2015 (8) TMI 392 - AT - Central Excise

Valuation of goods - whether cost of transportation from the palce of removal to the place of delivery is required to be added to the assessable value or not under Section 4 of the Central Excise Act, 1944 - Held that - The ratio laid down by the Apex court in the case of CCE, Noida vs. Accurate Meters Ltd. (2009 (3) TMI 1 - SUPREME COURT) is squarely applicable to the present proceedings and it has to be held that transportation charges cannot be added to the assessable value as the same are charged by the appellant under separate contracts. - Decided against Revenue.

Summary

Issues:
- Discharge of Central Excise duty with respect to freight
- Requirement to add transportation cost to assessable value under Section 4 of the Central Excise Act, 1944

Analysis:
1. Discharge of Central Excise duty with respect to freight:
- The appellant argued that Central Excise duty was not discharged on freight from the factory to the point of delivery in FOR destination contracts where transportation charges and transit insurance were borne by the manufacturer.
- The respondent contended that the sale of finished goods occurred at the factory gate, and the removal of goods took place upon clearance from the factory gate, even if transportation and insurance costs were covered by the manufacturer.
- Reference was made to Section 4 of the Central Excise Act, 1944, to support the argument that the element of freight from the place of removal to the place of delivery should not be added to the assessable value.

2. Requirement to add transportation cost to assessable value under Section 4 of the Central Excise Act, 1944:
- The issue revolved around whether the cost of transportation from the place of removal to the place of delivery should be included in the assessable value under Section 4 of the Central Excise Act, 1944.
- It was noted that the respondent had separate contracts for the sale of transformers and for their transportation. Reference was made to a previous case involving electricity meters where two separate contracts were in place for sale and transportation.
- The judgment highlighted the legal effect of delivery to a carrier by the seller under Section 39 of the Sale of Goods Act, emphasizing that delivery to the carrier is deemed as delivery to the buyer.
- Citing the precedent set by the Hon'ble Apex court in a similar case, it was concluded that transportation charges could not be added to the assessable value as they were covered under separate contracts.

3. Conclusion:
- The judgment dismissed the appeals filed by the Revenue and disposed of the Cross Objection filed by M/s Anand Transformers (P) Ltd., affirming that transportation charges could not be considered in determining the value of the goods supplied based on the established legal principles and contractual arrangements.
- The decision aligned with the precedent set by the Hon'ble Apex court, emphasizing the separation of contracts for sale and transportation and the legal implications of delivery to a carrier as delivery to the buyer.