2005 (4) TMI 465 - AT - Central Excise

Summary

Issues:
1. Whether extra realisation from customers towards transportation charges can be added towards the cost of goods.
2. Whether the charges for transportation are part of the price of goods or post-manufacturing activity.
3. Whether the factory gate price should be considered as the assessable value.

Issue 1:
The original adjudicating authority dropped charges against the appellant, citing the Supreme Court decision in Baroda Electric Meters Ltd. v. CCE, which held that extra realisation from customers towards transportation charges should not be added to the cost of goods for excise duty calculation. The Commissioner (Appeals) accepted the department's appeal, arguing that the extra transportation charges were part of the price of goods and not a post-manufacturing activity. However, the Tribunal found no evidence that the cost of goods was diverted to transportation charges, following the Supreme Court's precedent, and set aside the Commissioner (Appeals) order, allowing the appeal on merits.

Issue 2:
The Commissioner (Appeals) contended that the extra transportation charges were part of the price of goods based on the significant difference between actual transportation charges and those charged to buyers. The Commissioner argued that these charges were not post-manufacturing activities but were part of the charges for manufacturing goods. The appellant's argument that the factory gate price should be considered as the assessable value was rejected by the Commissioner (Appeals), who suggested that the factory gate price, including excess transport charges, should be the basis for assessing the value of goods.

Issue 3:
The Tribunal highlighted that there was no evidence indicating that the cost of goods was diverted to transportation charges and realized under the guise of the same. Referring to the Supreme Court's decision in Baroda Electric Meters Ltd. v. Commissioner, the Tribunal emphasized that the law established by the Supreme Court had been consistently followed. Consequently, the Tribunal found no merit in the Commissioner (Appeals) order and set it aside, allowing the appeal on merits. The Miscellaneous Application for early hearing was also disposed of in the process.