TMI Blog2009 (6) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 - M/616-617/2009-WZB/C-I/EB - Dated:- 12-6-2009 - Justice R.M.S. Khandeparkar, President, S/Shri P.G. Chacko, Member (J) and A.K. Srivastava, Member (T) Shri Kishori Lal, SDR, for the Appellant. S/Shri M.H. Patil with T.C. Nair, Consultant Ms. Padmavati Patil, Advocates, for the Respondent. [Order per : P.G. Chacko, Member (J)].- The issue referred to this bench vide order no. M/1726-1727/08/C-II/EB dated 18-11-08 passed by the regular Bench is whether the expenses of loading of goods within the factory for clearance to a buyer are includable in the assessable value of the goods where such expenses are incurred by, or on behalf of, the buyer. 2. After examining the records, we find that the expenses of loading of the goods onto trucks within the respondent's factory premises and its transportation to, and unloading at, the buyers' premises were borne by the transporters who recovered such expenses from the buyers. In adjudication of two show-cause notices, which invoked the extended period of limitation under the proviso to Section 11A(1) of the Central Excise Act for demanding differential duty from the respondent, the original authority confirmed the demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L.T. 158 (Tri.-Chennai). He argued that if the principles laid down by the Supreme Court in Union of India Others v. Bombay Tyre International Ltd. [1983 (14) E.L.T. 1896] and followed in Assistant Collector v. MRF Ltd. Others [1987 (27) E.L.T. 553 (S.C.)] were to be applied in the present case, the expenses of loading of goods within the factory would become part of the assessable value. The ld. SDR also referred to the definition of "transaction value" given under Section 4(3)(d) with effect from 1-7-2000. He claimed that the expenses of loading of the goods within the factory for its outward transportation were incurred by the buyer on behalf of the assessee in connection with the sale of the goods and, therefore, such expenses should form part of the "transaction value" of the goods. It was argued that the loading charges constituted "amount charged" for "outward handling" of the goods and hence fell within the coverage of the definition of "transaction value". 5. According to the ld. Counsel, the cost of loading of goods within the factory, incurred by the buyer, was not includable in the assessable value of the goods for any period, whether prior to 1-7-2000 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions. This case is typical as the period of dispute (1-4-1996 to 30-11-2001) is partly pre-amendment and partly post-amendment with reference to the relevant provision of law and the excisable goods under valuation were removed from factory during the entire period. The referred issue, for a major part of this period (up to 30-6-2000), is governed by the provisions of Section 4 of the Central Excise Act as it stood prior to its amendment under Section 94 of the Finance Act, 2000, and, for the remaining period (from 1-7-2000), the issue will be governed by the new Section 4 of the Act. 7. In the case of Indian Oxygen Ltd. (supra), that company was manufacturing excisable goods in their factory at Visakhapatnam and selling some of these goods through their depot at Vijayawada. As the wholesale price of these goods was ascertainable at factory gate, the apex court held that the assessable value had to be computed in terms of Section 4(1)(a) read with Section 4(4)(d)(i) of the Act and, therefore, there was no question of adding the cost of transportation from the factory gate to the place of delivery (Vijayawada), to the wholesale price for the purpose of payment of duty. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue, then, on each removal of the goods, such value shall - (a) in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the transaction value; (b) in any other case, including the case where the goods are not sold, be the value determined in such manner as may be prescribed." (underlining supplied) 'Transaction value" referred to in Section 4(1)(a) has been defined vide Section 4(3)(d) as under:- (d) "transaction value" means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organisation expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court in the case of Bombay Tyre International Ltd. (supra), which is discernible from para 49 of the judgement in Bombay Tyre International, which reads: "It is apparent that for purposes of determining the "value", broadly speaking, both the old Section 4(a) and the new Section 4(1)(a) speak of the price for sale in the course of wholesale trade of an article for delivery at the time and place of removal, namely, the factory gate. Where the price contemplated under the old Section 4(a) or under the new Section 4(1)(a) is not ascertainable, the price is determined under the old Section 4(b) or the new Section 4(l)(b). Now, the price of an article is related to its value (using this term in a general sense), and into that value how poured several components, including those which have enriched its value and given to the article its marketability in the trade. Therefore, the expenses incurred on account of the several factors which have contributed to its value upto the date of sale, which apparently would be the date of delivery, are liable to be included. Consequently, where the sale is effected at the factory pate, expenses incurred by the assessee upto the date of delivery o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case. None of such expenses was mentioned as any ingredient of "normal price" under Section 4(1)(a). They were just deemed to be part of the "normal price" inasmuch as they were found to have contributed to the value of the goods upto the date of sale. To our mind, this is the principle laid down in Bombay Tyre International case. Further, we are also of the view that "outward handling charges" considered by the apex court in para 49 ibid would include the cost of loading of the goods in any interior part of the factory and the cost of its transportation upto the factory gate (place of removal as well as place of delivery/sale). "Handling" has not been defined. According to COLLINS DICTIONARY OF THE ENGLISH LANGUAGE, "handling" means "the process by which a commodity is packaged, transported etc." Undoubtedly, loading takes place between packaging and transportation and must come within the ambit of "handling". According to the same dictionary, "outward" means "directed towards the outside or exterior". Therefore, loading of goods for its transportation out of a factory can be called "outward handling" of the goods. We think that this view stands vindicated in Indian Oxygen cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee by reason of, or in connection with, the sale, whether payable at the time of the sale or at any other time. It would thus appear that the transaction value would depend on the terms of the contract of sale of excisable goods between the seller (assessee) and the buyer. The terms and conditions may be had or discerned from the purchase order, invoice and allied documents. Going by the terms "sale" and "purchase" vide Section 2(h) of the Act, we and that, where the possession of goods is transferred by the manufacturer to the buyer in the ordinary course of trade or business for cash or deferred payment or other valuable consideration, the same constitutes "sale" by the former and "purchase" by the latter. It may be useful, in this context to read Section 2(h): (h) "sale" and "purchase", with their grammatical variations and cognate expressions, mean any transfer of the possession of goods by one person to another in the ordinary course of trade or business for cash or deferred payment or other valuable consideration." If the buyer, in terms of the contract of sale, lifts the goods from the manufacturer's factory (whether or not by incurring the cost of outward handling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s relied on the Hon'ble Supreme Court's judgement in Indian Oxygen case and consequently the demand came to be confirmed against the assessee. The dispute ultimately came up before a regular Bench of this Tribunal, which, after distinguishing the case of Indian Oxygen (supra), held that any amount paid by the buyer to the contractor for transportation of gypsum from the assessee's premises to the cement factory would not form part of the transaction value of the goods. Although the case of Indian Oxygen could have been distinguished for better reasons, we must agree with the conclusion arrived at by tie Tribunal, which is to the effect that the expenses incurred for transporting gypsum from the assessee's factory by the contractor employed by the buyer should not form part of the transaction value under Section 4(1)(a) read with Section 4(3)(d). After examining the definition of "transaction value" under Section 4(3)(d), the Bench observed thus: "It is clear that only amounts which the buyer is liable to pay to the assessee are includable in transaction value. In the present case, the Revenue has not shown that any portion or all of amounts received by M/s. N.S. Shetty flows back t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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