2001 (11) TMI 352 - AT - Central Excise

Summary

Issues:
- Whether the cost of transportation from the factory to sales depots should be included in the value for assessment of duty of travel goods manufactured by the appellant.
- Interpretation of amendments to Section 4 of the Act in 1996 regarding the determination of the value of goods sold from depots.
- Applicability of sub-section (2) of Section 4 providing for the exclusion of the cost of transportation.
- The impact of the Supreme Court judgments in U.O.I. v. Bombay Tyre International Ltd. and G.O.I. v. Madras Rubber Factory Ltd. on the deduction of averaged freight.
- Clarification on the inclusion or exclusion of transportation costs in the assessable value post the 1996 amendment to Section 4.

Analysis:

1. The appeal questioned whether, post the 1996 amendment to Section 4 of the Act, the cost of transportation from the factory to sales depots should be included in the duty assessment of travel goods. The Assistant Commissioner and the Commissioner (Appeals) concluded that such costs were includable, leading to the appeal against the duty payable and the penalty imposed.

2. Prior to the 1996 amendment, the assessable value was based on the price at which goods were sold at the factory gate for wholesale trade. Sub-section (2) excluded transportation costs in such cases. The amendment in 1996 introduced changes, including the addition of Proviso (i)(a) and a modified definition of "place of removal" to include depots. This meant that the price at which goods are sold from depots would determine the assessable value.

3. The appellant argued that the 1996 amendment did not affect the exclusion of transportation costs as per sub-section (2) of Section 4. Referring to Supreme Court judgments, they contended that transportation costs up to the place of removal should not be included in the assessable value, as per the provisions prior to and after the 1996 amendment.

4. The judgment analyzed the implications of the Bombay Tyres case on freight deductions. It clarified that transportation costs from the factory to the place of delivery should not be excluded, except in cases of delivery at the factory gate. The amendment broadened the definition of "place of removal," impacting the applicability of sub-section (2) in excluding transportation costs.

5. The court emphasized that the inclusion or exclusion of averaged freight should be based on the real wholesale cash price at the factory gate. It highlighted that the law did not permit deductions for transportation costs not covered by sub-section (2) of Section 4. The judgment affirmed the Commissioner (Appeals)'s conclusion on the matter, ultimately dismissing the appeal.