2014 (9) TMI 949 - AT - Central Excise

Valuation of goods - Whether the equalized freight was to be part of the assessable value or not - Held that - During the period of dispute the definition of Place of Removal as given in Section 4(3)(c) of Central Excise Act 1944 covered only a factory or any other place or premises of production or manufacture of the excisable goods or warehouse or any other place or premises wherein excisable goods have been permitted to be deposited without payment of duty. - during the period prior to 14-5-2003 the place of removal would include only the factory or Bonded Warehouse where the non-duty paid have been allowed to be stored and would not include the depot or consignment agent s premises or customer s premises in case of FOR sales. In accordance with the Apex Court s judgment in the case of Ispat Industries v. CCE Mumbai reported in 2006 (9) TMI 181 - SUPREME COURT OF INDIA in case of conflict between provision of a Rule framed under the Delegated Legislative Authority and the provisions of an Act passed by the Parliament it is the provision of the Act which will prevail. Provisions of Rule 7 of the Central Excise Valuation Rules 2000 relied upon by the Department cannot be given an interpretation which is the conflict with the provisions of Section 4(3)(c) of the Central Excise Act 1944 as the same stood during the period of dispute. Therefore during the period of dispute equalized freight would not be includible in the assessable value as the transaction value has to be the price at the place of removal which in this case during the period of dispute was the factory gate. There is therefore no infirmity in the impugned order - Decided against Revenue.

Summary

Issues:
- Inclusion of equalized freight in the assessable value for Central Excise duty calculation.
- Interpretation of the definition of "Place of Removal" under the Central Excise Act, 1944.
- Applicability of Central Excise Valuation Rules, 2000 in relation to freight charges.

Analysis:
1. Inclusion of Equalized Freight in Assessable Value:
The case revolved around whether the equalized freight should be considered part of the assessable value for Central Excise duty calculation. The appellant argued that since the supply was on a FOR destination basis, the freight charges should be included in the assessable value. However, the Tribunal examined the provisions of the Central Excise Act, 1944, and the Central Excise Valuation Rules, 2000. It was noted that during the relevant period, the definition of "Place of Removal" did not include locations other than the factory gate or bonded warehouse. Therefore, the Tribunal held that the equalized freight would not be includible in the assessable value as the transaction value had to be determined at the factory gate, where the goods were removed. The Tribunal relied on a Supreme Court judgment to emphasize that the Act's provisions would prevail over conflicting rules. Consequently, the impugned order was upheld, and the Revenue's appeal was dismissed.

2. Interpretation of "Place of Removal" under Central Excise Act:
The Tribunal delved into the definition of "Place of Removal" under the Central Excise Act, 1944, to determine the appropriate location for assessing the value of goods for Central Excise duty. It was highlighted that before a specific amendment, the "Place of Removal" only encompassed the factory or bonded warehouse where goods were stored without duty payment. The Tribunal emphasized that during the relevant period, locations like depots or consignment agents' premises were not included in the definition. Therefore, the assessable value had to be calculated based on the factory gate as the place of removal. This interpretation was crucial in deciding whether the equalized freight should be factored into the duty calculation.

3. Applicability of Central Excise Valuation Rules, 2000:
The Tribunal scrutinized the applicability of the Central Excise Valuation Rules, 2000, in the context of determining the inclusion of freight charges in the assessable value. The Department relied on Rule 7 of the Valuation Rules to argue for the inclusion of equalized freight. However, the Tribunal emphasized that the Valuation Rules could not be interpreted in a manner conflicting with the provisions of the Central Excise Act, especially during the period in question. The Tribunal's analysis underscored the importance of aligning rule interpretation with statutory provisions to ensure consistency and compliance with the law.

In conclusion, the Tribunal's detailed analysis of the legal provisions, including the definition of "Place of Removal" and the Central Excise Valuation Rules, led to the dismissal of the Revenue's appeal. The judgment clarified the criteria for determining the assessable value for Central Excise duty calculation, emphasizing adherence to statutory provisions over conflicting rule interpretations.