2015 (3) TMI 1158 - AT - Central Excise

Transaction value for the purpose of charging excise duty - demanding the differential duty - cost of transportation handling etc. and one lump sum amount inclusion in excised duty - Held that - While arriving at the transaction value for the purpose of charging excise duty the cost of transportation from the factory to the depot or any other place or premises from where the excisable goods are sold have to be included and no abatement in respect of such charges is permitted. In the present case the goods have been sold and delivered at the ONGC Nhava Depot and on the total value charged Sales Tax has been collected. In other words the sales took at the ONGC Nhava Depot. We have perused invoices in respect of supplies made by the appellant at the ONGC Depot and these facts also become very clear from the invoices. Further in these invoices the total amount charged is indicated and there is no bifurcation as to what is the amount charged for towards the price of the goods the excise duty element the cost of transportation handling etc. and one lump sum amount is charged which is inclusive of excise duty. The appellant s claim to the contrary is not evident from the invoices raised as there is no mention in these invoices of any charges towards transportation handling etc. In these circumstances the contention of the appellant that these are towards transportation and handling charges cannot be accepted. Since the sale takes place at ONGC Nhava Depot that is the place relevant for determination of the transaction value in terms of Section 4(1)(b) read with Rule 7. Therefore notwithstanding the fact that depot was not included as a place of removal prior to 14-05-2003 the appellant has no case at all. After 14-5-2003 the price at the ONGC depot is clearly the value on which duty liability has to be discharged. As regards the invocation of extended period of time merely because the appellant is a Public Sector Undertaking it does not mean that the appellant is liable to pay duty only for the normal period of limitation. If the appellant does not comply with the provisions of law and the documentary evidences available on record does not support the appellant s contention the presumption that the appellant suppressed the facts would naturally arise. The law does not make any distinction between a PSU or non-PSU. In this view of the matter invocation of extended period of time in the present case is fully justified. Consequently the assessee is also liable to penalty under the provisions of Section 11AC of the Central Excise Act 1944. Therefore we do not find any infirmity in the impugned order passed by the lower adjudicating and appellate authorities. - Decided against assessee

Summary

Issues Involved:
1. Determination of the 'place of removal' for valuation purposes.
2. Inclusion of transportation and handling charges in the assessable value.
3. Applicability of the extended period for demand and imposition of penalty under Section 11AC.

Detailed Analysis:

1. Determination of the 'Place of Removal':
The primary issue was whether the 'place of removal' should be the refinery or the depot. The appellant argued that the warehouse was the place of removal, and thus, the stock transfer price should be used for duty calculation. However, the Tribunal held that from 14-05-2003 onwards, the depot itself becomes the place of removal due to the amendment in Section 4(3)(c) of the Central Excise Act. This means that the value at which goods are sold from the depot should be the assessable value. For the period before 14-05-2003, the warehouse was considered the place of removal, and the valuation should be done under Rule 7 of the Central Excise Valuation Rules, 2000, which mandates that the transaction value at the depot should be used for duty calculation.

2. Inclusion of Transportation and Handling Charges:
The appellant contended that the additional amounts recovered as 'other charges' were for transportation and handling and should not be included in the assessable value. The Tribunal noted that the invoices did not separately indicate these charges, and thus, the entire amount charged from the buyers must be considered the transaction value. The Tribunal referred to Rule 7 of the Valuation Rules, which states that the cost of transportation from the factory to the depot should be included in the assessable value. The Tribunal also cited previous decisions, including CCE, Nashik v. VIP Industries Ltd. and CCE, Chennai v. Madras Refineries Ltd., which supported this view.

3. Applicability of Extended Period and Penalty:
The appellant argued that being a Public Sector Undertaking (PSU), there was no intention to evade duty, and thus, the extended period for demand and penalty under Section 11AC should not be invoked. The Tribunal disagreed, stating that the law does not differentiate between a PSU and a non-PSU regarding compliance. The Tribunal found that the appellant had not disclosed the additional charges in the invoices, constituting suppression of facts. Therefore, the invocation of the extended period and the imposition of penalties were justified.

Separate Judgments:

- Member (Technical): Upheld the duty demand, interest, and penalty, stating that the depot was the place of removal post-14-05-2003 and that the entire amount charged, including transportation and handling charges, should be included in the assessable value. Also justified the invocation of the extended period and penalties due to suppression of facts.

- Member (Judicial): Disagreed, stating that the warehouse was the place of removal and that transportation and handling charges should be excluded from the assessable value. Also held that there was no suppression of facts, and thus, the extended period and penalties were not applicable. Remanded the matter for recalculation of the assessable value.

- Third Member (Technical): Concurred with Member (Technical), emphasizing the applicability of Rule 7 for valuation and justifying the extended period and penalties due to suppression of facts.

Final Order:
In view of the majority decision, the appeal was dismissed as devoid of merits, upholding the duty demand, interest, and penalties.