ORDER
G.A. Brahma Deva, Member (J)
1. These are four appeals filed by the Department involving a common issue and therefore, they are clubbed together and are being disposed of by this common order.
2. The point to be considered in this case is whether the following items are to be included in determining the assessable value of the goods manufactured and cleared by the respondents :-
1. Transport charges
2. Handling and
3. Service charges.
3. Shri Vijay Singh, ld. SDR arguing for the Revenue submitted that he has nothing to say in respect of transportation charges since it is a post manufacturing expenses but as regards handling charges and service charges, they are to be included in the assessable value and in support of his contention, he reiterated the grounds taken by the Department in the Grounds of Appeal.
4. Shri R.K. Habbu, ld. Advocate appearing for the respondents submitted that since ex-factory gate price is assessable as can be seen from the records, the question of adding these expenses do not arise. Referring to the decision of the Hon’ble Supreme Court in the case of Indian Oxygen -1988 (36) E.L.T. 723 (S.C.), he submitted that as long as ex-factory price is ascertainable that should be the basis in determining the assessable value and other expenses to be ignored. He also submitted that the issue involved in this case with reference to these items has been properly considered by the ld. Collector (Appeals), Central Excise and has given a clear finding as can be seen from last para of the order :-
“Various contentions made by the appellants in the appeal petitions as well as at the time of personal hearing have been considered. What the appellants are recovering through debit notes are transport charges, charges for labours provided to go with the trucks to stock the goods properly at the buyer’s godowns, interest on credit – sales and charges to recover the amount in respect of sales made on credit. In this respect, I find considerable force in the appellant’s arguments made in the appeal petitions. What the appellants are recovering on account of service charges are the expenses made for the recovery of amount due to them from their customers on account of sales made on credit. Such expenses cannot form the part of assessable value. They are also recovering interest on credit sales. The appellants shall be entitled for the same, as the assessable value of the goods under Section 4(1)(a) of the Act, is based on wholesale cash price of the goods delivered for sales at the factory gate. As regards handling charges, it is observed that there are incurred on account of labourers provided with trucks, i.e. for transportation of goods from factory gate to buyer’s godowns for un-loading of goods at buyers’ godown and stocking the same in their godown after the sale of the goods at factory gate. These are the expenses, which are to be borne in fact by the customers. Had the customers/buyers provided their own transports and labourers for taking delivery of the goods at the factory gate, these expenses would not have been recovered by the appellants from the buyers. It is quite clear that since the appellants are arranging for transport and labourers transportation of goods after sale at the factory gate, they recover these expenses separately from the buyers through debit notes. It may please be noted herein that the expenses on account of handling charges incurred within the factory gate are not deductible from the assessable value, nor they can be recovered separately on debit-notes, in fact, the appellants shalll not be entitled for such deductions as it is quite clear from the impugned order and the submissions made in the appeal petitions that these are the charges on account of handling of goods after sales at the factory gate and recovered for the purpose of delivery of goods (unloading and stocking) at buyers’ godowns and not the appellants’ godowns. Therefore, the transportation charges as well as such handling charges cannot become part of assessable value of the goods in question. I, therefore, hold that amounts collected through debit notes on account of transportation charges, handling charges, interest on credit sale and service charges for the same will not form part of the whole-sale cash price of the goods sold at factory gate. As regards imposition of penalty under Rule 173Q, I cannot find any deliberate intention on the part of the appellants to evade payment of duty. The appellants have taken a view as per the interpretation of Section 4 and which appears to my mind, the correct interpretation as observed earlier. Since, I have also held that the obovesaid expenses recovered through debit notes will not form the part of assessable value I do not find any justification not to waive the penalty and the same is, therefore, waived.”
5. On going through the submissions made by both the sides and records, particularly are impugned order passed by the ld. Collector (Appeals), we find that the issue in respect of the above expenses has been properly considered by the ld. Collector (Appeals) as it was correctly pointed but by the ld. Counsel for the respondents.
6. In the facts and circumstances of the case, we do no find any infirmity in the impugned order. Accordingly, the appeals filed by the Department are hereby dismissed. Order accordingly.