2006 (9) TMI 472 - AT - Central Excise

Summary

Issues:
- Inclusion of transportation cost in the assessable value of the final product
- Compliance with Section 35F of the Central Excise Act
- Liability to pay duty on the assessable value of the sleepers

Issue 1: Inclusion of transportation cost in the assessable value
The appeals involved a dispute regarding the inclusion of transportation cost in the assessable value of "Pre-stressed concrete sleepers" manufactured by the assessee for the Southern Railways on a job work basis. The raw materials, special cement, and steel wires, were supplied free of cost by the Railways. The transportation cost of cement from Katpadi Junction to the factory incurred by the assessee was reimbursed by the buyer. The original authority included this transportation cost in the assessable value, leading to a demand for duty. The appellants followed the formula established by the Apex Court in Ujagar Prints' case, which stated that the cost of transportation of raw materials should be considered in the cost of inputs for the job worker. The Tribunal found that the cost of transportation of cement was reimbursed by the Railways and should be included in the assessable value of the final product, making the assessee liable to pay duty on the undisputed cost of inputs.

Issue 2: Compliance with Section 35F of the Central Excise Act
One of the appeals was dismissed by the Commissioner (Appeals) due to non-compliance with Section 35F of the Central Excise Act. The Tribunal noted that the order-in-appeal was not based on merits but solely on the ground of non-compliance. Despite the non-compliance, the Tribunal declined to order a remand at that point. However, the Tribunal upheld the original authority's order demanding differential duty for the period April to September 1992 based on the inclusion of the transportation cost in the assessable value. Thus, the issue of compliance with Section 35F did not impact the decision on the inclusion of transportation cost in the assessable value.

Issue 3: Liability to pay duty on the assessable value of the sleepers
The Tribunal sustained the order passed by the Commissioner (Appeals) demanding duty from the assessee on the transportation cost of cement. Additionally, the Tribunal upheld the original authority's order demanding differential duty for the period April to September 1992. Both appeals were ultimately dismissed on merits, confirming the liability of the assessee to pay duty on the assessable value of the sleepers, which included the transportation cost of raw materials in the cost of inputs.

In conclusion, the Tribunal affirmed the inclusion of transportation cost in the assessable value of the final product, dismissed the appeals on merits, and upheld the duty liability of the assessee based on the undisputed cost of inputs, including the transportation cost of raw materials.