Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Missing seized records must be considered while testing ITC claim; duplicate GST demands ordered corrected: Delhi High Court. *  GST appeal can’t be rejected without addressing taxpayer’s grounds: Allahabad High Court. *  Surplus IGST credit can offset CGST, SGST shortfall: GSTAT. *  GST refund can’t be denied when cancelled airfares are returned with tax: GSTAT. *  3 Hearing notices issued within 2 minutes: Gujarat High Court flags portal flaw, seeks report. *  GSTR-9, GSTR-9C filing for FY 2025-26 enabled; pending GSTR-1 and GSTR-3B must be filed first. *  Dupattas are exempt fabrics, can’t be taxed as fibres at 4%: Madras High Court. *  Full transitional credit allowed on capital goods received after GST rollout: GSTAT denies Rs. 6.99 lakh export duty credit. *  GST return mismatch alone can’t justify fraud proceedings: GSTAT orders fresh adjudication under section 73. *  Supplier found non-existent later can’t alone justify input tax credit denial: GSTAT. *  GST interest stops once tax reaches government account, can’t run until return filing: GSTAT. *  Cancelled flat booking- GST refund can’t be denied without excluding COVID period from limitation: GSTAT. *  India notifies rules of origin for India–New Zealand FTA. *  Incomplete E-bike kits classifiable as complete vehicles, but not eligible for CKD duty concession: CESTAT. *  Same GST rate on main input and output can’t by itself bar inverted duty refund: GSTAT. *  Unjust enrichment doesn’t apply to customs refunds from assessments finalised before July 13, 2006: Gujarat High Court. *  CENVAT credit can’t be denied solely because plant And machinery are embedded in earth: Karnataka High Court. *  DFIA exports ineligible for RoDTEP benefits; customs directs repayment with applicable interest. *  Second E-Way bill alone doesn’t prove another supply: GSTAT. *  Bail denied in Rs. 1.19 crore fake GST refund case over risk of accused absconding again: Punjab and Haryana High Court. *  GST registration can be restored after revocation deadline if outstanding dues are paid: Gauhati High Court. *  Multiple GST proceedings over same suppliers: Calcutta High Court directs dept. to share findings for adjudication. *  E-Governance portal services not OIDAR, fixed deposit interest not taxable: CESTAT. *  Rs. 500 Stamp duty required on authority letters for CAs, CMA and GST practitioners in Pune GST division.  *  Rs. 1.10 crore GST refund must be paid in cash after business closure: Allahabad High Court. *  Godown rent attracts 18% GST even when used exclusively for exempt agricultural warehousing: AAR. *  GST portal launches "Multi-State Registration" facility: one master TRN for registration applications across multiple States/UTs. *  RoDTEP scheme extended till 31st December, 2026.  *  Mere disagreement with order can’t override Rs. 20 lakh appeal limit: GSTAT. *  Customs interest can’t be backdated before confiscation liability is determined; nearly 8 year period excluded: Delhi High Court.
Subject News *  GST summons: anticipatory bail maintainable without arrest order, but relief denied in evasion case: Allahabad High Court. *  GST Appeal can’t be decided without hearing taxpayer’s objections to fresh evidence: Allahabad High Court. *  GST ITC can’t be reversed merely because supplier grants discount without reducing tax liability: GSTAT. *  Mere quoting of GST provision is not a valid charge: GSTAT quashes ITC denial. *  Personal hearing mandatory before adverse GST order, even without taxpayer’s request: Rajasthan High Court. *  Parallel bail pleas without full disclosure amount to abuse of process Rs. 43.08 crore GST case sent for fresh hearing: Supreme Court. *  GST refund based on unchallenged advance ruling can’t be recovered using later circular: GSTAT. *  Payment of GST alone doesn’t end interest and penalty liability when tax and interest remain unpaid beyond 30 days of notice: GSTAT. *  GST demand over builders’ 80% procurement rule requires reasoned adjudication: GSTAT. *  Eligible ITC doesn’t automatically entitle taxpayers to compensation cess refund on domestic sales: GSTAT. *  GST confiscation order passed before reply deadline invalid: GSTAT. *  GST interest can’t be retained after tax refund on delayed export receipts: Punjab & Haryana High Court. *  GST appeal can’t be dismissed over pre-deposit shortfall without opportunity To respond: Bombay High Court. *  DGGI SCN can’t be challenged before reply and adjudication:Chhattisgarh High Court. *  GST input tax credit can’t be denied solely due to supplier’s retrospective registration cancellation: GSTAT. *  GST notice must explain fraud allegations; merely repeating section 74 Is not enough:  Himachal Pradesh High Court. *  Audit detection alone can’t justify GST fraud penalty; specific suppression must be proved: GSTAT. *  GST order uploaded only under ‘Additional Notices’ tab without separate intimation set aside: Calcutta High Court. *  Service Tax appeal can’t be rejected for missing pre-deposit proof when payment is already recorded: CESTAT. *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty.  

Comments

Print   |    |  Comment

PJ/Case Laws/2011-12/1360

Valuation of Goods - inclusion of transport, insurance & handling charges of paper reels

Case: COMMISSIONER OF C. EX., PANCHKULA versus BALLARPUR INDUSTRIES LTD
 
Citation: 2011 (271) E.L.T. 268 (Tri. - Del.)
 
Issue:- Valuation of paper reels cleared from factory on payment of duty to cutting centres for cutting into sheets which further cleared to depot for sale – whether cost of transportation to cutting centres and insurance charges & handling charges includible in value of paper reels?
 
