2011 (6) TMI 549 - AT - Central Excise

Assessable value - assessee claimed deduction towards freight and insurance Held that - Merely because the goods have been delivered at the buyer s premises and transportation charges have been recovered from the buyers, it cannot be concluded that the sale has taken place at the buyer s premises, therefore, on the basis of evidences available on record, the lower appellate authority has come to the conclusion that the ratio of the judgment in the case of Associated Strips vs. CCE and Escorts JCB referred to supra are applicable to the facts of the case, duty demand set aside and the imposition of penalties on the Directors, appeals is dismissed

Summary

Issues:
Departmental appeals against Order-in-Appeal, duty demand on transportation charges, imposition of penalties on directors, applicability of judgments in Escorts JCB and Associated Strips cases.

Analysis:

1. Departmental Appeals against Order-in-Appeal: Three departmental appeals were filed against Order-in-Appeal No. PD/114 TO 116/Th-I/2003 dated 28.11.2003 passed by the Commissioner of Central Excise (Appeals), Mumbai VI. The case involved the issue of duty demand on transportation charges totaling Rs. 3,83,840 for goods cleared during the period from July 1997 to June 2000. The jurisdictional Joint Commissioner confirmed the duty demand and imposed penalties on the directors of the assessee company. On appeal, the Commissioner (Appeals) allowed the appeal, leading to the department filing appeals against this decision.

2. Duty Demand on Transportation Charges: The appellant, a manufacturer of electrical control panels, sold goods on a door delivery basis to the Maharashtra State Electricity Board, with the price inclusive of freight and transit insurance. However, the appellant claimed deductions towards freight and insurance while calculating the assessable value. The department issued a show-cause notice demanding duty on transportation charges. The lower appellate authority analyzed the contractual terms and concluded that the sale was on an ex-works basis, with transportation costs to be reimbursed by the buyer. The authority found no infirmity in the order, setting aside the duty demand and penalties on the directors.

3. Imposition of Penalties on Directors: The Joint Commissioner had imposed penalties on the directors of the assessee company along with a penalty equal to the duty demand on the company. However, on appeal, the Commissioner (Appeals) allowed the appeal, leading to the department challenging this decision. The department argued that the facts of the case were different from the judgments in the Escorts JCB and Associated Strips cases, emphasizing distinctions in pricing, risk responsibility, and invoice details. The department contended that the lower appellate authority's reliance on these judgments was incorrect and legally flawed.

4. Applicability of Judgments in Escorts JCB and Associated Strips Cases: The department and the respondent had conflicting views on the applicability of the judgments in the Escorts JCB and Associated Strips cases to the present case. The department argued that the facts of the case were distinguishable from these judgments, while the respondent contended that the judgment in the Escorts JCB case applied squarely to the case at hand. The lower appellate authority found the judgments applicable based on the contractual terms and evidence on record, leading to the dismissal of the department's appeals and the disposal of cross-objections accordingly.