2011 (8) TMI 855 - AT - Central Excise

Tribunal rules duty must be paid on plastic goods' value inclusive of equalised freight

The Tribunal allowed the Revenue's appeals in a case concerning the inclusion of equalised freight in the transaction value of plastic moulded luggage ... Inclusion of equalised freight in transaction value - add-back of freight to assessable value - operation of new Section 4 of Central Excise Act, 1944 affecting exclusion of equalised freight - transaction value inclusive of cost of transaction from factory to depotInclusion of equalised freight in transaction value - operation of new Section 4 of Central Excise Act, 1944 affecting exclusion of equalised freight - Whether equalised freight recovered by the manufacturer is required to be included in the transaction value for the periods in question - HELD THAT: - The Tribunal applied its earlier decision in CCE vs. VIP Industries which held that with effect from 1.7.2000, when the provisions of the new Section 4 came into force, exclusion of equalised freight from transaction value is not permissible and duty is exigible on value inclusive of the cost of transport from factory to depot. The show-cause notices in this case relate to periods in 2001, falling after 1.7.2000. Therefore the equalised freight recovered by the respondent must be added to the transaction value and duty paid thereon. In consequence, the Commissioner (Appeals) order allowing the respondent's appeal was set aside and the original order confirming the inclusion of freight and directing recovery was restored.Order-in-Appeal set aside; Order-in-Original restored and appeals allowed.Final Conclusion: The Tribunal allowed the Revenue appeals, holding that equalised freight for the periods in 2001 must be included in the transaction value (post 1.7.2000 rule) and restored the original order confirming duty and recovery. Issues:Inclusion of equalised freight in the transaction value for the period May 2001 to June 2001 and July 2001 to March 2002.Analysis:The case involved two appeals filed by the Revenue against an Order-in-Appeal. The respondent, a manufacturer of plastic moulded luggage goods, was issued show-cause notices proposing the inclusion of freight charge recovered by them in the transaction value of the goods. The Asst. Commissioner confirmed the show-cause notices and imposed penalties and interest. However, the respondent appealed before the Commissioner (Appeals) who allowed the appeal, setting aside the Order in Original. The Revenue then appealed against this decision before the Tribunal.The issue in question was whether equalised freight should be included in the transaction value for the specified period. The Revenue argued that the matter had already been settled by a previous Tribunal order in the case of CCE Nashik vs. VIP Industries. The Tribunal in that case held that no exclusion of equalised freight is permissible from 1.7.2000 onwards, and duty is liable to be paid on the value inclusive of the cost of transaction from factory to depot. The Revenue requested the Tribunal to set aside the Order-in-Appeal and restore the Order in Original.Despite the respondent not appearing during the proceedings, the Tribunal examined the case papers and found that the issue was squarely covered by the previous Tribunal order in the case of CCE vs. VIP Industries. The Tribunal noted that the equalised freight is required to be added in the transaction value for the period from 1.7.2000 onwards. As the show-cause notice in this case was issued for the period 2001, the duty was deemed to be required to be paid on the value inclusive of the equalised freight. Consequently, the Tribunal set aside the Order-in-Appeal and restored the Order in Original, thereby allowing the appeals filed by the Revenue.