2017 (9) TMI 207 - AT - Central Excise

Valuation - includibility - transportation, laying, joining, testing charges - place of removal - When the respondent claimed deduction relating to transportation, laying, joining, testing charges from the invoice value received from the main contractor, revenue did not allow deduction thereof but alleged undervaluation of the pipes - Held that - When the notice issued by the authority below has brought clearly the facts of the contract and also place of removal where the respondent carried out certain activity over the goods cleared from the factory, there is no scope for the respondent to claim deduction since transfer of property of the goods did not pass at the factory gate but transfer thereof occurred after value addition made thereto at the site - appeal allowed - decided in favor of Revenue.

Summary

Issues:
- Incorrect assessable value determination of cement pipes
- Alleged undervaluation of pipes
- Misconception of facts by authorities below
- Definition of place of removal
- Transfer of property of goods

Analysis:
The judgment addresses the issue of incorrect assessable value determination of cement pipes in a case where the respondent claimed deductions for transportation, laying, joining, and testing charges from the invoice value. The appellate authority noted that the transfer of property of the goods did not occur at the factory gate but after value addition at the site. The judgment cites the Sale of Goods Act to determine the transfer of ownership from the seller to the buyer, emphasizing that any expenditure incurred after the transfer of ownership is the buyer's responsibility and should not be included in the valuation of goods. The Apex Court's judgment in CCE v. Roofit Industries Ltd. is relied upon to support this interpretation. The appeals are allowed, restoring the adjudication order and setting aside the appellate order.

The judgment also discusses the alleged undervaluation of the pipes, pointing out that the respondent did not determine the correct assessable value as per the show-cause notice. The authorities below were criticized for misconceiving the facts of the case, with the Departmental Representative arguing that the demand raised in adjudication should be waived. The judgment clarifies the definition of the place of removal in relation to excisable goods, highlighting the importance of when the transfer of goods occurs to determine the correct assessable value.

Furthermore, the judgment delves into the transfer of property of goods, emphasizing the intention of the buyer and seller to transfer ownership at the buyer's premises. The Sale of Goods Act is referenced to determine the timing of property transfer, with the judgment citing Section 19 of the Act to establish when the property in goods is transferred to the buyer. By analyzing the terms of the agreement and relevant legal principles, the Revenue's appeals are allowed, overturning the appellate order and upholding the adjudication order.

In conclusion, the judgment provides a detailed analysis of the issues surrounding the assessable value determination, alleged undervaluation, misconceptions by the authorities, the definition of the place of removal, and the transfer of property of goods. Legal principles from the Sale of Goods Act and relevant case law are applied to support the decision to allow the appeals and restore the adjudication order.