2008 (11) TMI 230 - AT - Central Excise

Clearing Up Loading Charges In Assessable Value: Tribunal Seeks Clarity on Inclusion

The Tribunal referred the case to a Larger Bench to resolve conflicting opinions on whether loading charges incurred for goods' clearance from the factory ... Valuation – Transaction Value – Section 4 - loading charges incurred for clearance of goods – held that - there is a conflict of judicial opinion on the substantive issue, which needs to be resolved by a larger bench. Accordingly, the Registry is directed to place the relevant papers before the Hon’ble President to constitute a Larger Bench to consider and decide on the following issue: - “Whether the expenses of loading of goods within the factory for clearance to a buyer are includable in the assessable value of the goods where such expenses are incurred by, or on behalf of, the buyer” Issues: Whether loading charges incurred for clearance of goods from the factory should be included in the assessable value of the goods.Analysis:1. Background: The main appeal filed by the department questioned whether loading charges incurred for goods' clearance from the factory between April 1996 to November 2001 should be part of the assessable value. The department issued a show-cause notice to the assessee alleging the loading expenses should be included, leading to a demand for differential duty, interest, and penalties.2. Arguments: The department relied on the Apex Court's judgment in Indian Oxygen Ltd. v. Collector of Central Excise, stating loading charges within the factory should be included in the assessable value. The counsel for the respondent referenced Albright & Wilson Chemicals India Ltd. v. Commissioner of Central Excise, where loading expenses by the buyer's contractor were deemed non-includable.3. Precedents: The Tribunal cited cases like AIMS Oxygen Pvt. Ltd. and Nichrome Metal Works, aligning with the view that loading charges within the factory are to be included in the assessable value based on Supreme Court judgments. However, Albright & Wilson Chemicals India Ltd. distinguished Indian Oxygen Ltd., asserting loading charges by the buyer's contractor are not part of the assessable value.4. Judgment: The Tribunal noted a conflict in judicial opinions and directed the matter to a Larger Bench for resolution. Referring to the apex Court's ruling, the Tribunal expressed doubts about the distinction made in Albright & Wilson Chemicals India Ltd. The Larger Bench was tasked to decide whether loading expenses within the factory for buyer clearance should be included in the assessable value, especially when borne by or on behalf of the buyer.5. Conclusion: The Tribunal's decision highlighted the need for clarity on the inclusion of loading charges in the assessable value. The matter was referred to a Larger Bench to resolve the conflicting opinions and provide a definitive ruling on the issue, considering the differing interpretations of relevant legal precedents.