2019 (4) TMI 1341 - AT - Central Excise

Valuation - inclusion of Freight in assessable value - Railway freight has been paid by the appellant and recovered separately - Place of removal - HELD THAT - In the case of disputed clearances, the goods were booked through Railways. The appellant has paid the Railway freight at the behest of the buyer, but recovered the same separately. The freight charges are never mentioned in the relevant invoices nor included in the price for payment of Central Excise duty. In such cases the question to be decided is the place of removal. From the Railway Receipts it is seen that it is made in favour of the buyer. Railway Receipt is one of the documents specified in Section 2(iv) of the Sale Goods Act as document of title to the Goods - As per Section 39 ibid, delivery of goods to the carrier is to be considered as delivery of goods to the buyer. In view of the above it is clear that the goods stand sold to the buyer at the factory gate. The factory being the place of removal, there is no mandate for adding freight charges. Scope of SCN - HELD THAT - The case decided by the adjudicating authority is entirely different from the case made out in the show cause notice issued on the basis of the C AG objection. Since the adjudicating authority has discussed and decided an issue which was not the subject matter of show cause notice - impugned order cannot be sustained. The issue is remanded back to the adjudicating authority for passing denovo order - appeal allowed by way of remand.

Summary

Issues involved: Dispute regarding inclusion of freight charges in the assessable value for payment of central excise duty on goods cleared ex-works.

Detailed Analysis:

1. Background: The appellant, engaged in manufacturing iron and steel products, faced a dispute regarding the central excise duty demand raised in a show cause notice dated 28.03.2001 following an audit by the Comptroller and Auditor General (CAG) for the period from October, 1996 to February, 2000.

2. Argument by Appellant: The appellant's representatives argued against including freight charges in the assessable value for excise duty payment on goods cleared ex-works. They referred to internal circulars and legal provisions to support their stance, emphasizing that the goods were sold at the factory gate, and hence, freight charges should not be added.

3. Department's Submission: The Department argued that based on the sale invoices and the process of goods delivery, it was evident that the sale was not at the factory gate, and thus, freight charges should be included in the assessable value.

4. Judicial Review: The Tribunal analyzed the dispute originating from CAG's objection related to goods cleared ex-works, where freight charges were collected separately. It was observed that the adjudicating authority incorrectly treated the case as pertaining to clearances from stockyards, leading to an erroneous decision not aligned with the show cause notice.

5. Decision: The Tribunal set aside the impugned order and remanded the issue to the adjudicating authority for a fresh decision, emphasizing the need for a denovo order based on the correct understanding of the dispute related to goods cleared ex-works. The appellant was granted an opportunity for representation during the denovo proceedings.

6. Conclusion: The judgment highlighted the importance of aligning the adjudication with the subject matter of the show cause notice, ensuring a fair and accurate resolution of disputes concerning the inclusion of freight charges in the assessable value for central excise duty payment on goods cleared ex-works.

This detailed analysis provides an overview of the legal judgment, focusing on the key arguments presented by both parties, the Tribunal's review of the dispute, and the ultimate decision to remand the issue for a fresh adjudication in line with the actual subject matter of the case.