity of being heard. The adjudicating authority confirmed the demand of Rs. 6,81,428/- with interest against the respondent and also imposed penalty of equal amount.
4. Feeling aggrieved with the order-in-original, the respondent preferred an appeal. The appeal was allowed vide impugned order and order in original was set aside.
5. Ld. AR appearing for the appellant has submitted that the Commissioner (Appeals) has committed a grave error in holding that the case of the assessee is covered by Section 4(1)(a) of the Central Excise Act, 1944 on the premise that goods were sold at the factory gate. Ld. AR submitted that Commissioner (Appeals) lost sight of the fact that the respondent assessee have transported the goods to the place of destination in their own vehicle against the payment of freight charges, hence, it cannot be said to be a case of sale of goods at factory gate and actually the transaction amounts to sale on FOR basis. Thus, it is submitted that the case is covered under the provision of Section 4(1)(b) of the Central Excise Act, 1944 and as such the valuation for the purpose of excise duty ought to have been done in accordance with Rule 5 Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. It is further contended by the departmental representative that the Commissioner (Appeals) has erred in relying upon the case of M/s Baroda Electric Meters Ltd. and the case of Escorts JCB Ltd. ignoring that those cases pertain to the period prior to 01.07.2000 when there was no concept of transaction value. It is further contended that in terms of the Board Circular No. 643/34/2002-CX dated 01.07.2000 the deduction of transport charges is admissible provided the transport charges are shown separately in the invoices. Whereas in the instant case there is no mention of transport charges in the invoices.
6. In order to appreciate the contention of the appellants it is necessary to have a look at Section 4(1)(a) & (b) of the Central Excise Act, 1944 as also Rule 5 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 which are reproduced thus:-
Section 4(1)(a) 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.
[RULE 5.?Where any excisable goods are sold in the circumstances specified in clause (a) of sub-section (1) of section 4 of the Act except the circumstances in which the excisable goods are sold for delivery at a place other than the place of removal, then the value of such excisable goods shall be deemed to be the transaction value, excluding the cost of transportation from the place of removal upto the place of delivery of such excisable goods.
Explanation 1. - Cost of transportation includes -
(i) the actual cost of transportation; and
(ii) in case where freight is averaged, the cost of transportation calculated in accordance with generally accepted principles of costing.
Explanation 2. - For removal of doubts, it is clarified that the cost of transportation from the factory to the place of removal, where the factory is not the place of removal, shall not be excluded for the purposes of determining the value of the excisable goods.]
7. On bare reading of Section 4(1)(a) it is apparent where the assessee and the buyers are not related party and the excisable goods are sold by the assessee for delivery at the time and place of the removal the price if it is sole consideration for the sale shall be the transaction value for the purpose of excise. In the instant case, there is nothing on record to suggest that the respondent-assessee and the customer to whom the goods were sold were related parties. On perusal of the order-in-original and the impugned order it transpires that as per the copies of invoices produced before the authorities the sale was at the factory gate and the price charged was as per the invoices. Thus, in our considered view for the purpose of transaction value Section 4(1)(a) of the Central Excise Act, 1944 is attracted. Thus, Section 4(1)(b) does not come into play. That being so, Rule 5 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 is also not attracted. In the case of Baroda Electric Meters Ltd. vs. CCE reported in 1997 (94) ELT 13 (Tri.), the Tribunal will dealing with similar issue of valuation held that excess amount of freight collected by the assessee need not form part of assessable value. The issue is also covered by the decision of the Supreme Court in the case of Escorts JCB Ltd. -2004 (146) ELT 31 (SC) wherein the Supreme Court held if the place of removal of goods is factory of the assessee then transport charges will not be included in the assessable value. Thus, going by the law laid down by the Supreme court also we do not find any infirmity in the impugned order which may call for interference by the Tribunal.
8. The result of above discussion is that the appeal is devoid of merit, it is accordingly dismissed.
(Justice Ajit Bharihoke) President (Rakesh Kumar) Member (Technical) Pant 5