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TMI Blog2004 (6) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... customers from the factory they were adopting two patterns. First, delivery of the goods is made to the customers at the factory gate of the appellant. In such cases, their customers are bringing trucks to the factory and taking delivery of the goods from the factory. They are not collecting any freight/transit insurance charges from the customers as the goods are delivered at their factory gate itself. Simultaneously in some cases goods are transported by appellant up to their customers' premises and delivered to the customer at the customers' premises. It was alleged that in such cases the appellants were collecting the transportation charges from their customers. Therefore the said transportation charges had not been included in the assessable value of the goods for the purpose of payment of Central Excise duty. Therefore, the Department initiated proceedings for recovery of these sums, which had not been included for the years 1997-98, 1998-99, 1999-2000. In this regard the statements of the Managing Director, Manager (Excise), Deputy General Manager (Accounts), Senior Accountant, Deputy Manager and Officer (Taxation) has been relied. The transport agreement has also been exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice (Notfn. No. 13/2000-C.E., dtd. 1-3-2000). Regarding penalty, the ld. Advocate stated that mens rea has not been established. In this regard, the ld. Advocate placed reliance on Hon'ble Tribunal's judgment reported in 1999 (32) RLT 115 (CEGAT). He further stated in the case under reference, Section 11AC of Central Excise Act, 1944 cannot be invoked. In the end, he stated that they would be submitting written submission within a fortnight. Subsequently, JVSL submitted their additional submission vide their letter dtd. 14-1-2002." The Commissioner after detailed examination of the case and statements noted that the cost of transportation which the assessee had recovered from their buyers for delivery of goods at the buyer's premises and the insurance has to be included in the assessable value for the purpose of excise. He also held that the larger period was invocable as there was suppression of facts in the matter. He also upheld the imposition of penalty of like sum of duty required to have been paid. 2. We have heard ld. Advocate Shri K.S. Ravi Shankar and ld. SDR, Shri P.M. Saleem. 3. Ld. Counsel submitted that it is a well settled proposition of law that in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, he submitted that once the sale has been made at the factory gate by issue of lorry receipt and the goods had been taken delivery of by the driver with all the consequences of its shortages, etc., then the transportation charges effected thereafter cannot be added to the assessable value. He relied on the judgment of the Apex Court in the case of Indian Oxygen Ltd. v. CCE [1988 (36) E.L.T. 723 (S.C.)] wherein it has been held that when ex-factory price is ascertainable then transportation is not to be added in the assessable value. Likewise he relied on the judgment rendered by the Tribunal in the case of Associates Strips Ltd. v. CCE, New Delhi [2002 (143) E.L.T. 131 (Tri.-Del.)] wherein also it has been held that freight and insurance charges and transportation charges effected after the removal of goods from the factory and when the sale has been effected in the factory then the sale is not includible in the assessable value. He pointed out that this judgment has been affirmed by the Apex Court in the case of Escorts JCB Ltd. v. CCE [2002 (146) E.L.T. 31]. He pointed out that ex-factory sales had been effected in the present case at the factory gate in terms of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of Sale of Goods Act to strengthen his case that once the goods have been delivered to the transporter than the liability shifts on the consignee. He also referred to the various declarations filed from time to time and also the price list wherein they had disclosed that the fact of collecting the transportation and freight charges from customers and therefore it is his submission that there was no suppression in the matter and hence larger period is not invocable. 4. Ld. SDR strongly argued for upholding the Commissioner's order. He submitted that the delivery in the present case was effected up to the customers' place. The price and transportation charges was to have been effected at the customers' place therefore, he submits that in view of the admissions made of the appellants with regard to taking the responsibility to transfer the goods up to the customers' place, the charges have been rightly included in the assessable value. 5. On a careful consideration of the submissions made and perusal of the entire documents relied it is very clear on the rulings of the Supreme Court relied that when the sale has been effected at factory gate then the transportation and fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods are deemed to have been delivered to the customer when the goods were handed over to the transporter. Even in terms of Sec. 2(b) of the Central Excise Act, the transfer of the possession of goods by one person to another in the ordinary course of trade or business in cash or deferred payment and other valuable consideration is deemed to be sale and purchase. In the case of CCE v. Purisons Engineers (P) Ltd. [2002 (141) E.L.T. 672] it has been held that delivery to Railways for transport amounts to delivery to the customer. It has been held that since the Railways receipt shows that the consignee is the buyer the sale takes place and the goods are handed over to the buyers and there is no reasons to hold that the place of removal of goods under the Section 4 of the Act is the outstation buyer premises. As has been noted from the judgment of the Indian Oxygen Ltd. v. CCE (supra) it has been held that once ex-factory price is ascertained, ex-factory prices shall be the basis for determination of value under the Sec. 4 of the Central Excise Act then the question of transportation charges to be added in the assessable value has been held to become irrelevant. In view of the legal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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