2017 (11) TMI 1324 - AT - Central Excise

Tribunal: Transportation charges included in assessable value of PSC Poles for electricity distribution

M/s The Imperial Trading Company Versus Commissioner of Central Excise Tirunelveli

The Tribunal upheld the inclusion of transportation charges in the assessable value of PSC Poles for electricity distribution, based on the contract terms ... Valuation - PSC Poles for electricity distribution - includibility - charges shown under the headings safe handling, loading, transportation, unloading, stacking of PSC poles - Held that: - though the basic price of PSC poles at the appellant's yard as well as transportation, loading, unloading, stacking charges are shown separately, the terms of the contract clearly indicate that the appellant has to safely deliver/stake-up these goods at the intended destination as informed by the client. Even, insurance for safe delivery is the responsibility of the appellant - the transportation charges including loading, unloading, stacking charges will necessarily form part of the assessable value in terms of section 4 of CEA, 1944 - demand upheld. Extended period of limitation - penalty - Held that: - the valuation of PSC Poles manufactured and cleared by the appellants have been the subject-matter of dispute on earlier occasions. Admittedly, in such situations, there is no scope for including suppression of fact, intention to evade payment of duty against the appellant - extended period and penalty set aside. Appeal allowed in part. Issues:Valuation of PSC Poles for electricity distribution - Inclusion of handling and transportation charges in assessable value - Liability for Central Excise duty - Penalty imposition - Calculation of duty liability based on cum-duty valuation.Valuation Dispute:The appeals revolved around the dispute regarding the valuation of PSC Poles for electricity distribution. The appellant contended that the charges for safe handling, loading, transportation, unloading, and stacking of PSC poles should not be included in the assessable value as they were shown separately in the contract. The Revenue, however, argued that these charges form part of the assessable value since the sale is completed only upon safe delivery at the designated depots of the client. The lower authorities upheld the duty demand based on the inclusion of these charges in the assessable value.Extended Period Demand and Penalty Imposition:The appellant challenged the demand for an extended period and penalty imposition. The appellant's counsel argued that since the base price of the PSC Poles was available, duty should be paid only on that base price. Moreover, the appellant had undertaken loading, transport, and unloading as part of the contract, which, according to the appellant, should not be liable to Central Excise duty. The appellant also emphasized that there was no suppression or willful misstatement as the valuation of PSC Poles had been a subject of dispute in previous proceedings as well.Judicial Analysis and Decision:Upon examining the contract terms, it was noted that while the charges for transportation, loading, unloading, and stacking were shown separately, the contract indicated that the sale was effectively concluded at the client's depot upon safe delivery of the PSC Poles. Consequently, the transportation charges, including handling charges, were deemed to form part of the assessable value as per Section 4 of the Central Excise Act, 1944. The Tribunal upheld the lower authorities' findings on this issue.Extended Period Demand and Penalty Imposition Resolution:Regarding the extended period demand and penalty imposition, the Tribunal held that since the valuation of the PSC Poles had been a subject of dispute in previous occasions, there was no basis for alleging suppression or intention to evade duty payment against the appellant. Therefore, the duty demands were restricted to the normal period only, and the penalty imposed on the appellant was set aside.Calculation of Duty Liability:The appellant requested a re-calculation of duty liability based on cum-duty valuation, arguing that Central Excise duty should only be calculated on the base price shown separately. The Tribunal directed the authorities to consider recalculation of duty liability on transportation/handling charges, with the possibility of considering the differential value as inclusive of Central Excise duty if satisfactory verification with documentary evidence was provided by the Jurisdictional officer.In conclusion, the Tribunal disposed of the appeals by upholding the inclusion of transportation charges in the assessable value, restricting duty demands to the normal period, setting aside the penalty, and allowing for a re-calculation of duty liability based on cum-duty valuation.