2005 (2) TMI 416 - AT - Central Excise

Summary

Issues:
1. Inclusion of excess freight and insurance charges in the assessable value of goods.
2. Benefit of abatement of duty from the invoice price of goods under Section 4(4)(d)(ii) of the Central Excise Act.

Issue 1: Inclusion of excess freight and insurance charges in the assessable value of goods
The appeal involved a demand of duty and penalty against M/s. Kothari Sugars & Chemicals Limited for including excess freight and insurance charges in the assessable value of goods collected from buyers during 1996-2001. The department argued that since the ownership of goods remained with the assessee until delivery at the buyer's premises, the charges collected should be included. The assessee contended that the goods were sold directly at the factory gate and the charges did not extend the 'place of removal.' The Commissioner agreed to exclude actual charges but included excess amounts collected as additional consideration for manufacturing. The assessee relied on the Supreme Court's judgment in Baroda Electric Meters Ltd. v. CCE to challenge the inclusion. The Tribunal, following the Supreme Court's decision, held that excess charges for transportation should be excluded from the assessable value as they constitute the assessee's "profits on transportation." Consequently, the demand of duty and penalty were set aside, and the appeal was allowed.

Issue 2: Benefit of abatement of duty from the invoice price of goods under Section 4(4)(d)(ii) of the Central Excise Act
The second appeal by the Revenue contested the grant of abatement of duty from the invoice price of goods under Section 4(4)(d)(ii) of the Central Excise Act. The appeal was based on a review petition filed by the department in the Supreme Court against the judgment in the case of Maruti Udyog Ltd., which upheld abatement of duty for valuation purposes. The review petition was subsequently dismissed by the Supreme Court, affirming the ruling in the Maruti Udyog Ltd. case. Therefore, the Tribunal upheld the impugned order treating the sale price as cum-duty price and allowing abatement of duty under Section 4(4)(d)(ii) for determining the assessable value. Consequently, the Revenue's appeal was rejected.

In conclusion, the Tribunal's judgments in both issues favored the assessee, setting aside the demand of duty and penalty in the first issue and upholding the abatement of duty in the second issue based on relevant legal precedents and interpretations of the Central Excise Act.