2016 (8) TMI 579 - AT - Central Excise

Valuation - paper reels sent from factory to cutting centres for conversion into sheets - sold from the depot - whether the freight and insurance charges from factory to cutting centres and handling charges at the cutting centres must be included on the assessable value - Held that - the same issue has been decided by the Tribunal in the appellant s own case 2011 (4) TMI 800 - CESTAT NEW DELHI by relying on the decision of Hob ble Apex Court in the case of Union of India vs. J.G. Glass Industries Ltd. 1997 (12) TMI 110 - SUPREME COURT OF INDIA wherein it was held that value of the goods when the duty on the same is chargeable at an ad-valorem rate has to be taken as the value of the goods in the form in which the same had been cleared at the time of removal and since in this case it is the reels which had been cleared from the factory on payment of duty which subsequently after being cut into sheets were sold from the depot it is the value of the reels which has to be adopted for charging duty and the cost of transportation and insurance from factory gate to the cutting would not be includable in the assessable value. - Decided in favour of appellant

Summary

Issues:
Dispute over inclusion of freight and insurance charges in the assessable value of paper reels sent to cutting centres for conversion into sheets.

Analysis:
The appellant, engaged in manufacturing paper chargeable to Central Excise Duty, cleared paper sheets and reels, some of which were sent to cutting centres for conversion into sheets and then sold from the depot. The department contended that freight, insurance charges to cutting centres, and handling charges must be included in the assessable value. Show cause notices were issued, leading to confirmation of duty demands, interest, and penalty by the Additional Commissioner. The Commissioner (Appeals) upheld this decision, prompting the current appeal.

The appellant argued that a previous Tribunal decision rejected the department's plea in a similar case, which the Supreme Court dismissed the department's appeal against. The Adjudicating Authority refused to apply this precedent, deeming it sub-silentio. The appellant contended that the impugned order should be set aside due to this untenable approach. The department countered, citing a change in Section 4 of the Central Excise Act, altering the definition of 'place of removal' to include the depot.

The Tribunal considered the dispute regarding paper reels sent for cutting and subsequent sale from the depot. Referring to a previous Tribunal order and the Supreme Court's judgment in Union of India vs. J.G. Glass Industries Ltd., it held that duty is chargeable based on the value of goods at the time of removal. As the reels were cleared from the factory and sold after being cut into sheets, the value of the reels should be used for duty calculation, excluding transportation and insurance costs. Since the facts and issues were identical to the previous case, the appeal was allowed, setting aside the impugned order.

This judgment clarifies the assessable value calculation for goods sent for further processing and sale, emphasizing the value at the time of removal for duty assessment. The decision highlights the importance of consistency in applying legal precedents and the significance of relevant legal definitions in determining tax liabilities under the Central Excise Act.