Custom, Excise & Service Tax Tribunal
M/S Mideast Integrated Steels Ltd vs Cce, Bhubaneswar on 31 August, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL KOLKATA Excise Appeal No. 396 of 2011 (Arising out of Order-in-Appeal No. 22/CE/BBSR-I/2011 dated 24.02.2011 passed by the Commissioner of Central Excise (Appeals), Bhubaneswar) DATE OF HEARING : 23.08.2017 DATE OF DECISION : 31.08.2017 M/s Mideast Integrated Steels Ltd. . Appellants (Rep by Sh. K.K. Acharya, Adv.) VERSUS CCE, Bhubaneswar . Respondent
(Rep. by Sh. K. Chaudhari, DR) CORAM : HONBLE MR. JUSTICE (DR.) SATISH CHANDRA, PRESIDENT HONBLE MR. V. PADMANABHAN, MEMBER (TECHNICAL) FINAL ORDER NO. FO/A/77097/2017 PER V. PADMANABHAN :
The present appeal is filed by the assessee-Appellants against the Order-in-Appeal No. 22/CE/BBSR-I/2011 dated 24.02.2011 passed by the Commissioner of Central Excise (Appeals), Bhubaneswar.
2. The brief facts of the case are that, the Appellants are a 100% EOU and manufacturer of pig iron and scrap thereof falling under Chapter 74 of the Central Excise Tariff Act, 1985. They removed their products to Domestic Tariff Area (DTA) on payment of duty under Proviso to Section 3 of the Central Excise Act, 1944. As per the contract executed by the Appellants with their buyers, sometimes the goods are directly sold from the factory and in some other cases the goods are shifted to the nearby railway sliding if the buyers opt for such facility. In the second case, the Appellants charges from the buyers additional charges towards shifting of the goods upto the railway sliding and loading the same into railway wagons. The Revenue was of the view that, in such cases, the place of removal of the goods is to be considered as the railway sliding and the loading charges recovered from the buyers are to be included in the value of the goods for the purposes of charging duty. Accordingly, a show cause notice was issued and the authorities below confirmed the demand for excise duty amounting to Rs. 6,87,417/- along with interest. Penalty of an equal amount was also imposed. Aggrieved with the impugned order, the present appeal has been filed.
3. With this background, we have heard Shri K.K. Achariya, learned counsel for the Appellants and Shri K. Chaudhari, learned DR for the Revenue.
4. The learned counsel for the Appellants submits that the goods cleared from the 100% EOU are leviable to duty in terms of Section 3 of the Central Excise Act, 1944, but valuation of such goods is required to be done in terms of Section 14 of the Customs Act, 1962. In respect of 100% EOU, the factory gate will become the boundary between the EOU and the rest of the country, and accordingly there is no justification to add the loading charges at the railway sliding to the goods which are cleared from the Appellants factory. Accordingly, he submits that the impugned order may be set aside.
5. The learned DR for the Revenue justifies the impugned order. He submits that the goods are contracted for delivery at the railway sliding and accordingly that becomes the place of removal, and hence the loading charges have been rightly included in the assessable value.
6. The short point involved in the present case is: Whether loading charges recovered by the Appellants from the buyers of the goods is required to be added to the assessable value for the purposes of levy of Central Excise duty payable by the EOU in terms of Section 3 of the Central Excise Act, 1944? Section 3(1)(b)(ii) deals with the duties payable by 100% EOU at the time of clearing goods to DTA. The same is reproduced below for ready reference :
Section 3 - Duties specified in First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 to be levied. -
(1) There shall be levied and collected in such manner as may be prescribed, -
(a) xxxx xxxx xxxx (b) xxxx xxxx xxxx
(ii) by a hundred per cent export-oriented undertaking and brought to any other place in India, shall be an amount equal to the aggregate of the duties of customs which would be leviable under the Customs Act, 1962 (52 of 1962) or any other law for the time being in force, on like goods produced or manufactured outside India if imported into India, and where the said duties of customs are chargeable by reference to their value; the value of such excisable goods shall, notwithstanding anything contained in any other provision of this Act, be determined in accordance with the provisions of the Customs Act, 1962 (52 of 1962) and the Customs Tariff Act, 1975 (51 of 1975).
7. It may be noted that the EOU is required to pay Central Excise duty, but the quantum of such duty is to be determined in terms of the above provisions. It is seen that the value for the purposes of charging ad valorem, duty is to be determined in accordance with the provisions of Customs Act, 1962. Section 14(1) of the Customs Act, 1962 deals with Valuation of Goods for the purposes of levy of Customs duty which is reproduced below for ready reference :
14. Valuation of goods for purposes of assessment - (1) For the purposes of the Customs Tariff Act, 1975(51 of 1975), or any other law for the time being in force, the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such other conditions as may be specified in the rules made in this behalf :
Provided that such transaction value in the case of imported goods shall include, in addition to the price as aforesaid, any amount paid or payable for costs and services, including commissions and brokerage, engineering, design work, royalties and licence fees, costs of transportation to the place of importation, insurance, loading, unloading and handling charges to the extent and in the manner specified in the rules made in this behalf :
Provided further that the rules made in this behalf may provide for - (i) the circumstances in which the buyer and the seller shall be deemed to be related; (ii) the manner of determination of value in respect of goods when there is no sale, or the buyer and the seller are related, or price is not the sole consideration for the sale or in any other case (iii) the manner of acceptance or rejection of value declared by the importer or exporter, as the case may be, where the proper officer has reason to doubt the truth or accuracy of such value, and determination of value for the purposes of this section Provided also that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under section 46, or a shipping bill of export, as the case may be, is presented under section 50. It may be seen that the value for the purposes of charging Customs duty is a transaction value for delivery at the time and place of clearance of importation. A conjoint reading of Section 14 of the Customs Act and Section 3 of the Central Excise Act leads us to the conclusion that the duty payable by 100% EOU, DTA clearance is to be assessed on transaction value applicable at the place where the sale takes place. As per the terms of the contract entered between Appellants and the buyers, the Appellants are required to deliver the goods at the railway wagon. Since the transaction value is for delivery at the railway wagon, the duty is to be charged on the said transaction value at this point.
8. In view of the above discussion, we find no infirmity in the impugned order and the same is hereby sustained along with the reasons mentioned therein.
9. In the result, the appeal filed by the Appellants is dismissed.
(Pronounced in the open court on 31.08.2017) \ (V. PADMANABHAN) MEMBER (TECHNICAL) (JUSTICE (Dr.) SATISH CHANDRA) PRESIDENT Golay 1 A.No. E/396/11