2021 (8) TMI 759 - AT - Central Excise

Valuation - inclusion of assessable value of freight collected in excess to the actual amount spent - HELD THAT - In the instant case, it is a fact that the price of transportation contracted is not always in excess of the actual amount spent on transportation. Sometimes it is less and other times it is more. However, the demand has been raised by selecting entries where the amount collected is higher than the actual amount spent. In the instant case too a perusal of the contracts produced shows that it contains separate clauses for the cost of goods sold and the cost of transportation. Also, the representative contract produced by them in respect of Rajasthan Rajya Vidyut Prasaran Nigam Limited in para 5 thereof contains details of various tests to be conducted by the buyer. The tests include Stage Inspection, Routine Tests, Type Tests, Test for Nitrogen Inspection, Fire Prevention and Extinguishing System. The dispatch of goods is also subject to approval of buyer after testing. The dispatch instruction prescribes in para 7 of the contract prescribe the manner in which the dispatch clearance will be granted by the buyer. Following the decision in case of COMMISSIONER OF CENTRAL EXCISE, NOIDA VERSUS M/S. ACCURATE METERS LTD. 2009 (3) TMI 1 - SUPREME COURT and ASHOK TRANSFORMERS P LTD. VERSUS C.C.E. S.T. -SURAT-I 2019 (11) TMI 831 - CESTAT AHMEDABAD , demand set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against demand of Central Excise duty, interest, and penalty for including excess freight in assessable value.

Analysis:
The appeal involved a dispute regarding the inclusion of excess freight collected over the actual amount spent in the assessable value by M/s Transformers & Rectifiers (India) Limited. The appellant argued that the contracts with buyers included predetermined prices for transportation, which sometimes differed from the actual transportation cost. The Revenue sought to include the excess freight in the assessable value. The counsel for the appellant relied on various court decisions, including the Hon'ble Apex Court's decision in Accurate Meters Limited. The Tribunal had previously granted relief in a similar case, Ashok Transformers Private Limited.

The Tribunal examined the facts and noted that the price of transportation contracted was not always higher than the actual amount spent. The Revenue had selected instances where the collected amount exceeded the actual cost. Citing the Accurate Meters Limited case, the Tribunal emphasized the importance of delivery terms in contracts. The Tribunal highlighted the legal effect of delivery to a carrier under the Sale of Goods Act, emphasizing that delivery to the carrier is deemed delivery to the buyer. The Tribunal found similarities with the Accurate Meters case and the case of Ashok Transformers Pvt. Ltd., where relief was granted. Consequently, the Tribunal set aside the impugned order and allowed the appeals.

In conclusion, the Tribunal's decision was based on the interpretation of delivery terms in contracts and the legal effect of delivery to a carrier under the Sale of Goods Act. By applying the principles established in the Accurate Meters case and considering the factual similarities, the Tribunal granted relief to the appellant, M/s Transformers & Rectifiers (India) Limited, by setting aside the impugned order.