2016 (2) TMI 640 - AT - Central Excise

Demand of central excise and equal amount of penalty confirmed - Held that - The goods were supplied by the appellant against the Purchase Orders issued by the Electricity Board. The Purchase Orders clearly show the ex factory price, sales tax, freight and insurance charges separately. The appellant have entered into an agreement with the Transport Company providing for payment of compensation on account of loss and damage to the goods direct to the consignee. The only issue which may have to be looked into is whether the price of the goods is being collected in the guise of cost of transportation. On going through the case records, we find that no such case has been made out therefore the argument that the transporting company is a related person and consideration realised by the transporting company for transportation should form part of the assessable value and has no legal support. Section 4 of the Central Excise Act refers to related person only in the context of a sale to a related person. The Revenue has not been able to prove that the partnership firm of M/s Miracle Trading Co. is a proxy with no separate entity. Neither is any case made out that part of the price of the goods is being realised by the transporting company for the benefit of the Appellant company. Therefore in the facts of the case we do not see any merit in the orders of the lower authorities and we are in agreement with the argument of the Appellants that the proceeds realised by M/s Miracle Carrier and Trading Co. towards transportation of the goods will not form part of the assessable value of the goods cleared by Appellants.

Summary

Issues:
- Appeal against the order upholding central excise demand and penalty
- Allegation of proprietary interest in a transport firm by the appellant
- Interpretation of ownership of goods until delivery to buyers
- Application of previous tribunal decision on a similar issue

Analysis:
The judgment involves an appeal challenging an order upholding a central excise demand and penalty against the appellant. The appellant, engaged in manufacturing conductors, supplied goods to Electricity Boards through a related transporter, raising concerns about proprietary interest in the transport firm. The central issue revolved around the ownership of goods until delivery to buyers, with the Department arguing for duty demand confirmation. The appellant cited a previous tribunal decision in their favor, emphasizing the agreement with the transport company for compensation in case of loss or damage to goods.

The Tribunal analyzed the case, noting that goods were supplied against Purchase Orders specifying ex factory price, taxes, freight, and insurance separately. The agreement with the transport company for compensation directly to consignees was highlighted. Referring to the previous tribunal decision, the Tribunal emphasized the Apex Court's stance on the place of removal being the factory gate, not the delivery site. It was clarified that transportation costs to buyers' premises do not add to the assessable value of excisable goods unless collected as part of the goods' price.

Ultimately, the Tribunal found no merit in the Department's arguments, agreeing with the appellant's position that the transport company's proceeds did not contribute to the assessable value of cleared goods. Citing the lack of evidence supporting the Department's claims regarding the transport firm's role and pricing, the impugned orders were set aside, and the appeals were allowed in favor of the appellants. The judgment was delivered on 3.2.2016, with the order pronounced in open court by the Tribunal.