MAJESTIC AUTO LTD. Vs. CCE

JUDGEMENT

(1.) In this appeal at the instance of the assessee the issue arising for consideration is whether equalized freight shown separately in the invoices are to be added to the assessable value of the goods, even though in the order impugned the Commissioner has taken the view that all the goods were being removed on payment of duty from the factory premises itself. On going through the show cause notice it will be seen that part of the goods are sold from the depots of the assessee at different places. In the impugned order the Commissioner has taken the view that the equalized freight charge is to be included while arriving at the assessable value of the goods. The correctness of the above view is challenged in this appeal.

(2.) The period involved in this appeal is from 1.7.2000 to 31.3.2001. In the common order passed by us in Appeal No. E/2324/2002 -NB(A) and connected cases we have held that in cases where sale price at the factory gate is available and if the three conditions referred under Clause (a) are satisfied the assessable value of the goods is the transaction value. The definition of the term 'transaction value' under Section 4(3)(d) would show that no other ingredient has to be added to the sale price at the factory gate for arriving at the assessable value. Determination of value by applying Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (hereinafter referred to as the Valuation Rules) would arise only in the case of excisable goods coming under Clause (b) of Sub -section (1) and, therefore, Rule 5 of the Valuation Rules has no application in the matter of computing the assessable value of goods in respect of which sale has taken place at the factory gate. We also held that under the above circumstances whether the freight charges are shown as actual or on equalized basis separately in the invoice is irrelevant. Freight charges cannot be added to the factory gate price for the purpose of arriving at the assessable value. We follow the above ratio and hold in the present appeal that in respect of the goods which have a factory gate price, freight and insurance charges cannot be added to it for arriving at the assessable value.

(3.) Now we will come to the question of computing the assessable value of the goods which were sold at the depot. Even in respect of such sales we are of the view that the freight and insurance expenses incurred for transporting the goods from the depot to the buyers' place and shown separately in the invoice whether in terms of actual amount, or on equalized basis, cannot be added for arriving at the assessable value for the following reasons.