2011 (4) TMI 800 - AT - Central Excise

Assessable value - Goods cleared from depot - Whether expenses incurred up to the depot are to be included in the assessable value? - Held that - As what had been cleared from the factory was paper reels and the same after being cut into sheets at the cutting centres had been sold from the depot, that duty had been paid on the paper reels at the time of their clearance from the factory on the price of the paper reels prevailing at that time at the depot, that the freight, handling charges etc. are already included in the selling price of the paper reels, that this very issue in the respondent s own case had been decided by the Tribunal that Government's SLP to Hon'ble Supreme Court, against this judgment of the Tribunal has been dismissed by the Hon ble Supreme Court 2010 (7) TMI 845 - SC ORDER that since what had been cleared from the factory was the paper reels and the duty had been paid on the paper reels at the price of paper reels prevailing at the depot at the time of removal, there is no question of addition of the expenses of freight, insurance and handling incurred in sending the cut paper from the cutting centres to depot and that in view of this, there is no infirmity in the impugned order - Since, the price of paper reels at the depot at the time of removal was available and the duty had been paid only on that price, there is no short payment of duty - Decided in favour of assessee.

Summary

Issues:
1. Dispute regarding inclusion of freight and handling charges in the assessable value of paper reels cleared to cutting centers.
2. Interpretation of the law on assessable value under Section 4 of the Central Excise Act, 1944.
3. Applicability of previous Tribunal judgment and Supreme Court ruling in a similar case.

Issue 1: Dispute over inclusion of freight and handling charges:
The case involves a dispute where the Revenue contends that charges for freight, insurance, and handling from cutting centers to depot were not included in the assessable value of paper reels cleared for conversion into sheets. The Department imposed duty demands and penalties based on this contention, citing the judgment of the Hon'ble Supreme Court in a specific case.

Issue 2: Interpretation of assessable value under Section 4:
The Commissioner (Appeals) set aside the original orders, emphasizing that the value determination under Section 4 of the Central Excise Act should be based on the condition of goods at the time of clearance from the factory, not at the final sale stage. The defense argued that the duty was paid on the paper reels' price prevailing at the depot during clearance, including freight and handling charges in the selling price.

Issue 3: Applicability of previous Tribunal judgment and Supreme Court ruling:
The Tribunal, in the appellant's previous case, held that the value for duty calculation should be based on the condition of goods at the time of removal from the factory, not the final selling stage. The defense highlighted that the Government's Special Leave Petition (SLP) to the Supreme Court against this judgment was dismissed, supporting their argument that duty was correctly paid based on the paper reels' price at the depot during clearance.

In a detailed analysis, the Tribunal considered the dispute focused solely on paper reels cleared to cutting centers for conversion into sheets and subsequent sale from the depot. The Revenue's argument regarding non-inclusion of freight and handling charges was refuted based on the principle that duty calculation should align with the value of goods at the time of factory clearance. The Tribunal cited a relevant Supreme Court case to support the position that duty should be based on the value of goods as cleared from the factory, not the final selling price.

Moreover, the Tribunal emphasized the significance of the previous Tribunal judgment in the appellant's case, which was upheld despite the Government's appeal dismissal by the Supreme Court. This reaffirmed the stance that duty payment on the paper reels was correctly done based on the prevailing depot price during clearance, negating the need to include additional expenses incurred post-clearance in the assessable value. Consequently, the Tribunal dismissed the Revenue's appeals, upholding the impugned order and reinforcing the legal interpretation of assessable value under the Central Excise Act.