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PJ/CASE LAW/2015-16/2718

Whether transportation charges from factory to godown are includible in assessable value?

Case:-COMMISSIONER OF C. EX., BELAPUR VERSUSSHARP BATTERIES & ALLIES INDS. LTD.
 
Citation:-2015 (318) E.L.T. 506 (Tri. - Mumbai)
 
Brief facts:- Revenue is in appeal against the impugned order wherein the ld. Commissioner dropped the proceedings against the respondent. The brief facts of the case are that the respondents are manufacturers of water storage tank of various capacities. After manufacturing these water storage tanks in their factory, some of tanks are transported to their Ghatkopar godown and the same are cleared directly to the customers. For the storage tank cleared directly from the factory, the transporter is charging 30p/litre of the capacity of the storage tank as transportation charges. The tanks cleared from the godown, the transporter is charging 25p/litre of capacity of the storage from the customer as transportation charges. No transportation charges is being charged by the transporter for the tanks transported from the factory to the godown. In rare cases, where tanks were transported by the customers themselves from the godown, the respondent charges 25p/litre of the capacity of the storage tank from the customer on account of transportation from factory to their godown. In these set of facts, the Revenue sought to demand duty on the transportation charges collected by the respondent on account of transportation of storage tank from factory to godown. Therefore, a show cause notice was issued to the respondent and proceedings were initiated. The show cause notice was adjudicated. The Adjudicating Authority dropped the demand against the respondent. Aggrieved from the said order, Revenue is in appeal.
 
Appellant’s contention:- The ld. AR submits that, in the cases where customer is being charged of transportation charges from factory to godown, the transportation charges are to be included in the assessable value as the transporter is the sister concerns of the respondent themselves. Therefore, in the guise of transportation charges the respondent is collecting the money over and above the transaction value to avoid evading payment of Central Excise duty on the transportation charges which are required to be included in the assessable value of the final product. In these circumstances, the impugned order is required to be set aside.
 
Respondent’s contention:- The ld. Counsel appearing on behalf of the respondent submits that in this case they are filing the price list regularly and sale price of the final product is same if it is cleared from the factory or from the godown. In rare cases, where the buyer takes the delivery of the storage tank themselves from the godown, they charge the transportation charges for transportation of tanks from the factory to the godown from the buyer which one paid by the buyer to the transporter directly. In these circumstances, they are not required to pay any duty on this transportation charges. He further submits that the dispute period is May 1997 to December 2001 and the show cause notice came to be issued on 30-5-2002. Therefore, the extended period of limitation is not invocable. The respondent has also filed a Cross Objection to the appeal of the Revenue.
 
Reasoning of judgement:- In this case the short issue involved is that whether the transportation charges for transportation of storage tanks from factory to godown in the cases where buyer takes the delivery of the final product i.e. storage tank from the godown of the respondent are includible in the assessable value or not?
 
As the goods have been cleared to the customers from their godown by the respondent, therefore, whatever transportation charges being paid for transportation of the goods from the factory to the godown are includible in the assessable value. In these circumstances, it is immaterial whom so ever has paid the transportation charges, the same are includible in the assessable value as the goods have been cleared to the customers from the godown only. Therefore, the impugned order is not sustainable on merits. They further find that the respondent has raised the issue of limitation but while filing their price list, they have not stated the fact that in rare cases they are charging transportation charges for the transportation of the goods from the factory to godown when the customer takes the delivery from the godown. As the facts were not made known to the department, therefore extended period was rightly invoked by the Revenue. Therefore, they hold that show cause notice was issued within time.
With these observations, impugned order is set aside. The matter is sent back to the Adjudicating Authority for quantification of the actual demand to be recovered from the respondent as observed hereinabove. The Cross objection is also disposed of in the above terms.
 
Decision:-Appeal allowed
 
Comment:- The analogy of the case is that as the goods were cleared to customers from godown, the transportation charges from factory to godown were includible in the assessable value for discharging excise duty.
 
Prepared by:- Monika Tak

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