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TMI Blog2006 (10) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... inal of the Joint Commissioner (Adj.) made on 18-2-2003 by which demand of Central Excise duty amounting to Rs. 7,67,165/- was confirmed under Section 11A of the Central Excise Act 1944, and penalty of the like amount was imposed on the appellant under Rule 173Q of the Rules of 1944 read with Section 11AC of the Act, with a direction to pay interest at the appropriate rate under Section 11AB of the Act. 3. The appellant was engaged in the manufacture of transformers falling under sub-heading No. 8504 of the Schedule to the Tariff Act. From the scrutiny of their records it transpired that the appellant had collected Rs. 35,98,220/- on account of equalized freight and Rs. 11,96,563/- by way of labour and painting charges which fact was neither declared by the appellant nor was the excise duty paid on these amounts. According to the Revenue, the amounts collected on account of equalized freight and labour and painting charges should have been included in the assessable value, in view of the amended provisions of Section 4 of the Central Excise Act, 1944 read with Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. In reply to the show cause notice, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s labour and painting charges to the tune of Rs. 11,96,563/-, the adjudicating authority, considering the submission of the assessee that they were following the same practice since the beginning and were not aware of the changes in the definition and that they had not suppressed any information with intent to evade duty, held that, in the light of the definition of transaction value w.e.f. 1-7-2000, labour and painting charges, received by the appellant from their customer during the period from July 2000 to November 2001 amounting to Rs. 11,96,563/-, were includible in the value of the goods for determination of excise duty. On the question of the penalty, it was held that the appellant-company was a well organized company working since many years and had full knowledge of the Act and Rules, and though the provisions defining transaction value came into force from 1-7-2000, they did not intentionally pay correct duty on removal of the finished goods. 4.2 The Appellate Commissioner after considering the contentions raised on behalf of the appellant and noticing that the appellants were under an obligation to deliver the goods to desired destinations at fixed freight, held that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aman reported in 2005 (185) E.L.T. 59 (T) = 2005 (70) RLT 389 (CESTAT-Mum.), in which it was submitted that profit on account of transportation which was a separate effort and contract, did not amount to additional consideration. The decision of the Apex Court in Baroda Electric Metric v. CCE reported in 1997 (94) E.L.T. 13 (S.C.), was cited for the proposition that excise duty was a tax on manufacture and not on profit made on transport charges, would be applicable. 6. The learned authorized representative for the department supported the reasoning and the findings of the authorities below contending that the appellant was not entitled to raise any issue which was not raised in reply to the show cause notice or before the adjudicating authority. It was submitted that in view of the definition of the expression transaction value which came into force from 1-7-2000, the freight charges which were fixed and not actual were includible in the assessable value of the goods sold. It was further submitted that no contention was ever raised in the reply to the show cause notice or before the adjudicating authority that labour and painting charges were recovered in respect of transforme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) of Section 4(1) of the Act except the circumstances in which the excisable goods were sold for delivery at a place other than the place of removal, then the value of such excisable goods shall be deemed to be the transaction value, excluding the actual cost of transportation from the place of removal up to the place of delivery of such excisable goods, provided the cost of transportation is to be charged to the buyer in addition to the price for the goods and shown separately in the invoice for such excisable goods. In the present case, the cost of transportation is shown separately in the invoice in addition to the price for the goods. However, admittedly, the cost of transportation shown is fixed cost per transformer irrespective of the actual cost of transportation incurred from the place of removal to the place of delivery of the transformer. Such a fixed cost of transportation irrespective of the distances to various destinations would not be the actual cost of transportation. Therefore, prima facie, since only actual cost of transportation could be excluded, exclusion of fixed cost of transportation irrespective of the distance is not contemplated by the provisions of Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of duty imposed on the appellant, such order of penalty was warranted by the provisions of Rule 173Q read with Section 11AC of the Act. Under Rule 173Q, it is inter alia, provided that when there is a contravention of the nature referred to in clause (a) or clause (b) or clause (bb) or clause (bbb) or clause (c) or clause (d) committed, manufacturer shall, inter alia, be liable to a penalty not exceeding three times the value of the excisable goods. Keeping in view this provision it is apparent that the penalty imposed equivalent to the duty confirmed was in no way harsh or excessive. 12. On the issue of financial hardship, admittedly, the applicant manufacturing transformer is a running concerned. Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 cannot be invoked by the appellant. No material is placed on record to show the actual financial condition of the applicant including assets and the expenditure incurred by the company. However, while making the order of pre-deposit, we are keeping in view the fact that the applicant is a sick but running unit. 13. Having regard the aforesaid facts and circumstances of the case, we are of the view that the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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