2014 (2) TMI 816 - AT - Central Excise

Waiver of predeposit of duty - Imposition of equal penalty u/s 11AC - Determination of assessable value of goods - Inclusion of freight value - Held that - It is the claim of the Revenue that even though certain quantities of goods were sold on ex-works basis through railways but in fact, the same were delivered from the Branch Offices and hence, the railway freight charges incurred in transferring the goods from the factory to their Branch Offices, should be included in the value of such goods. On a preliminary analysis of the evidences adduced by both sides, prima-facie, we find that the customers take constructive delivery of the goods at their factory of the Applicant as is evident from the Internal Price Circular of the Applicant, which indicates two channels of sale; one from the factory gate and the other one from the stockyard of the Applicant. Prima-facie, thus the Applicant could able to show that besides stockyard sales, there were also ex-works sale, but in relation to ex-works sales, the freight charges were incurredinitially by the Applicant in transferring the goods from the factory to a place other than the factory, where from their customer take delivery of the goods, but the freight charges were ultimately borne by the customer, which was a condition of sale. Freight charges incurred on behalf of the buyers cannot be included in the assessable value of goods sold on Ex-works basis. In these circumstances, the Applicants are able to make out a prima-facie case for waiver of all dues adjudged, accordingly, pre-deposit of all dues adjudged is waived andits recovery stayed during pendency of the appeal - Stay granted.

Summary

Issues:
1. Waiver of predeposit of duty and penalty under Section 11AC of the Central Excise Act, 1944.

Analysis:
The case involved an application for the waiver of predeposit of duty amounting to Rs.17.08 Crores and an equal penalty imposed under Section 11AC of the Central Excise Act, 1944. The dispute centered around the determination of the assessable value of goods sold by the Applicants directly from the factory gate to consignee/customers. The main contention was whether the freight charges incurred in transferring the goods from the factory to the Branch Offices should be included in the value of such goods. The Applicant claimed that the goods were sold on an ex-works basis, and the customers took constructive delivery of the goods at their factory. The Revenue argued that the sale/delivery did not happen at the factory gate, as payment and possession of goods were made at the Branch Offices. The Tribunal noted that there were two channels of sale mentioned in the Internal Price Circular of the Applicant, one from the factory gate and the other from the stockyard. Prima facie, it was observed that the customers took delivery of goods at the factory, supported by the issuance of Railways Receipt in the name of the customer on goods clearance from the factory. The Tribunal found that the freight charges incurred by the Applicant for ex-works sales were ultimately borne by the customer as a condition of sale. Therefore, the freight charges incurred on behalf of the buyers could not be included in the assessable value of goods sold on an ex-works basis. Consequently, the Tribunal allowed the waiver of all dues adjudged, stayed the recovery during the appeal's pendency, and granted the stay petition.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision regarding the waiver of predeposit of duty and penalty under the Central Excise Act, 1944.