2006 (1) TMI 282 - AT - Central Excise

Summary

Issues:
1. Assessable value of 'Perlite Powder' under Section 4(1) of the Central Excise Act.
2. Abatement claimed for the cost of packing in durable and returnable bags.
3. Treatment of excess transportation charges in the assessable value.
4. Imposition of penalty on the firm.

Assessable Value of 'Perlite Powder':
The appeal was filed against the Order-in-Appeal regarding the assessable value of 'Perlite Powder' manufactured by the appellant under Section 4(1) of the Central Excise Act. The appellant claimed abatement for the cost of packing in durable and returnable bags at Rs. 2500/- per M.T., while the Revenue allowed abatement at Rs. 5/- per bag based on the contract terms with the customer. The Tribunal held that as per the Act, only the cost of durable and returnable packing should be excluded from the assessable value. Since the cost of the bag was Rs. 5/- and not Rs. 2500/- as claimed by the appellant, the Tribunal upheld the Revenue's decision.

Abatement for Packing and Durable Bags:
The appellant contended that they should receive abatement at Rs. 2500/- per M.T. for packing in durable and returnable bags. However, the Revenue argued that as per the contract terms, the customer had to pay Rs. 5/- per bag if not returned, making the actual cost of packing Rs. 5/-. The Tribunal referred to Section 4(1) of the Central Excise Act, which excludes only the cost of durable and returnable packing from the assessable value. Since the cost of the bag was Rs. 5/-, the Tribunal rejected the appellant's claim for higher abatement.

Treatment of Excess Transportation Charges:
Regarding excess transportation charges, the Revenue claimed that the appellant received more than the actual transportation costs. However, the Tribunal cited a Supreme Court decision stating that excise duty is on manufacture, not on transportation profit. Therefore, the excess amount received for transportation should not be included in the assessable value. Since there was no evidence of suppressing the value of goods, the Tribunal set aside the demand to include excess transportation charges in the assessable value.

Imposition of Penalty:
The lower authorities imposed a penalty on the firm, which the Tribunal reduced to Rs. 20,000/- considering the facts and circumstances of the case. The Tribunal disposed of the appeal accordingly, taking into account the issues related to assessable value, abatement for packing, treatment of excess transportation charges, and the penalty imposed on the firm.