TaxTMI 
TaxTMI 
2009 (6) TMI 51
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.... In adjudication of two show-cause notices, which invoked the extended period of limitation under the proviso to Section 11A(1) of the Central Excise Act for demanding differential duty from the respondent, the original authority confirmed the demand of duty (with interest) against them and also imposed a penalty on them. Its decision was set aside by the first appellate authority. Hence the present appeals of the Revenue. 3. Before the regular Bench, the appellant claimed that the issue was squarely covered in their favour by the apex Court's judgement in Indian Oxygen Ltd. v. CCE - 1988 (36) E.L.T. 723 (S.C.), wherein it was held that the loading charges incurred for loading the goods within the factory were to be included in the assessable value of the goods irrespective of who had incurred such charges and that the loading expenses incurred outside the factory gate were not to be included in the assessable value. The appellant also claimed support from the Tribunal's decision in AIMS Oxygen Pvt. Ltd. v. CCE - 1988 (36) E.L.T. 151 (T) and Nichrome Metal Works v. CCE - 1996 (88) E.L.T. 448 (T). On the other hand, the counsel for the respondent submitted that the case of Indian....
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....value". 5. According to the ld. Counsel, the cost of loading of goods within the factory, incurred by the buyer, was not includable in the assessable value of the goods for any period, whether prior to 1-7-2000 or thereafter. In the instant case, the loading expenses were incurred by the buyers. It was also argued by the counsel that loading of the goods was incidental to its transportation and, therefore, the cost of loading should be treated in the same way as the cost of transportation. In this connection, it was pointed out that, in the cases of Bombay Tyre International (supra) and Govt. of India v. Madras Rubber Factory Ltd. - 1995 (77) E.L.T. 433 (S.C.), cost of transportation of goods from the place of removal to the place of delivery was allowed to be excluded from the assessable value if the goods under Section 4 of the Central Excise Act and, similarly, deduction was also allowed in respect of insurance on freight on the ground that the insurance charge on freight was an adjunct of transportation charge. Therefore, according to the counsel, where the cost of transportation of the goods was not included in the assessable value as in the present case, the cost of loadin....
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.... the Act and, therefore, there was no question of adding the cost of transportation from the factory gate to the place of delivery (Vijayawada), to the wholesale price for the purpose of payment of duty. It was further held that the cost of loading the goods within the factory was to be included in the assessable value, irrespective of who had incurred such cost. However, loading expenses incurred outside the factory gate were held to be excludable. 8. During the period relevant to the above case, Section 4(1)(a) (without the proviso thereto which is not relevant to the present context) read as follows:- "4. Valuation of excisable goods for purposes of charging duty of excise - (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value shall, subject to the other provisions of this section, be deemed to be - (a) the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale." During t....
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....for, advertising or publicity, marketing and selling organisation expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods." The pre-28-9-1996 definition of "place of removal" stands restored under the new Section 4 of the Act, which aspect, however, would not per se make any difference for the present case inasmuch as, during the entire period of dispute, excisable goods were removed, admittedly, from "factory" - a "place of removal" as defined at all times. 10. Going by the provisions of Section 4 of the Act, we note that sub-section (1)(a) as it stood both prior to, and on, 1-7-2000 was applicable to a case where (a) excisable goods were sold by the assessee to a buyer for delivery at the time and place of removal (b) the assessee and the buyer were not related and (c) price was the sole consideration for the sale. The noteworthy difference is that, prior to 1-7-2000, the assessable value of the goods was deemed to be its normal price as explained under the same sub-section whereas, on and after 1-7-2000, the....
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....upto the date of sale, which apparently would be the date of delivery, are liable to be included. Consequently, where the sale is effected at the factory pate, expenses incurred by the assessee upto the date of delivery on account of storage charges, outward handling charges, interest on inventories (stocks carried by the manufacturer after clearance), charges for other services after delivery to the buyer, namely after-sales services and marketing and selling organisation expenses including advertisement expenses cannot be deducted. It will be noted that advertisement expenses, marketing and selling organisation expenses and after sales-service promote the marketability of the article and enter into its value in the trade. Where the sale in the course of wholesale trade is effected by the assessee through its sales organization at the place or places outside the factory gate, the expenses incurred by the assessee upto the date of delivery under the aforesaid heads cannot, on the same grounds, be deducted. But the assessee will be entitled to a deduction on account of the cost of transportation of the excisable article from the factory gate to the place or places where it is sold. ....
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....ns "directed towards the outside or exterior". Therefore, loading of goods for its transportation out of a factory can be called "outward handling" of the goods. We think that this view stands vindicated in Indian Oxygen case (supra) wherein the cost of loading of excisable goods within the factory was held to be includable in the assessable value of the goods for a pre-l-7-2000 period. 11. The principle laid down in Bombay Tyre International case was reaffirmed in MRS case (supra) and the same was followed by this Tribunal in the cases of AIMS Oxygen Pvt. Ltd. (supra), Nichrome Metal Works (supra) and Ultra Marine & Pigments (supra) relied on by SDR as also in Grasim Industries Ltd. v. CCE [2004 (175) E.L.T. 866 (Tri.-Bang.)], PCM Cement Concrete Pvt. Ltd. v. CCE [2003 (162) E.L.T. 183 (Tri-Kolkata)] etc. cited by Counsel. In all these cases, the valuation dispute pertained to pre-1-7-2000 periods. Therefore, for the period prior to 1-7-2000, the principle which was laid down by the apex Court in Bombay Tyre International (supra) and subsequently followed in Indian Oxygen (supra) has got to be applied and, accordingly, we hold that the expenses of loading of goods within the fa....
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.... cash or deferred payment or other valuable consideration." If the buyer, in terms of the contract of sale, lifts the goods from the manufacturer's factory (whether or not by incurring the cost of outward handling of the goods i.e. the cost of loading and outward transportation of the goods), then by virtue of Section 2(h), he will be considered to have "purchased" the goods from the manufacturer and, conversely, the manufacturer will be held to have "sold" the goods to the buyer, for purposes of Section 4(1)(a). For "purchase" and "sale" to happen, it is immaterial as to who incurs the above cost. But it is certainly material to transaction value, for the definition of 'transaction value' indicates that any amount charged by the assessee for outward handling of the goods is one of its components. Transaction value, as defined, includes any amount charged by the assessee for outward handling of the goods by reason of, or in connection with, the sale. This legal position emerges from a conjunctive reading of the main and inclusive parts of the definition. Therefore "any amount that the buyer is liable to pay to, or on behalf of, the assessee by reason of, or in connection with, t....
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....ounts which the buyer is liable to pay to the assessee are includable in transaction value. In the present case, the Revenue has not shown that any portion or all of amounts received by M/s. N.S. Shetty flows back to the appellant. Hence these amounts cannot be added to the assessable value of gypsum cleared by the appellant." We find that the regular Bench arrived at the correct conclusion on the facts of that case. 14. We have also studied the Hon'ble Supreme Court's judgment in the case of Acer India Ltd. (supra) which was referred to by the learned counsel in relation to "transaction value". In that case, the apex court held, inter alia, that the definition of transaction value under Section 4(3)(d) could not override the charging provisions of Section 3 of the Act. We observe that the view we have taken hereinbefore with regard to 'transaction value' as defined under Section 4(3)(d) is not, in any way, hit by the above ruling which, to our mind, 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. 15. The ld. Counsel has argued that the cost of loading of the g....