2002 (3) TMI 790 - AT - Central Excise

Summary

Issues:
1. Interpretation of Section 4 of the Act post-amendment in 1996 regarding the inclusion of transportation cost in the assessable value of goods sold from sales depots.
2. Applicability of prior judgments on the deduction of transportation costs in determining the assessable value of goods.
3. Impact of the 1996 amendment on the determination of assessable value for goods sold from different places of removal.
4. Consideration of freight costs in the assessable value calculation post-amendment.

Analysis:

1. The appeal before the Appellate Tribunal CEGAT, Mumbai centered on whether, after the 1996 amendment to Section 4 of the Act, the value for duty assessment of travel goods sold from sales depots should include the cost of transportation from the factory to these depots. The jurisdictional Assistant Commissioner and the Commissioner (Appeals) concluded that such costs were includible, leading to the current 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, excluding transportation costs. The amendment introduced changes, including the addition of Proviso (i)(a) under sub-section (1) of Section 4, which deemed different prices for goods sold at various places of removal as the assessable value. The definition of "place of removal" was also expanded to include sales depots, impacting how the assessable value is determined.

3. The appellant argued that the 1996 amendment did not affect the applicability of sub-section (2) of Section 4, which excludes transportation costs. Referring to past judgments, the appellant contended that the cost of transportation up to the place of removal should not be included in the assessable value. However, the Tribunal noted that the amendment expanded the definition of "place of removal," necessitating a reevaluation of how transportation costs are factored into the assessable value.

4. The Tribunal analyzed the implications of the Bombay Tyres judgment regarding freight costs. It clarified that transportation costs incurred from the factory to the place of delivery, such as a sales depot, should be included in the assessable value post-amendment. The judgment emphasized that where prices are the same at different delivery points, the averaged freight must be deducted to determine the real assessable value at the factory gate. The Tribunal upheld the Commissioner (Appeals) conclusion that transportation costs to various places of removal should be considered in the assessable value calculation.

In conclusion, the Tribunal dismissed the appeal, affirming the inclusion of transportation costs in the assessable value of goods sold from different places of removal post the 1996 amendment to Section 4 of the Act.