1978 (10) TMI 41 - HC - Central Excise

Summary

Issues:
Interpretation of Sec. 4(2) of the Central Excises and Salt Act, 1944 regarding exclusion of transportation costs from assessable value.

Analysis:
The petitioner, a company engaged in manufacturing electric dry batteries, sought to exclude transportation costs from the assessable value under Sec. 4(2) of the Act. The petitioner charged a uniform price for batteries but varied transportation charges based on the distance to different destinations. The excise authorities contended that the uniform price included transportation costs and denied the deduction. The petitioner argued that the transportation charges were separate and should be excluded as per Sec. 4(2) of the Act. The appellate authority upheld the denial, stating that the uniform price included equalized freight, merging it with the cost price. However, the petitioner provided detailed figures showing varying transportation charges, which the authorities failed to consider. The court held that the transportation charges incurred by the petitioner should be excluded from the assessable value as per Sec. 4(2) of the Act.

The appellate authority's misunderstanding of the petitioner's pricing structure led to the incorrect denial of the deduction for transportation costs. The court emphasized that the uniform list price for batteries did not negate the exclusion of transportation charges under Sec. 4(2) of the Act. The court examined the three elements of the subsection: unknown price at the place of removal, determination of value at the place of delivery, and actual transportation costs incurred. The court found that the transportation charges were genuinely incurred and should be excluded from the assessable value. The court criticized the excise authorities for overlooking the detailed figures provided by the petitioner and upheld the petitioner's entitlement to the benefit of Sec. 4(2) for excluding transportation costs.

In conclusion, the court allowed the writ petitions, directing the exclusion of transportation charges from the assessable value. The court also noted the concession regarding packing charges and canceled the bonds executed by the petitioner. The petitioner was awarded costs, and the judgment clarified the correct application of Sec. 4(2) of the Act in determining assessable value for excisable goods.