Assessable value includes transport and warehousing charges at the place of removal; penalties require proof of conscious abetment.

Transportation and warehousing charges were held includible in assessable value where the place of removal was treated as the warehouse and the goods were delivered there with those charges collected from customers; the valuation addition was upheld. For alleged clandestine removals through family firms, the duty demand could not be sustained without correlating purchase invoices, sales and seized records, so the matter was remanded for factual re-verification and re-quantification. Penalties on the transporter and warehouse keeper were deleted because mere involvement in movement and storage of goods, without proof of conscious knowledge or participation in duty evasion, was insufficient.

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Issues: (i) whether the demand based on alleged clandestine removals and clearances through family firms required remand for re-quantification after correlation of records and invoices; (ii) whether transportation and warehousing charges were includible in assessable value and whether the penalties on the transporter and warehouse keeper were sustainable.

Issue (i): whether the demand based on alleged clandestine removals and clearances through family firms required remand for re-quantification after correlation of records and invoices.

Analysis: The demand arising from clearances through the family firms could not be sustained without examining the purchase invoices said to have been obtained from the local market and without correlating the quantities of sales and purchases. The matter required factual re-verification of the seized records, lorry receipts and invoices so that the correct duty liability could be arrived at.

Conclusion: The demand on account of clearances through the family firms was set aside for re-quantification and the matter was remanded on this aspect.

Issue (ii): whether transportation and warehousing charges were includible in assessable value and whether the penalties on the transporter and warehouse keeper were sustainable.

Analysis: The place of removal was treated as the warehouse premises, and the goods delivered there attracted the transportation and storage charges collected from customers. Those charges formed part of the assessable value in the facts of the case. At the same time, the transporter and warehouse keeper were not shown to have knowledge that the goods were non-duty-paid or that they were aiding and abetting evasion, and mere association with the movement and storage of goods was insufficient for penalty.

Conclusion: The addition of transportation and warehousing charges to assessable value was upheld, but the penalties on the transporter and warehouse keeper were set aside.

Final Conclusion: The appeals resulted in a partial success for the appellants: the demand was remanded for re-quantification on one part, the valuation issue was decided against the assessee, and the penalties on the transporter and warehouse keeper were deleted.

Ratio Decidendi: For levy and penalty under the central excise regime, assessable value must reflect the price at the place of removal, while penalty for alleged abetment requires proof of conscious knowledge or participation in duty evasion; absent such proof, penalty cannot stand.

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