2015 (11) TMI 896 - AT - Central Excise

Valuation - Determination of assessable value - Inclusion of ground rent collected - appellant contended that it was collected as storage charges for the scrap from the customers and it is in the nature of penalty for over due retaining of the material in the factory premises of the appellant - Held that - In the case of SAIL (2013 (12) TMI 452 - CESTAT NEW DELHI), the customers were required to make the payment within 28 days from the date of sale and if they failed to make the payment they were required to pay ground rent at the specified rates. The Tribunal took a view that the ground rent is payable as per the terms and conditions of sale which provided for delay in payments and the amount collected is in the nature of interest on receivables and was not includable in the assessable value. In the present case, it is not the case that payment for the scrap has not been made by the customer. Even if he makes the payment, if the scrap is left without taking delivery, the appellants charged the so called ground rent. In this case, there is no evidence to show that goods have been removed from the factory gate. The date of removal of the goods from the factory gate by the customer is the date for finding the transaction value of the goods. No invoice has been produced before us. In the absence of any evidence to show that the amount charged is for delayed payment as per the conditions of the sale and is in the nature of interest, the price charged by the appellant at the time of removal of the goods would be liable to excise duty. In the situation, we do not find any merit in the appeal filed by the appellant - Decided against Revenue.

Summary

Issues: Ground rental charges collected for scrap as part of assessable value for central excise duty payment.

Analysis:

Issue 1: Whether ground rental charges collected for scrap should be treated as part of the assessable value for central excise duty payment.

The appellants collected ground rental charges for scrap from customers who did not lift the scrap within the stipulated time. The issue was whether these charges should be included in the assessable value for central excise duty. The learned counsel argued that the ground rent was collected as storage charges and was a penalty for overdue retention of material. He relied on a previous decision in a similar case. However, the Tribunal noted that in the previous case, ground rent was payable for delayed payments, considered as interest on receivables, and not included in the assessable value. In the present case, there was no evidence that the customers had not made the payment for the scrap. Even if payment was made, ground rent was charged if the scrap was not removed from the factory premises. Since there was no evidence to show that the amount charged was for delayed payment or interest, the price at the time of removal of goods would be liable to excise duty. Therefore, the Tribunal rejected the appeal, stating that the ground rental charges should be part of the assessable value for central excise duty payment.

Conclusion: The Tribunal held that the ground rental charges collected for scrap should be treated as part of the assessable value for the purpose of central excise duty payment, as there was no evidence to prove otherwise.

This detailed analysis provides a comprehensive understanding of the judgment, addressing the issues involved and the Tribunal's reasoning behind its decision.