Brief Facts:- Respondent are engaged in manufacture of paper and paper­board of different varieties chargeable to Central Excise duty under Chapter 48 of the Central Excise Tariff. They clear cut paper sheets as well as paper in reels. They sell the same at the factory gate as well as through depots. Besides this, some quantity of paper reels are cleared on pay­ment of duty to cutting centres for cutting on job work basis and from there, the cut paper sheets are transferred to depot from where the same are sold.
 
The dis­pute in this case is about the value of paper reels cleared to cutting centres, which after cutting into sheets were sold from depot. The period of dispute in these appeals is from 1-7-98 to 31-3-03. Department alleged that in respect of reels so cleared to cutting centres an from their to depots, the charges for freight and insurance from cutting to Depot and handling at the cutting centre had not been included in the assessable value.
 
The Original Authority confirmed the demand of duty with interest and imposed penalties. The ground taken was that the said transportation and insurance charges were required to be included as per the judgment of Supreme Court in Prabhat Zarda Factory Limited v/s CCE [2002 (146) ELT 497 (SC)].  
 
In appeal, the Commissioner (Ap­peals) set aside the orders of the Original Adju­dicating Authority relying upon the judgment of the Tribunal in the appellant's own case vide Final Order No. 607/2002-A, dated 3-12-2002 wherein it has been held that the condition in which the goods are cleared from the factory at the ma­terial time is the basis for determination of value under Section 4 of the Central Excise Act, 1944 and not the condition in which the goods are finally sold to the customers from the job worker cutters/depots after carrying out the further operations. The Commissioner (Appeals), therefore, held that the handling charges incurred at the cutting centres are not to be included in the assessable value.
 
Against these orders, appeals have been filed by Revenue.
 
Appellant’s Contention:- Revenue's contention is that the paper in reels had been cleared to cutting centres for conversation into sheets and from there the same had been sent to the depot from where the cut paper in sheets had been sold, that in terms of judgment of Supreme Court in the case of Prabhat Zarda Factory Limited v. CCE the expenses incurred up to the depot are to be included in the assessable value, and that the impugned order of the Commissioner (Appeal) is contrary to the law laid down in the case of Prabhat Zarda Factory Limited v. CCE by the Supreme Court.          
 
Respondent’s Contention:- Assessee pleaded that what had been cleared from the factory was paper reels and the same after being cut into sheets at the cutting centres had been sold from the depot, that duty had been paid on the paper reels at the time of their clearance from the fac­tory on the price of the paper reels prevailing at that time at the depot, that the freight, handling charges etc. are already included in the selling price of the pa­per reels, that this very issue in the respondent's own case had been decided by the Tribunal vide final order No. 607/2002-A, dated 3-12-2002, that Govern­ment's SLP to the Supreme Court, against this judgment of the Tribunal has been dismissed by the Supreme Court vide order dated 16-7-2010, That since what had been cleared from the factory was the paper reels and the duty had been paid on the paper reels at the price of paper reels prevailing at the de­pot at the time of removal, there is no question of addition of the expenses of freight, insurance and handling incurred in sending the cut paper from the cut­ting centres to depot and that in view of this, there is no infirmity in the im­pugned order.
 
Reasoning of Judgment:- The Tribunal noted that assessee were clearing their goods in various routes.
 
The Tribunal relied upon the judgment in case of Union of India v. J.G. Glass Industries Ltd [1998 (97) E.L.T. 5 (S.C.)] wherein the dispute was as to whether print­ing/decoration of Glass bottles amounts to manufacture and also whether the printing/decoration charges would be includible in the assessable value of the glass bottles, if the printing and decoration is done in the same factory in which the glass bottles are manufactured.
 
The Supreme Court in that case while holding that printing or decoration on plain glass bottles would not amount to manufacture, in Para 23 held that when the printing/decoration is done in the same factory in which the plain bottles are manufactured, the duty would be payable on the value of the printed/decorated bottles including the printing/decoration charges. The Apex Court also held that if only the plain glass bot­tles are cleared from the factory and printing/decoration is done outside, duty would be chargeable only on value of the plain glass bottles and print­ing/decoration charges would not be includible.
 
It was noted that the ratio of this judgment of the Apex Court was that when the duty on any goods is on ad valorem basis, the value of the goods adopted has to be the value of the goods in the form in which the same had been cleared at the time of removal.
 
In the present case what had been cleared from the factory was the paper reels, the Revenue is comparing the value of the paper reels with the selling price of the cut paper at the depot which is not correct. Since, the price of paper reels at the depot at the time of removal was available and the duty had been paid only on that price, there is no short payment of duty.
 
The judgment of the Supreme Court in the case of Prabhat Zarda Factory Limited v. CCE  is not applicable to the facts of this case. The Tribunal took note of the order passed in assessee’s own case by the Tribunal dated 03.12.2002 and that he appeal of deparment against the same was dismissed by the Tribunal. Accordingly, it was held that there is no infirmity in order of Commissioner (Appeal). 
 
Decision:- Appeals disallowed.
 
Comment:- This is very important decision wherein it is held that the price is to be paid on the goods in which condition they are removed from the factory. If any processing is done at depot before selling the goods at depot then price available at depot will not be made applicable to factory price. This is due to the fact that the goods are not sold in the same condition at depot. Hence the valuation is to be done on comparable goods method.  

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com