2015 (5) TMI 177 - AT - Central Excise

Tribunal dismisses appeal on transportation costs inclusion in assessable value without evidence of disintegration

KG. Naidu Mills Versus Commissioner of C. EX., Coimbatore

The appeal was dismissed by the Tribunal regarding the inclusion of transportation costs of input and handling charges in the assessable value of goods ... Valuation of goods - Inclusion of transportation cost of input sent to the job worker’s premises and handling charges incurred by the job worker-appellant for un-loading the goods by its own workers - Held that:- Written submissions filed by the appellant does not disclose whether the transportation cost can be disintegrated from the contact between the manufacturer and the job worker appellant. Unless there is a clear disintegration made out by evidence, the appellant fails on this count. - In so far as handling charges is concerned, it is integrally connected with the input coming to the premises of the job worker. This cannot be disintegrated. For no disintegration, appeal fails on this count also. It does not make difference to law as to whether unloading is done by workers from outside or own workers of appellant since every activity involves cost whether expressed for intrinsic. - Following decision of Ujjagar Prints case [1989 (1) TMI 124 - SUPREME COURT OF INDIA] - Decided against assessee. Issues:1. Inclusion of transportation cost of input sent to job worker's premises in assessable value.2. Inclusion of handling charges incurred by job worker for unloading goods in assessable value.Analysis:1. The first issue in this appeal concerns whether the transportation cost of input sent to the job worker's premises should be included in the assessable value of the goods manufactured by the job worker. The appellant failed to provide evidence showing a clear disintegration between the transportation cost and the contract between the manufacturer and the job worker. Without such disintegration, the appellant cannot succeed on this issue.2. The second issue pertains to whether the handling charges incurred by the job worker for unloading the goods should be included in the assessable value. The Tribunal held that handling charges are integrally connected with the input reaching the job worker's premises and cannot be disintegrated. The Tribunal emphasized that every activity involves a cost, whether undertaken by external workers or the job worker's own workers.3. The appellant relied on a previous decision related to the transportation of empty bottles, which was deemed inapplicable to the current case involving the assessable value of transportation charges in the hands of the job worker. The Tribunal highlighted the settled legal position based on another case cited by the Revenue.4. The Respondent's representative pointed out the non-inclusion of the cost of waste arising during the manufacturing process, which was not raised by the appellant in the written submissions or appeal. The Tribunal clarified that it cannot create jurisdiction to decide issues not brought before it. Consequently, the appeal was dismissed on both the transportation cost and handling charges issues.