2007 (12) TMI 10 - SC - Central Excise

Loading charges at time of clearance Assessable value Price should be treaded as cum-duty price for assessment Revenue s plea that loading charges were part of cost of production is not sustainable Held that assessee is entitled to benefit of abatement

Summary

Issues:
Whether accruing loading charges collected by the assessee were liable to be treated as cum-duty price and if the Department was obliged to make the demand after allowing abatement for central excise duty payable on such loading charges.

Analysis:
The case revolved around the treatment of loading charges collected by the assessee and whether they should be considered as cum-duty price for the purpose of assessing excise duty. The Assessing Officer (AO) initially held that the loading charges were includible in the assessable value, thus denying the deduction claimed by the assessee under Section 4(4)(d)(ii) of the Central Excise Act, 1944. However, the Commissioner (A) allowed the abatement for the loading charges based on a previous Tribunal judgment in the case of Srichakra Tyres Ltd., which stated that such charges should be treated as cum-duty price for determining the assessable value.

The Department, dissatisfied with the decision, brought the matter to the Supreme Court through a civil appeal. The Department argued that the loading charges were part of the cost of production and, therefore, the assessee should not be entitled to abatement. Additionally, the Department claimed that it had not accepted the Tribunal's judgment in Srichakra Tyres Ltd. and had filed appeals against it. However, the Supreme Court found no merit in these arguments. The Court noted that there was no mention in the Department's appeal that loading charges constituted a cost of production. Furthermore, the Court highlighted that the Department's appeals against the Tribunal's judgment had already been dismissed by a three-Judge Bench, affirming the correctness of the Tribunal's decision.

In light of the above, the Supreme Court dismissed the civil appeal, emphasizing that there was no merit in the Department's contentions. The Court upheld the treatment of loading charges as cum-duty price for calculating the assessable value, in line with the Tribunal's decision, and ruled in favor of allowing abatement for central excise duty payable on such charges.