2006 (10) TMI 54 - AT - Central Excise

Valuation(Central Excise) Alleged that assessee had short paid the duty leviable Appellant maintained depot was place of removal and determined the assessable value and accordingly pay duty Authority rejected the allegation

Summary

Issues:
Assessable value determination based on depot sales, inclusion of transportation cost, exclusion of certain expenses, factory gate price adoption, interpretation of Section 4(2) of the Act, applicability of previous judgments.

Assessable Value Determination Based on Depot Sales:
The case involved M/s. SPIC Ltd. selling Caustic Soda Lye (CSL) to M/s. Nalco from their depot at Chennai harbour. The dispute arose regarding the assessable value of the goods cleared from the depot. The Assistant Commissioner demanded differential duty and imposed a penalty, alleging underpayment of duty. The contention was whether the depot price should be the basis for assessable value, considering sales to other customers from the depot as well. The Commissioner (Appeals) upheld the demand based on the depot price as the assessable value, dismissing the appeal.

Inclusion of Transportation Cost and Exclusion of Certain Expenses:
The Commissioner (Appeals) ruled that only sea freight cost incurred till the date of delivery could be deducted under Section 4(2) of the Act from the price for delivery at the port of discharge. Other expenses like packing, handling, demurrage, and port dues incurred before delivery from the depot were not admissible for deduction. The judgment emphasized that expenses contributing to the value of goods up to the date of sale or delivery should be included, following the principles laid down by the Supreme Court in previous cases.

Factory Gate Price Adoption:
The appellants argued that the factory gate price should be adopted as the assessable value, citing a judgment supporting this claim. They contended that various expenses incurred outside the factory gate were included in the amount collected from the buyer and should be excluded from the assessable value. However, the tribunal held that the goods were delivered from the depot, not the factory gate, and thus, the depot price was the appropriate basis for determining the assessable value.

Interpretation of Section 4(2) of the Act:
The tribunal applied Section 4(2) of the Act, which mandates deduction of transportation costs from the price for delivery at the place of removal if the price for delivery at that place is unknown. In this case, the cost of transportation from the depot to the port of discharge was deducted from the price for delivery at the port, as correctly determined by the lower authorities.

Applicability of Previous Judgments:
The tribunal referred to a Supreme Court judgment emphasizing that expenses contributing to the value of goods up to the date of sale or delivery should be included in the assessable value. The argument that the amount collected from the buyer included the amortized value of the storage tank was rejected, as the expenses incurred until the date of delivery should be considered. The tribunal upheld the lower appellate authority's order as in accordance with the law, leading to the dismissal of the appeal.