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2019 (1) TMI 1098 - AT - Central ExciseValuation - transportation of manufactured pipes to the site of the customer for assembly - inclusion of transportation costs incurred for such movement in assessable value - Held that - It is amply clear from the decision in the case of COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE, NAGPUR VERSUS M/S ISPAT INDUSTRIES LTD. 2015 (10) TMI 613 - SUPREME COURT that the inclusion of transport cost beyond the factory of manufacture is allowed only upon establishing that the manufacturer continues to be the owner of the goods even at the site of assembly. Reliance placed upon the provisions of Sale of Goods Act, 1930 will not suffice when it is on record that the goods are supplied in accordance with a contract entered into with government agencies and accepted at the factory after prescribed tests - It is also found from the records that the contract requires the appellant to assemble the goods in accordance with the pre-arranged design in a separate transaction in which the goods supplied cannot be rejected by the procurement agency. In the circumstances, there is no reason to accept the contention of Revenue that the sale has occurred at the premises of the buyer. The transportation costs are not liable to be included in the assessable value of the accessible goods - appeal allowed - decided in favor of appellant.
Issues Involved:
Challenge against differential duty, interest, and penalty under Central Excise Act, 1944 for transportation costs excluded from assessable value at the time of removal from the factory. Analysis: 1. The appeals by two manufacturers against the differential duty of ?7,13,398, along with interest and penalty imposed under the Central Excise Act, 1944, were heard. The duty was held recoverable for the period from March 2003 to February 2007 on transportation costs excluded from the assessable value at the time of removal from the factory. 2. The impugned orders relied on the provisions of section 4 of the Central Excise Act, 1944, post its amendment from 14th May 2003, which included the place of sale in the definition of 'place of removal'. The Sale of Goods Act, 1930 was also referred to in determining the location of sale. 3. The appellant's Chartered Accountant referred to a Supreme Court judgment which analyzed the amendments to section 4 of the Central Excise Act, 1944, and concluded that post 14-5-2003, the cost of transportation from the place of removal to the place of delivery is to be excluded, except when the factory is not the place of removal. The buyer's premises cannot be considered the place of removal for the purpose of Section 4. 4. The decision of the Tribunal in a related case was also considered, emphasizing the exclusion of transportation costs beyond the factory premises in determining duty liability. 5. The Authorized Representative argued that all costs up to the site of assembly should be included in determining duty liability since the place of removal was deemed to be the buyer's premises. 6. However, the Tribunal held that the transportation costs should not be included in the assessable value of the goods based on the Supreme Court's decision. It was established that the manufacturer did not retain ownership of the goods at the site of assembly, and the sale did not occur at the buyer's premises as contended by the Revenue. 7. Consequently, following the Supreme Court's decision, the Tribunal set aside the impugned order, allowing the appeals of the manufacturers against the differential duty, interest, and penalty imposed under the Central Excise Act, 1944. This detailed analysis of the judgment highlights the key legal arguments, interpretations of relevant statutes, and the final decision rendered by the Tribunal in favor of the appellants.
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