2010 (2) TMI 574 - AT - Central Excise

Depot as a place of removal - At depot an extra amount of 4% of value of goods was collected as warehousing charges Demand for inclusion of warehousing charges - value of such goods has to be determined on the basis of the value at which they are sold, which in this case is from the depot Held that - uphold the impugned order including 4% of Ware housing charges in the assessable value, not a case where any penalty is called.

Summary

Issues:
1. Assessing the duty liability on excisable goods cleared by the appellants to their OE customers directly from the factory gate.
2. Clarification on the inclusion of warehousing charges in the assessable value for goods transferred to a depot premises before being sold.

Analysis:
1. The appellants, as manufacturers of excisable goods, were clearing goods to OE customers directly from the factory gate. Additionally, they were transferring spares to a duty paid godown/depot at Pune from Chennai depot, collecting 4% warehousing charges at Pune depot. A show cause notice was issued for not paying duty on the price inclusive of warehousing charges, proposing a differential duty and penalty. The Asst. Commissioner confirmed the demand and imposed a penalty, upheld by the Commissioner (Appeals), leading to the appeal before the Tribunal.

2. The Tribunal considered the contention that the depot could be treated as a place of removal and that subsequent sale price at the later depot should not affect the assessable value. However, Rule 7 of the Central Excise Valuation Rules, 2001 was cited, stating that if goods are not sold at the time and place of removal but transferred to another place for sale, the value should be based on the normal transaction value of goods sold from that place. As there was no sale at the factory gate, the value had to be determined based on the price at which the goods were sold, in this case, from the Pune depot. The Tribunal upheld including 4% warehousing charges in the assessable value but set aside the penalty, concluding that no penalty was warranted. Therefore, the appeal was partially allowed by upholding the duty demand and canceling the penalty.

This detailed analysis of the judgment highlights the key issues of assessing duty liability and determining the assessable value concerning the clearance of excisable goods by the appellants, providing clarity on the inclusion of warehousing charges in the valuation process.