2005 (3) TMI 583 - AT - Central Excise

Summary

Issues:
- Duty demand and imposition of penalty on transport expenses collected from customers.

Analysis:
The judgment by the Appellate Tribunal CESTAT, New Delhi involved the case of M/s. Shree Rajasthan Syntex Limited, a manufacturer of man-made yarn subject to central excise duty on an ad valorem basis. The appeal centered around the inclusion of transport expenses from the factory gate to the transporter's godown, collected from customers, in the assessable value. The Tribunal examined the appellant's practice of charging Rs. 2 per bag for loading expenses and Rs. 6 per bag for transportation. It was established that costs up to the delivery of manufactured goods at the factory gate are to be included in the assessable value. Consequently, the Rs. 2 per bag collected as loading charge at the factory gate was deemed liable to be included in the assessable value. However, it was clarified that the cost of transportation, represented by the Rs. 6 per bag cartage charges, could not be considered part of the assessable value.

Furthermore, the Tribunal ruled that duty related to loading charges would be liable to duty, while no duty would be payable on the cartage charges. Since there was no justification for invoking the extended period, the demand and refund were limited to the amount falling within the normal period stipulated by the statute. Consequently, no penalty was deemed applicable in this case. As a result of the above findings, the appeals were allowed on the specified terms, providing a clear resolution to the duty demand and penalty imposition issues related to the transport expenses collected from customers.