2004 (4) TMI 504 - AT - Central Excise

Summary

Issues:
1. Inclusion of equalized freight in the assessable value.
2. Determination of place of removal.
3. Inclusion of freight and transit insurance in assessable value.
4. Interpretation of tender contract terms.
5. Applicability of previous decisions on similar cases.

Analysis:
1. The issue in this case revolves around the inclusion of equalized freight in the assessable value of goods sold under a tender contract. The Revenue contended that the inclusion of equalized freight from the factory gate to the buyer's premises was not permissible even on clearance made after 1-7-2000. The grounds for appeal included the definition of the place of removal under Section 4(3)(e) and the terms of the contract as per Board's Order No. 59/1/2003-CX. The Revenue argued that assessments should be under Section 4(1)(b) rather than S. 4(1)(a) as determined by the CCE (Appeals). The decision in previous cases was cited to differentiate the addition of equivalent freight on Factory Gate Sale from the current case where the sale was not completed as per the contract terms.

2. Another issue raised was the determination of the place of removal and the inclusion of freight and transit insurance in the assessable value. It was argued that freight and transit insurance should not be included in the assessable value when the transfer of goods' title occurred at the factory gate. The tender contract in question prescribed a factory gate price and included clauses for safety and defective supplies, not for correct goods. The approval of the value under Section 4(1)(a) was deemed appropriate as it reflected a normal sale transaction value.

3. The case also involved the interpretation of tender contract terms regarding the inclusion of freight and other charges in the assessable value. The argument centered around whether actual freight could be deducted or only equalized freight. The tender document specified that only the Ex-works price would be considered, and other charges would not be reckoned. The document was characterized as a 'work contract' rather than a simple sales contract, involving various activities beyond those of a seller.

4. The judgment also addressed the applicability of previous decisions on similar cases. It was concluded that there was no material to alter the earlier views held by the CESTAT's decision, which were relied upon by the CCE (Appeals). Consequently, the Revenue appeals were dismissed, upholding the order of the Ld. CCE (Appeals) based on the CESTAT's decision.