2009 (6) TMI 51 - AT - Central Excise

Loading expenses within factory part of assessable value both before & after 1-7-2000. Proof required to exclude. Remand for disposal.

The Tribunal held that loading expenses within the factory must be included in the assessable value of goods both before and after 1-7-2000, unless the ... Valuation under central excise – transaction value – loading expenses - expenses of loading of the goods onto trucks within the respondent’s factory premises and its transportation to, and unloading at, the buyers’ premises were borne by the transporters who recovered such expenses from the buyers – Held that - definition of transaction value under Section 4(3)(d) could not override the charging provisions of Section 3 of the Act - means only that the assessable value of excisable goods should be determined under Section 4(1) without violence to the charging provisions of Section 3 of the Act - pre-1-7-2000, the expenses of loading of excisable goods within the factory for clearance to a buyer are liable to be included in the assessable value of the goods as held by the Hon’ble Supreme Court in Indian Oxygen case (vide supra) and, for the period from 1-7-2000 also, it is liable to be included in the assessable value of the goods unless it is proved by the assessee that the burden of such expenses was not borne by them Issues Involved:1. Inclusion of loading expenses within the factory in the assessable value of goods.2. Applicability of the extended period of limitation under Section 11A(1) of the Central Excise Act.3. Distinction between the pre and post-1-7-2000 valuation provisions under Section 4 of the Central Excise Act.Detailed Analysis:1. Inclusion of Loading Expenses Within the Factory in the Assessable Value of Goods:The primary issue examined was whether the expenses incurred for loading goods within the factory premises should be included in the assessable value of the goods when such expenses are borne by the buyer. The Tribunal referred to the Supreme Court's judgment in Indian Oxygen Ltd. v. CCE, which held that loading charges incurred within the factory must be included in the assessable value regardless of who incurred the expenses. This principle was reaffirmed for the period prior to 1-7-2000, aligning with the precedent that the cost of loading within the factory forms part of the assessable value.For the period post-1-7-2000, the Tribunal analyzed the definition of 'transaction value' under Section 4(3)(d) of the Central Excise Act. It was concluded that any amount the buyer is liable to pay to, or on behalf of, the assessee in connection with the sale, including loading expenses, should be included in the transaction value unless the assessee can prove that such expenses were not borne by them. This interpretation was consistent with the Tribunal's decision in Albright & Wilson Chemicals India Ltd. v. CCE, where it was held that expenses incurred by the buyer's contractor for transportation should not form part of the transaction value.2. Applicability of the Extended Period of Limitation Under Section 11A(1) of the Central Excise Act:The Tribunal noted that the original authority had invoked the extended period of limitation under the proviso to Section 11A(1) to demand differential duty from the respondent. The first appellate authority had set aside this decision, leading to the present appeals by the Revenue. The Tribunal did not delve deeply into the merits of invoking the extended period of limitation, as the primary focus was on the inclusion of loading expenses in the assessable value.3. Distinction Between Pre and Post-1-7-2000 Valuation Provisions Under Section 4 of the Central Excise Act:The Tribunal highlighted the significant shift in the valuation provisions of Section 4 of the Central Excise Act effective from 1-7-2000. Prior to this date, the assessable value was deemed to be the 'normal price' under Section 4(1)(a), which included loading expenses within the factory as per the Indian Oxygen case. Post-1-7-2000, the concept of 'transaction value' was introduced, which includes any amount the buyer is liable to pay in connection with the sale, thereby potentially including loading expenses within the factory in the assessable value.The Tribunal emphasized the importance of the contract of sale between the assessee and the buyer in determining whether such expenses should be included in the transaction value. The burden of proof lies on the assessee to demonstrate that the loading expenses were not borne by them to exclude such costs from the assessable value.Conclusion:The Tribunal concluded that for the period prior to 1-7-2000, loading expenses within the factory must be included in the assessable value of goods. For the period from 1-7-2000 onwards, such expenses should also be included unless the assessee proves otherwise. The matter was remanded to the regular Bench for final disposal of the appeals in light of this order.