TaxTMI 
TaxTMI 
2017 (3) TMI 1127
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....r chapter 39 of the Central Excise Tariff. 2. The Appeal Nos. E/97/2006, E/228/2010, E/1366/2010, E/171/2011 and E/1020/11 have been filed by the Appellant challenging the inclusion of freight in assessable value in case of pipes supplied to sites for erection of pipe line in case of composite and non composite contracts. In case of composite contracts the Appellant is being awarded contracts which include cost of pipes, cost of transportation/ insurance, cost of civil works for laying of pipelines. The Appellant followed two methods in such supplies. In some cases the Appellant adopted deductive method i.e deductions were made on account of turnover tax, freight & insurance, supervision, charges for erection of pipelines etc. The Appellan....
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....llant pay duty on value of pipes arrived at under and in accordance with Section 4 (1) (b) r/w rule 8 of Central Excise Valuation Rules. The Appellant is not paying duty on freight paid for transportation. The Revenue demanded duty on freight charges and the demands were upheld by Commissioner and hence these appeals. 3. The Ld. Counsel appearing for the Appellant in case of appeal Nos. E/97/2006, E/228/2010, E/1366/2010, E/171/2011 and E/1020/11 submits that impugned orders are not sustainable. He submits that in case of deduction method adopted by them since the value of pipes is available hence no demand can be made on transportation. As regard valuation of goods made by them as per Rule 8 of Central Excise Valuation Rules, he submits t....
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....s that the demand is time barred. 4. On the other hand the Ld. AR appearing for the revenue supports the findings of the lower authorities. He submits that in case of composite contracts the sale value at the site should be inclusive of freight element as the site is "any other place or premises" as defined under section 4 (3) (c) (iii) of Central Excise Act and therefore Rule 7 of Central Excise Valuation Rule sis applicable. He submits that in case of composite contracts the pipes and fitings has not been used for further consumption but for pipe line embedded to earth and hence becomes immovable. Hence Rule 8 read with Rule 11 of Valuation Rules would not apply. That the goods are not sold from the factory but are stock transferred to s....
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....le would be applicable. As the assessable value has not been arrived at in terms of Transaction value, the question of inclusion of freight cost in assessable value would not arise. The same would arise only in case when there is sale of the goods at customer's place. In the present case the valuation of goods has been adopted undisputedly in terms of Rule 8 of Central Excise Valuation Rules which provide for cost construction method in terms of CAS - 4 accounting standards. The freight element cannot be considered as part of such valuation arrived at for determining the assessable value. We are therefore of the view that freight element cannot be included in assessable value of the goods which arrived at and accepted under Rule 8 of Ce....
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....s, the freight charges would not form part of the assessable value. Our view is also based upon the judgments in case of ESCORT JCB LTD. Vs CCE, DELHI - II 2002 (146) ELT 31 (SC), CCE MEERUT II Vs. PRABHAT ZARDA FACTORY 2000 (119) ELT 191 (TRI - LB). 5.4 We do not agree with the contention of the Ld. AR that Rule 7 of Central Excise Valuation Rules would be applicable. The said Rule has applicability only where the goods are cleared from the depot or premises of consignment agent and such value is available. However in the present case since no depot sale or any place from where the goods are sold, the said Rule is not applicable. In such case the valuation under Rule 11 has to be adopted which provides for determination of value using rea....