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TMI Blog2017 (8) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... ansaction value and, therefore, valuation under Section 4(1)(a) and depot not being place of removal is to be adopted and transportation charges need not be included. Reliance placed in the case of Indian Oil Corporation [2015 (3) TMI 1158 - CESTAT MUMBAI], where it was held that the transportation charges/unloading charges are includable in the assessable value. Extended period of limitation - Held that: - it is abundantly clear that there was much confusion regarding the issue whether transportation charges are to be included or not. The same was set right by the amendment brought to the definition of 'place of removal' with effect from 14.05.2003 - the appellants cannot be said to be guilty of suppression of facts with intent to evade payment of duty - appellants succeed on the issue of limitation. The demand beyond the normal period is set aside on the ground of being time-barred - appeal allowed - decided partly in favor of appellant. X X X X Extracts X X X X X X X X Extracts X X X X ..... ,685 27,141 TOTAL 25,90,734 57,456 3. The Learned Counsel for appellants submitted that the goods were stock transferred from the factory to the depot and consignment agent at Bangalore, from where goods were sold. At the time of stock transfer, they paid excise duty. The freight charge from the factory to the depot/Consignment agent was shown separately in the stock transfer invoice. Appellants did not pay the excise duty on the freight charges. Periodically, the appellants paid differential excise duty for the difference between the value shown in the stock transfer invoice and the sale invoice from depot/consignment agent excluding freight charges. Appellant did not include the cost of freight from factory to depot/consignment agent premises because in terms of Rule 5 of the Central Excise Valuation Rules, 2000, the freight from factory is not includable in the assessable value. The appellants had disclosed in the Declaration dated 12.04.2000 filed under Rule 173-C the following: (i) The goods were sold through depots / consignment agents; (ii) In case of stock transfer, difference in sale value of goods will be submitted periodically as and when sold; and (iii) Transpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 of Central Excise Valuation Rules, 2000, contending that goods are sold at depot/consignment agent and not at factory gate. The Learned Counsel has explained that during the period prior to 01.07.2000 the factory, depot and consignment agent premises were all recognized as place of removal as defined under Rule 4 and appellant had filed declarations to this effect. However, during this time appellants was subjected to compounded levy. Such levy was withdrawn with effect from 01.04.2000. The new section 4 (Transaction Value) was introduced with effect from 01.07.2000 which defined the 'place of removal' as factory gate alone. Later, with effect from 14.05.2003 the definition of place of removal was restored to include depot as well as consignment agent premises. That for the period 01.07.2000 to 14.05.2003, as per law the place of removal is only factory gate and when goods are sold at place other than factory gate Rule 5 of Central Excise Rules, 2000 would apply. This Rule provides for deduction of freight and other charges from assessable value. The department has adopted Rule 7 of Central Excise Rules which does not make any provision for exclusion of freight charges. The r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re to be sold after their clearance from the factory and, from where such goods are removed; "Place of removal"-during the disputed period [7/2000 to 2/2003] (i) a factory or any other place or premises of production or manufacture of excisable goods; (ii) A warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty, from where such goods are removed "Place of removal" definition [with effect from 14.05.2003] (i) a factory or any other place or premises of production or manufacture of the excisable goods; (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty; and (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory from where such goods are removed. 8. The appellants contend a combined reading of definition of 'place of removal' during the disputed period (7/2000 to 2/2003) and Rule 5 would go to show that when the excisable goods are sold at a place other than the place of removal, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal in the case of VIP Industries Ltd (supra) and also the Madras Refineries Ltd case (supra) clearly support this view, Once the duty demand is confirmed, the interest liability is automatic and consequential and has to be confirmed. 15.2 The dispute is relating to the valuation of such stock transfer. The appellant was selling the goods from the depot at a price which was higher than that charged in the warehouse. For sale from the depot, the appellant was collecting "other charges" at the rate of ₹ 172.54 per kilolitre. These charges were meant to recover the additional cost that the appellant was incurring in transporting the goods from warehouse to depot, storing the goods in the depot and for the investment made in the storage tanks and pipelines upto the jetties. The dispute or the point of difference is whether this amount will form part of the assessable value or not. 17. It is to be noted that clause (iii) in above mentioned Section 4(3)(c) was added with effect from 14-5-2003. The effect of the said change in the present case is that with effect from 14-5-2003, the depot itself becomes the place of removal while before 14-5-2003 tile place of remova ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The appellants cleared goods at the factory gate as well as from the depots. In respect of the goods sold at the factory gate, the appellants paid duty on the price at which the goods are sold at the factory. For the period after September 1996, the premises of the Consignment Agents were also declared as place of removal'. The appellants paid duty on the basis of market price prevailing at the factory gate. After the goods are sold by the Consignment Agents, the appellants received the details of the actual realization made by the Consignment Agents and from such details, arrived at the differential value and paid the differential duty. While Calculating the duty, the appellants did not reduce the cost of transportation from the factory to the premises of the Consignment Agents, as the premises of the Consignment Agents were also considered as 'place of removal'. During the period from 1-9-1997 to 31-3-2000, the goods manufactured by the appellants were brought under the Compounded Levy Scheme in terms of Section 3A and, therefore, the value of the goods had no relevance for payment of duty. W.e.f. 1-4-2000, the appellants arrived at a tentative value for the paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1)(a) price. In respect of sales made from depot/Consignment Agent's premises, there is nothing wrong in reducing the price by an amount equal to the cost of transportation from the factory gate to the depot, as the depot was not a place of removal prior to 14-5-2003. It is in consonance with Rule 7 read with Rule 5 of the Central Excise Valuation Rules. During the period when the depot is also a place of removal, the appellants have stated that they had paid the differential duty demanded on account of the cost of transportation. The appellants have made another point that the department, while calculating the value {or depot sales, has adopted the maximum price available on a date prior to the date of sale or after the sale instead of arriving at the normal Transaction Value in terms of Rule 7 as clarified by the Board by taking the value at which the greatest aggregate quantity of the goods has been sold on a date prior to the date of clearance from the factory gate. Further, the greatest aggregate quantity is the largest quantity of identical goods sold on a particular day. If the department had taken the highest price available after the date of clearance, it is not correc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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