2005 (3) TMI 662 - AT - Central Excise

Summary

Issues:
Demand of differential duty on motor spirit (MS) and high speed diesel (HSD) cleared from refinery to terminal without payment of duty and sold to dealers.
Notional inclusion of transportation charges in the assessable value of goods sold from the terminal.

Analysis:
The case involved an appeal regarding the demand of differential duty on motor spirit (MS) and high speed diesel (HSD) cleared from the refinery to the terminal without payment of duty and sold to dealers. The appellants paid duty on the price at which HSD and MS were sold from the Vashi terminal. The issue arose from a show cause notice that transportation charges from the refinery to the terminal should be notionally included in the assessable value of goods sold, based on the appellants' practice at another terminal. The Dy. Commissioner of Central Excise confirmed the duty demand, which was upheld by the Commissioner (Appeals), leading to the present appeal.

Upon hearing both sides, the Tribunal found that adding transportation charges notionally to the assessable value of goods sold from the Vashi terminal was incorrect. It was noted that the price at which goods are sold from the terminal would already include transportation charges if no additional amount is being recovered from buyers. The Tribunal emphasized that the transportation charges for bringing goods from the refinery to the terminal were part of the total price charged ex-terminal. The fact that transportation charges were considered for sales from another terminal did not justify adding them to sales from the Vashi terminal on a notional basis.

Furthermore, since the appellants had not charged any amount towards transportation charges separately and had not claimed any deduction for transportation charges, the Tribunal concluded that the notional addition of transportation charges to the price charged for the sale of HSD and MS from the Vashi terminal was incorrect. Therefore, the demand for the payment of the duty was deemed unsustainable. Consequently, the Tribunal set aside the order and allowed the appeal in favor of the appellants.

In conclusion, the Tribunal's decision was based on the principle that transportation charges should be considered as part of the total price charged for goods sold from a terminal when no additional amount is recovered separately. The judgment clarified that notional additions of transportation charges to the assessable value of goods sold were unwarranted in the absence of explicit charges or deductions related to transportation.