2004 (9) TMI 225 - AT - Central Excise

Summary

Issues: Central Excise Valuation - Inclusion of transportation charges in assessable value; Penalty under Rule 173Q of Central Excise Rules, 1944.

Central Excise Valuation - Inclusion of transportation charges in assessable value:
The case involved M/s. Solaris Chemtech Limited, engaged in manufacturing various products falling under the Central Excise Tariff Act, 1985. The dispute arose when the department issued a show cause notice for not including the cost of transportation in the assessable value of goods sold by the appellants. The adjudicating authority held that as the goods were not sold for delivery at the factory gate, the value had to be determined under Section 4(1)(b) of the Central Excise Act. The authority confirmed a duty demand and imposed a penalty under Rule 173Q of the Central Excise Rules, 1944. The Commissioner (Appeals) upheld the decision but reduced the penalty. The appellants challenged the order, arguing that all sales were on an ex-factory basis, and transportation was arranged at the buyer's request, with costs charged separately. The Tribunal noted that when goods are sold ex-factory, valuation is under Section 4(1)(a), and there is no need to apply Section 4(1)(b) or Valuation Rules. The Tribunal held that the cost of transportation need not be included in the assessable value, especially when it was not collected in excess of actuals. The appeal was allowed, and the order-in-appeal was set aside.

Penalty under Rule 173Q of Central Excise Rules, 1944:
Regarding the penalty imposed under Rule 173Q of the Central Excise Rules, 1944, the Tribunal found no justification for it. The Tribunal emphasized that since the cost of transportation was not includible in the assessable value, there was no basis for imposing a penalty. The Tribunal concluded that there was no merit in upholding the penalty and set aside the order-in-appeal, allowing the appeal with consequential relief.