2009 (11) TMI 303 - AT - Central Excise

Valuation- Road Delivery Charges- The appellants are engaged in manufacture of motor vehicles and parts thereof. Duty demand of Rs.25,21,943 has been confirmed on the ground that the appellants had collected Road Delivery Charges (RDC) in respect of vehicles cleared by them over and above the actual amount spent by them. Held that- Excess amount collected from the dealer over and above the actual amount incurred towards RDC by the assessee is liable to be added to the assessable value and charged to duty. However, the additional amount collected is to be heated as turn-duty-price and demand would have to be re-worked. We reject the appeal except for direction to the lower authority to recalculate the demand and interest thereon treating the additional amount received as cum-duty price.

Issues Involved:

1. Includibility of excess Road Delivery Charges (RDC) collected in the assessable value.
2. Whether the Commissioner (Appeals) traveled beyond the allegations contained in the show cause notice.
3. Applicability of judicial precedents and the concept of judicial discipline.
4. Determination of transaction value under Section 4 of the Central Excise Act, 1944.
5. Adjustment of excess collection and short collection of RDC.

Issue-wise Detailed Analysis:

1. Includibility of Excess RDC Collected:

The appellants argued that the RDC collected separately from the dealer should not be included in the assessable value of the final product once the sales take place at the factory gate. They cited several judicial decisions, including M/s. Filaments India and M/s. Escorts JCB Ltd., to support their contention. However, the Tribunal found that the concept of transaction value under the new Section 4 of the Central Excise Act, 1944, requires each transaction to be assessed separately. The Tribunal distinguished the present case from the cited cases, noting that the RDC was fixed by the supplier without giving the dealer the option to arrange their own transport. Hence, the excess amount collected over the actual RDC incurred is to be treated as additional consideration and duty is to be paid on it.

2. Whether the Commissioner (Appeals) Traveled Beyond the Allegations Contained in the Show Cause Notice:

The appellants contended that the Commissioner (Appeals) should not have invoked Rule 6 of the Valuation Rules after finding that Rule 5 was not applicable. The Tribunal examined the decisions cited by the appellants and concluded that the facts of those cases were not comparable to the present case. The Tribunal held that the appellants were required to meet the allegation of additional consideration received under the head of RDC, and the Commissioner (Appeals) applied the correct rule. Therefore, the appellants' interest was not prejudiced by the Commissioner (Appeals) invoking Rule 6 instead of Rule 5.

3. Applicability of Judicial Precedents and the Concept of Judicial Discipline:

The Tribunal noted that judicial discipline requires one Bench of the Tribunal not to sit in judgment over the decision of another Bench. However, the Tribunal found that the earlier decision cited by the appellants did not record any finding on the specific issue of excess RDC collected. The Tribunal referred to the decision of the Hon'ble Supreme Court in the case of Collr. of CE, Calcutta v. A Tobacco Products, which emphasized that courts should not place reliance on decisions without discussing how the factual situation fits with the fact situation of the decision relied upon. The Tribunal concluded that it was not bound to follow the earlier decision as it did not lay down any clear ratio applicable to the present case.

4. Determination of Transaction Value under Section 4 of the Central Excise Act, 1944:

The Tribunal discussed the changes brought by the amendment to Section 4 in the year 2000, which introduced the concept of transaction value. The Tribunal emphasized that the levy of Central Excise duty is on the transaction value, which includes any amount that the buyer is liable to pay to the assessee in connection with the sale. The Tribunal held that the excess RDC collected is an additional consideration and must be included in the transaction value. The Tribunal also noted that the definition of transaction value requires the actual amount incurred towards transportation to be deducted, and any excess collection must be added to the assessable value.

5. Adjustment of Excess Collection and Short Collection of RDC:

The Tribunal found that each transaction must be assessed separately, and there cannot be any adjustment of excess collection against short collection. The Tribunal reasoned that the provisions relating to unjust enrichment and the requirement to determine transaction value for each removal of goods necessitate separate assessments. The Tribunal held that the excess RDC collected must be treated as turn-duty-price, and the demand must be re-worked accordingly. The Tribunal also noted that the legal provisions require the recovery of short levy/non-levy of excise duty from the assessee, irrespective of whether the duty was collected from the customer.

Conclusion:

The Tribunal concluded that the excess RDC collected is includible in the assessable value, the Commissioner (Appeals) did not travel beyond the show cause notice, and the earlier decision need not be followed as it did not lay down a clear ratio. The Tribunal emphasized the importance of determining transaction value for each transaction and held that the excess RDC collected must be added to the assessable value without adjustment against short collection. The demand was to be re-worked treating the additional amount as turn-duty-price.

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