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TMI Blog2010 (8) TMI 790X X X X Extracts X X X X X X X X Extracts X X X X ..... e noted that the transportation of the vehicles was undertaken in terms of collateral agreements between the appellant and the transporters. In the invoice issued to the dealer, the appellant showed freight separately, which was paid by the buyer. The freight so paid by the buyer to the appellant was pre-determined, considering numerous factors. We are told that the cars were transported in trucks of various capacities and that, at times, the truck might not be carrying cars of its full capacity and also (by way of an illustration) that the truck laden with cars to its full capacity at the factory gate (Pune) might be transporting some of the cars to a dealer at Bangalore and the remaining cars to a dealer at Cochin. These and other factual circumstances are said to have been taken into account in determining the freight to be shown in the invoices to be recovered from the buyers. In this process, in some cases, the freight collected from the dealer turned out to be more than the actual cost of transportation incurred by the assessee, that is the amount paid to the transporter. In other cases, the freight collected by the assessee from the dealer was less than what was paid by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present valuation issue in favour of the appellant. The learned Counsel has also relied on the Tribunal's decision in Kothari Sugar & Chemicals v. Commissioner of Central Excise - 2005 (192) E.L.T. 447 (Tri-Chennai) and TCP Ltd. v. Commissioner of Central Excise - 2008 (230) E.L.T. 181 (Tri-Chennai), wherein this Tribunal followed Baroda Electric Meters case (supra) and set aside demands of duty raised on excess freight collected by the assessees from their customers in respect of excisable goods sold at factory gate. According to the learned Counsel, this appeal is liable to be allowed in view of the said case law. 3. The learned Special Consultant for the Revenue has vehemently contested the above arguments. According to him, the decision of the Hon'ble Supreme Court in Baroda Electric Meters case (supra) is the relevant only for the period prior to 1-7-2000, the date on which the concept of 'transaction value' replaced that of normal (deemed) value. It is argued that the view taken in Baroda Electric Meters case (supra) may not be valid for the period from 1-7-2000. For the same reason, the learned Consultant has sought to distinguish Kothari Sugar & Chemicals case ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alers towards freight were separately shown in the relevant invoices. Again it is not in dispute that these amounts were more than the respective costs of transportation paid by the assessee to the transporters. The impugned demand of duty is on the differential amount, which, according to the Revenue, is not "cost of transportation' but an "additional consideration" paid by the buyer to the seller. In this connection, the Revenue would rely on Rules 5 and 6 of the Central Excise Valuation Rules, 2000. Rule 5, with its explanation, reads as follows : - "Where any excisable goods are sold in the circumstances specified in clause (a) of sub-section (1) of section 4 of the Act except the circumstances in which the excisable goods are 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 cost of transportation from the place of removal upto the place of delivery of such excisable goods. Explanation 1.- "Cost of transportation" includes - (i) the actual cost of transportation; and (ii) in case where freight is averaged, the cost of transportation calculated in accordan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this definition, we find that "transaction value" includes, in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with, the sale, whether payable at the time of the sale or at any other time. The definition has an inclusive portion also but the same has not been pressed into service in this case. The question to be considered in the instant case is whether the excess freight collected by the assessee from their dealers would qualify to be "an amount that buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with, the sale." 6. We have perused the agreement between the assessee and one of the dealers and we find that the sale of goods took place at factory gate and the dealer was liable to take delivery of the goods at factory gate. In other words, the dealer was liable to incur the cost of transportation from the factory gate to his own premises. It is also on record that the cost of transportation was initially incurred by the assessee and subsequently recovered from the buyer. What was actually paid by the assessee to the transporter will, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement. If any excess amount was collected by the assessee from a dealer towards freight, it cannot be considered to be an amount collected by the assessee by a reason of, or in connection with, the sale of the goods. It would be an amount collected by the assessee in connection with the transportation of the goods. The nexus is not between the amount and the sale of the goods but between the amount and the transportation. This aspect was noted by their lordships in the case of Baroda Electric Meters (supra) and it was held that any excess amount collected by the assessee from their customers would be a profit made on transportation and hence such amount would not be includable in the assessable value of the goods since the duty of excise was a tax on manufacture and not on any profit made on transportation. The character of the excess amount collected by the assessee from their dealers stands determined vide Baroda Electric Meters (supra) and therefore, in our considered view, the Revenue is precluded in the present case from contending that such amount represents additional consideration flowing directly or indirectly from buyer to the seller. We are also of the view that the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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