TaxTMI 
TaxTMI 
2011 (6) TMI 475
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.... manufacture excisable goods, i.e Travel Goods (of moulded plastics) falling under Chapter sub-heading no. 4201.00 of Central Excise Tariff Act, 1985. The goods are cleared from their factory to their depots and the sales are effected from the depots. However, they do not include the cost of freight expenses from the factory to the depot in the assessable value of the goods sold from the depot, even though, they are recovering from their customers depot-wise equalized freight at a pre-determined percentage varying from 1.5% to 4.5% of the price of the goods. Therefore, the jurisdictional Asst. Commissioner issued show-cause notices demanding Central excise duty on the amount recovered towards equalized freight from the customers on the ground that in respect of goods sold from the depot, the place of removal (as defined in section 4 of the Central Excise Act, 1944) is the depot and, therefore, whatever cost has been incurred for the transportation of the goods from the factory to the depot should be included in the assessable value of the goods for discharge of central excise duty liability. Ten show-cause notices were issued demanding central excise duty on the amount of equalized....
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....m the depot. The department has further argued that with effect from 1.7.2000, the old section 4 was substituted by a new section 4 as per which excise duty chargeable on the transaction value on each case of removal and depot is defined as a place of removal in the new section 4. Further, rule 7 of the Central Excise Valuation Rules, 2000 clearly states that where the excisable goods are not sold by the assessee at the time and place of removal but are transferred to a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the place of removal, the value shall be the normal transaction value of such goods sold from such other place. Since the sale value at the depot includes the cost of transportation of the goods from the factory to the depot, the assessee cannot claim any deduction towards such cost of transportation while discharging duty liability. On these grounds, the department has contended that the Commissioner's (Appeals) order is bad in law and therefore pleaded for setting aside the same and restoring the orders-in-original passed by the adjudicating authority. 4. The respondent ....
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....en replaced by the concept of transaction value on each removal for the purposes of charging of excise duty. Relevant extracts of the new section 4 are reproduced below:- [4. Valuation of Excisable goods for purposes of charging of duty of excise.- (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, such value shall. a. in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sold consideration for the sale, be the transaction value; b. in any other case, including the case where the goods are not sold, be the value determined in such manner as may be prescribed. (2) ... (3) For the purpose of this Section, - a....; b. ... (c) "place of removal" means. i. a factory or any other place or premises of production or manufacture of the excisable goods ; ii. a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty; iii. depot, premises of a consignment agent or an....
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.... includes not only the value of the goods but also the cost of the transportation from the factory to the depot which is indicated separately and collected from the customers. Therefore, the transaction value obviously includes the cost of the transportation, whether actual or equalized, from the factory to the depot. Further Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 reads as follows:- "7. Where the excisable goods are not sold by the assessee at the time and place of removal but are transferred to a depot, premises of a consignment agent or any other place or premises (hereinafter to as "such other place") from where the excisable goods are to be sold after their clearance from the place of removal and where the assessee and the buyer of the said goods are not related and the price is the sole consideration for the sale, the value shall be the normal transaction value of such goods sold from such other place at or about the same time and, where such goods are not sold at or about the same time, at the time nearest to the time of removal of goods under assessment." 9. Thus as per the provisions of the new section 4 of the C....