2017 (12) TMI 430 - AT - Central Excise

Valuation - allowability - discounts - Held that - some of the expenses taken into consideration in the finalization of assessment are dealing with expenses incurred after the goods were removed from the factory gate - all the expenses which are incurred after goods are cleared from factory gate are admissible for deduction - such expenses which are incurred after the goods are cleared from the factory gate do not become part of the transaction value and do not qualified to be subjected to assessment for Central Excise duty - matter remanded for re-determination of assessable value - appeal allowed by way of remand.

Summary

Issues:
1. Provisional assessment and admissibility of expenses for deduction from assessable value.
2. Interpretation of transaction value under Section 4 of Central Excise Act, 1944.
3. Appeal against Order-in-Appeal remanded to Original Authority for re-determination of assessable value and Central Excise Duty.

Issue 1: Provisional Assessment and Admissibility of Expenses for Deduction from Assessable Value
The case involved the appellant engaged in manufacturing laminating sheets, with goods sold from various depots. Provisional assessment for the financial year 2001-2002 was completed, but certain expenses like freight, delivery, unloading, and packing were not allowed for deduction from the assessable value as they were not separately shown on invoices. The appeal was made to the Commissioner (Appeals), who remanded the matter back to the Original Authority for consideration of different discounts and rejected the appeal concerning other expenses. The appellant contended that expenses post goods removal from the factory gate should be allowed for deduction.

Issue 2: Interpretation of Transaction Value under Section 4 of Central Excise Act, 1944
The Tribunal analyzed the definition of "transaction value" under Section 4 of the Central Excise Act, 1944, which includes expenses incurred by the manufacturer until goods are cleared from the factory gate. It was noted that discounts passed on to buyers or not collected by the appellant should not be part of the transaction value. The definition explicitly covers expenses like storage and outward handling charges within the factory, clarifying that expenses incurred post goods clearance from the factory gate should not be included in the transaction value for Central Excise duty assessment.

Issue 3: Appeal Against Order-in-Appeal Remanded for Re-determination
After considering the contentions and reviewing the case records, the Tribunal held that expenses incurred post goods clearance from the factory gate are admissible for deduction and should not be part of the transaction value for Central Excise duty assessment. Consequently, the Tribunal set aside the Order-in-Appeal dated 23.03.2007 and remanded the matter to the Original Authority for re-determination of assessable value and Central Excise Duty for the year 2001-2002. The direction was given to re-determine Central Excise Duty based on the provisions of Section 4 of the Central Excise Act, 1944, allowing the appeal by way of remand.

This judgment clarifies the admissibility of expenses for deduction from the assessable value under provisional assessment and provides a detailed interpretation of transaction value under the Central Excise Act, emphasizing expenses incurred post goods clearance from the factory gate. The decision to remand the matter for re-determination of assessable value and Central Excise Duty highlights the importance of accurate valuation in Central Excise matters.